Rent Normalization Memo Template

~ Certified Business Appraiser

Use this memo format to document market rent adjustments in underwriting and business valuations involving related-party real estate.

Purpose

To adjust reported rent expenses to reflect fair market lease rates, ensuring accurate valuation of the business under SBA standards.

Deal Summary

Business Name: ___________________________
Property Address: __________________________
Valuation Date: ____________________________

Current Rent Situation

  • Monthly Rent Paid: $_________
  • Lease Type: [ ] Related-party   [ ] Third-party
  • Lease Terms (if any): _______________________

Market Rent Analysis

  • Source of Comps: (e.g., LoopNet, CoStar, Rentometer)
  • Comparable Market Rent: $_________ per sq. ft.
  • Adjustments: ____________________________

Adjusted Rent Calculation

  • Adjusted Monthly Market Rent: $_________
  • Annual Rent Adjustment: $_________ increase / decrease

Valuation Impact

  • Adjusted Free Cash Flow reflects $_________ of market rent.
  • Valuation based on normalized expense for lease payment, compliant with SBA SOP.

Notes and Justification

Document source of market data and assumptions used in normalizing rent. Attach market rent support if available.