HADM 3387 355 Study Guide Prelim 1 Financial Measures, Trends and Asset Management

355 Study Guide Prelim 1 Financial Measures, Trends and Asset Management Building Maintenance (all from an operating budget) • Initial Investment (development, construction) • Routine Maintenance (upkeep, routine: vacuuming, window cleaning) • Preventive Maintenance (preventing bad things from happening: filter changes, cleaning refrigerator coils) • Scheduled Maintenance (takes longer, more complex: swimming pool) • Emergency/Breakdown Maintenance (worst case at the worst time) o Deferred Maintenance (waiting till the last minute; more expensive later) • Renovation/Rehab (big change, expensive) Asset managers = increase NOI (net operating income), maximize the value of property, from acquisition through sale, within the objectives of the owner. Revenue – Operating Expenses = CapEx. NOI = income after operating costs and fixed costs (doesn’t include depreciation, amortization, or debt service) To improve NOI, increase revenue or decrease costs 2 Cost Categories: 1) Property Operation and Maintenance Costs (POM or R&M) – For hotels this is usually 5.1% of gross revenues. For restaurants, usually 1.5-1.8% of gross revenue. 2) Utilities Costs – Usually 5.1% of gross revenue for hotels and 2.5-3.5% of gross revenue f