Calculation Transparency

How Solsten Calculates

Solsten is US commercial real estate underwriting software built around deterministic, assumption-driven calculations. The goal is straightforward: help teams model faster without sacrificing clarity around how outputs are produced.

Proof Framework

This page is the public methodology layer: we show core formulas, required inputs, and worked examples for major metric families. We do not disclose proprietary implementation details.

What we show

  • Industry-standard formulas
  • Input-to-output relationships
  • Worked examples with numbers
  • Interpretation rules and caveats

What we do not show

  • Proprietary weights or thresholds
  • Internal confidence heuristics
  • Source-level implementation details
  • Security or anti-abuse internals

Core Operating Statement Math

1) Effective Gross Income (EGI)

EGI is modeled as potential income net of vacancy and credit loss.

EGI = PGI - Vacancy Loss - Credit Loss + Other Income

2) Net Operating Income (NOI)

NOI is operating income after operating expenses, before debt service and below-the-line items.

NOI = EGI - Operating Expenses

Worked example (NOI)

  • PGI: $1,250,000
  • Vacancy and credit loss: $90,000
  • Other income: $40,000
  • Operating expenses: $470,000

EGI = 1,250,000 - 90,000 + 40,000 = $1,200,000

NOI = 1,200,000 - 470,000 = $730,000

Occupancy and Variable Cost Logic

Solsten follows ARGUS/Altus-style occupancy logic for operating expense scaling.

Occupancy rate

Occupancy % = Occupied Rentable SF / Total Rentable SF

Common area is excluded from both numerator and denominator.

Variable expense/revenue back-calculation

To avoid double-counting occupancy effects, entered amounts are normalized to a 100% baseline.

occupancy_factor = percent_fixed + (1 - percent_fixed) * occupancy
base_100 = entered_amount / occupancy_factor
forecast_amount = base_100 * inflation_factor * occupancy_factor

Worked example (variable expense)

  • Entered amount: $1,000
  • Percent fixed: 20% (0.20)
  • Current occupancy: 50% (0.50)

occupancy_factor = 0.20 + (0.80 × 0.50) = 0.60

base_100 = 1,000 / 0.60 = $1,666.67

Recovery Methodologies

Net (NNN)

Tenant pays pro-rata share of recoverable expenses.

Tenant Recovery = Recoverable Pool * Tenant Pro-Rata Share

Base Year Stop

Tenant pays only expense growth above a base-year level.

Excess = max(0, Current Recoverable Pool - Base Year Pool)
Tenant Recovery = Excess * Tenant Pro-Rata Share

Modified Gross

Uses gross-up logic on selected categories before allocation.

Grossed Pool = Eligible Expenses / Gross-Up Occupancy Factor
Tenant Recovery = Grossed Pool * Tenant Pro-Rata Share

Debt and Return Metrics

Debt Service Coverage Ratio (DSCR)

DSCR = NOI / Annual Debt Service

Loan-to-Value (LTV)

LTV = Loan Balance / Estimated Market Value

Net Present Value (NPV)

NPV = SUM( CashFlow_t / (1 + discount_rate)^t ) - Initial Equity

Equity Multiple

Equity Multiple = Total Distributions / Total Equity Invested

Internal Rate of Return (IRR)

IRR is the discount rate that makes net present value equal to zero. 

Find r such that: 0 = SUM( CashFlow_t / (1 + r)^t ) - Initial Equity

Validation and Limits

Validation posture

  • Core calculation workflows are tested and validated in backend SSOT modules.
  • Outputs are deterministic for identical inputs.
  • Calculation logic is versioned and updated as edge cases are hardened.

Limits

  • Outputs are scenario results, not guarantees.
  • Market risk and execution risk remain outside software control.
  • Users remain responsible for assumptions and decisions.

Disclaimer

Solsten provides calculation and reporting tools for user-supplied inputs. Content and demonstrations are for software education only and do not constitute financial, investment, legal, tax, or underwriting advice.

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