Prepaid/Deferred Rent Structures
SuperTRUMP has the capability to shadow-price or to create prepaid/deferred rent structures.
In either case, whether you are shadow-pricing or creating an original structure, start by entering the known parameters, such as delivery date, asset depreciation, commencement date, fees, and statistics. Next, prepare for the creation of prepaid/deferred rent screens by completing the following steps:
1. From the Parameters menu, select Taxes/Lessor. In the Taxes/Lessor screen, for Tax Options choose "Elections." Change the Tax Calculation Method to "Accrual (advance and arrears)." Click OK.
2. From the Controls menu, select Features. Activate the Shift cash date from accrual period feature. If you are shadow pricing, also activate External Adjustments. Click OK.
Shadow Pricing
Shadow pricing is matching an already-structured transaction to verify the yield or other economic measures. Follow these steps:
1. Load the rent allocations (rent accruals for tax purposes) into the rent screen. The easiest method is to make these annual, from Jan. 1 to the next Jan. 1 and extending over the full term. If your source numbers are in a spreadsheet, you can use the clipboard to load them. Highlight the spreadsheet column with the dates and values (or just the values), and then hit Ctrl-C. Return to SuperTRUMP, go into the rent screen, and from the Edit menu select Paste Special. The payment will paste into the rent screen.
2. From the Parameters menu, select External Adjustments. For Array select "Miscellaneous." (Cut and Paste Special work here also, if you can). Load the cash rent dates and amounts into the Adjustments box. Click OK.
3. Finally, merge the tax and cash amounts: From the Process menu, select Modify. Choose "Rent screens: pre-paid / deferred." Then hit the button "Create screens by merging tax and cash. Click OK.
Original Structuring
When you are structuring a transaction, ST will create a prepaid/deferred structure to meet your economic target within the specific constraints. Follow these steps:
1. From the Controls menu, select Constraints - 1. At the bottom of the screen, check Automatically create rent screens for prepaid/deferred payments. While in this screen set any needed constraints. Click OK.
2. Also from the Controls menu, select IRS Classification. For Test for holiday choose "Specify," then set Specified holiday (months) to the length of the holiday period. Click OK.
3. Click the target icon on the toolbar. Specify the yield target that you need and for Adjust choose "Rent." Then click OK.
4. From the Process menu, select Optimize. In most cases you will be solving for PV of rent. Click OK to begin the optimization.
Reports
SuperTRUMP includes a report that displays both the payments and allocations. While in the Report File Dialog box, for List Files of Type select "Basic". The report name is "Payment schedule: with tax allocation."
