This document provides cost and revenue information for a proposed real estate development project. It includes a breakdown of acquisition costs totaling $74,155,266. It also provides projected annual gross rents totaling $7,877,537 for the first stabilized year. Estimated operating expenses are provided, resulting in a projected net operating income of -$683,066 for the first year. The document also includes calculations for tax payments, returns on investment, and a potential sale of the property in year 10 with a net cash to the seller of $247,533,050.
3. Setup For First Stabilized year
studio/1 551 1,019$ 8 8,155$
studio/1 601 1,112$ 13 14,454$
studio/1 604 1,117$ 15 16,761$
studio/1 613 11,334$ 9 102,006$
studio/1 843 1,560$ 19 29,631$
1/1. 731 1,352$ 24 32,456$
1/1. 896 1,658$ 1 1,658$
1/1. 925 1,711$ 2 3,423$
1/1. 929 1,719$ 2 3,437$
1/1. 945 1,748$ 41 71,678$
1/1. 963 1,782$ 1 1,782$
1/1. 1,268 2,219$ 1 2,219$
1/1.5 963 1,782$ 20 35,631$
Loft 1/1.5 968 1,791$ 6 10,745$
Loft 1/1.5 982 1,817$ 8 14,534$
Loft 1/1.5 1,128 2,087$ 23 47,996$
Loft 1/1.5 1,147 2,122$ 8 16,976$
Loft 1/1.5 1,053 1,948$ 10 19,481$
Loft 1+1den/1.5 1,024 1,894$ 2 3,789$
Loft 1+1den/1.5 1,040 1,924$ 3 5,772$
Loft 1+1den/1.5 1,167 2,159$ 4 8,636$
Loft 1+1den/2 1,000 1,850$ 22 40,700$
Loft 2/2 1,440 2,520$ 7 17,640$
2/2. 1,088 2,013$ 32 64,410$
2/2.5 1,268 2,219$ 5 11,095$
2/2.5 1,278 2,237$ 13 29,075$
2/2.5 1,368 2,394$ 28 67,032$
2+1den/2.5 1,765 3,089$ 6 18,533$
2+1den/2.5 1,867 3,267$ 6 19,604$
3+1den/3.5 2,466 4,316$ 1 4,316$
Loft 3+1den/3.5 2,564 4,487$ 2 8,974$
Loft 3+1den/3.5 2,238 3,917$ 4 15,666$
Total Annual Gross Rent 360,841 656,461$ 346 $7,877,537
Less: Vacancies 20% $1,575,507
Effective Gross Income $6,302,030
HOA (Maintanace) provided 2,914,719$
Real Estate Taxes provided 1,598,894$
Concessions
Insurace fees 346 2,254$ 780,012.55$
Management Fees 1.5/sqft 541,262$
Annual Utilities Vacants and Common A 100,000$
Replacement Resesrves provided (misc) $415,200
Contingency 10% $635,009
Total Operating Expenses 6,985,096$
($683,066)
Annual Payment -$
Cash Flow After Financing (CAF) or Cash Flow Before taxes (CFBT) ($683,066.15)
Tax Payment see ($99,110.48)
Cash Flow After Taxes (CFAT) CF ($583,955.68)
Return on Total Assests (ROTA) F&C (NOI) divided by TAC -0.92%
After Tax Return on Equity (ROE) or Cash-on-cash reCFAT divided by equity -0.79%
cash Flow After Financing ($683,066.15)
Add: Replacement Reserves $415,200.00
Add: Mortgage Amortization $0.00
Less: Depreciation (Note: Land is not included in the dep(TDC-Land Cost) / 27.5 2,624,298.18$
Taxable Income ($267,866.15)
Tax Rate 37%
Tax Payable ($99,110.48)
Annual Gross Income SqFt monthly rent Units Assumptions/Notes TOTALS
Free and Clear Cash Flow (F&C) or Net Operating Income (NOI)
Expenses
Calculation of Tax Payment
Debt Service
4. Projected Setup Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Annual Gross Rent $7,877,537 $8,113,863 $8,357,279 $8,607,997 $8,866,237 $9,132,224 $9,406,191 $9,688,377 $9,979,028 $10,278,399
Less: Vacancies 20% $1,575,507 $1,622,773 $1,671,456 $1,721,599 $1,773,247 $1,826,445 $1,881,238 $1,937,675 $1,995,806 $2,055,680
Effective Gross Income $6,302,030 $6,491,090 $6,685,823 $6,886,398 $7,092,990 $7,305,780 $7,524,953 $7,750,702 $7,983,223 $8,222,719
HOA (Maintanace) 2,914,719$ 3,002,161$ 3,092,225$ 3,184,992$ 3,280,542$ 3,378,958$ 3,480,327$ 3,584,737$ 3,692,279$ 3,803,047$
Real Estate Taxes 1,598,894$ 1,646,861$ 1,696,267$ 1,747,155$ 1,799,569$ 1,853,556$ 1,909,163$ 1,966,438$ 2,025,431$ 2,086,194$
Concessions -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Insurace fees 780,013$ 803,413$ 827,515$ 852,341$ 877,911$ 904,248$ 931,376$ 959,317$ 988,097$ 1,017,739$
Management Fees 541,262$ 557,499$ 574,224$ 591,451$ 609,195$ 627,470$ 646,295$ 665,683$ 685,654$ 706,223$
Annual Utilities 100,000$ 103,000$ 106,090$ 109,273$ 112,551$ 115,927$ 119,405$ 122,987$ 126,677$ 130,477$
Replacement Resesrves 415,200$ 427,656$ 440,486$ 453,700$ 467,311$ 481,331$ 495,771$ 510,644$ 525,963$ 541,742$
Contingency 635,009$ 654,059$ 673,681$ 693,891$ 714,708$ 736,149$ 758,234$ 780,981$ 804,410$ 828,542$
Total Operating Expenses $6,985,096 7,194,649$ 7,410,488$ 7,632,803$ 7,861,787$ 8,097,640$ 8,340,570$ 8,590,787$ 8,848,510$ 9,113,966$
-$683,066 -$703,558 -$724,665 -$746,405 -$768,797 -$791,861 -$815,617 -$840,085 -$865,288 -$891,246
Annual Payment $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cash Flow After Financing (CAF) or Cash Flow Before taxes (CFBT)
($683,066.15) ($703,558.14) ($724,664.88) ($746,404.83) ($768,796.97) ($791,860.88) ($815,616.71) ($840,085.21) ($865,287.77) ($891,246.40)
Tax Payment (see of sheet calculation)
($1,070,100.80) ($1,073,074.12) ($1,076,136.63) ($1,079,291.02) ($1,082,540.04) ($1,085,886.53) ($1,089,333.42) ($1,092,883.71) ($1,096,540.51) ($1,100,307.02)
Cash Flow After Taxes (CFAT)
$387,034.65 $369,515.98 $351,471.75 $332,886.19 $313,743.07 $294,025.65 $273,716.71 $252,798.50 $231,252.75 $209,060.62
Return on Total Assests (ROTA) -0.92% -0.95% -0.98% -1.01% -1.04% -1.07% -1.10% -1.13% -1.17% -1.20%
After Tax Return on Equity (ROE) or Cash-on-cash ret 0.52% 0.50% 0.47% 0.45% 0.42% 0.40% 0.37% 0.34% 0.31% 0.28%
Calculation of Tax Payment Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cash Flow After Finaning ($683,066.15) ($703,558.14) ($724,664.88) ($746,404.83) ($768,796.97) ($791,860.88) ($815,616.71) ($840,085.21) ($865,287.77) ($891,246.40)
Add: Replacement Reserves $415,200 $427,656 $440,486 $453,700 $467,311 $481,331 $495,771 $510,644 $525,963 $541,742
Less: Depreciation 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ 2,624,298.18$ Acumilated Depreciation 26,242,982$
Taxable income ($2,892,164.34) ($2,900,200.32) ($2,908,477.38) ($2,917,002.76) ($2,925,783.90) ($2,934,828.47) ($2,944,144.38) ($2,953,739.76) ($2,963,623.01) ($2,973,802.76)
Tax Rate 37% 37% 37% 37% 37% 37% 37% 37% 37% 37%
Tax Payable ($1,070,100.80) ($1,073,074.12) ($1,076,136.63) ($1,079,291.02) ($1,082,540.04) ($1,085,886.53) ($1,089,333.42) ($1,092,883.71) ($1,096,540.51) ($1,100,307.02)
Expenses
Income
52800*(1.03)^9
132000*(1.03)^9
Assumptions
2574432*(1.03)^9
50,4000*(1.05)^9
Free and Clear Cash Flow (F&C) or Net Operating Income (NOI)
Assumptions
Debt Service
5. Year of Sale
Free and Clear Cash Flow on Year of Sale (891,246)$ 10
Cap Rate 0%
Capitalized Value or Selling Price (Value = income /R) -$316,131,341
1.Calculation of Book Value
Purchase Price or Total Development Cost $74,155,266
Add: Capital Improvements $3,707,763.31
Less:Accumulated Depreciation 26,242,981.82$
= Net Book value $51,620,047.69
2. Calculation of gain on Sale
Selling Price -$316,131,341
Less: Broker's Commission, Legal Fees (10%) (15,806,567.04)$
Net Selling Price (300,324,773.71)$
Less: Net Book Value $51,620,047.69
Gain on Sale -$351,944,821.40
3. Calculation of Tax Payment
Gain on Sale -$351,944,821.40
Multiplied by: Capital gain Tax Rate 15%
Capital Gain Tax Liability -$52,791,723.21
4. Calculation of Net Cash to Seller
Net Sale Price -$300,324,773.71
Less: Capital Gain Tax Liability -$52,791,723.21
Net Cash From Sale -$247,533,050.50
Estimate Selling Price Using the Cap Rate
Net Cash from Sale
6. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1. Calculate Total Cash Flow for Each Year
Cash Flow after taxes 387,035$ 369,516$ 351,472$ 332,886$ 313,743$ 294,026$ 273,717$ 252,799$ 231,253$ 209,061$
add: net cash from sale -$ -$ -$ -$ -$ -$ -$ -$ -$ (247,533,050)$
total cash flow for each year (1-10) 387,035$ 369,516$ 351,472$ 332,886$ 313,743$ 294,026$ 273,717$ 252,799$ 231,253$ (247,323,990)$
2. Calculate the Discount Factor (=1/(1+i)^n), where the discount rate of the investor is assumed to be 12%
Discount Factor Formula for each year 1/(1+.12)^1 1/(1+.12)^2 1/(1+.12)^3 1/(1+.12)^4 1/(1+.12)^5 1/(1+.12)^6 1/(1+.12)^7 1/(1+.12)^8 1/(1+.12)^9 1/(1+.12)^10
Discount Factor 0.8928571 0.7971939 0.7117802 0.6355181 0.5674269 0.5066311 0.4523492 0.4038832 0.3606100 0.3219732
3. Present Value (PV) of each cash flow
total cash flow for each year multiplied by the year's discount factor 345,567$ 294,576$ 250,171$ 211,555$ 178,026$ 148,963$ 123,816$ 102,101$ 83,392$ (79,631,706)$
4. Net Present Value (NPV)
Present Value of all total cash flows (1-10) (77,893,540)$
Less: Equity invested 74,155,266$
NPV (152,048,806)$
Calculation of Discounted Cash Flow, Net Present Value (NPV)
7. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
1. Total Cash Flow for Each Year
($74,155,266) $387,034.65 $369,515.98 $351,471.75 $332,886.19 $313,743.07 $294,025.65 $273,716.71 $252,798.50 $231,252.75
2. Calculate the IRR (=1/(1+i)^n)
Discount Factor Formula for each year 1/(1+.32)^1 1/(1+.32)^2 1/(1+.18)^3 1/(1+.18)^4 1/(1+.18)^5 1/(1+.18)^6 1/(1+.18)^7 1/(1+.18)^8 1/(1+.18)^9
Discount Factor 0.757575758 0.573921028 0.434788658 0.329385347 0.249534354 0.189041177 0.143213013 0.108494707 0.08219296
3. Present Value (PV) of each cash flow
total cash flow for each year multiplied by the year's discount factor 293,208.07$ 212,072.99$ 152,815.93$ 109,647.83$ 78,289.67$ 55,582.96$ 39,199.79$ 27,427.30$ 19,007.35$
4. Net Present Value (NPV)
Present Value of all total cash flows (1-10) (14,412,968.35)$
Less: Equity invested $74,155,266
NPV (88,568,234.55)$
Off-Sheet Verification Years
Calculation of the Internal Rate of Return (IRR) by Interpolation