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REAE 5311 Property Analysis By: Eddie Munoz

REAE 5311 Property Analysis By: Eddie Munoz Subject Properties 6,000 sq ft for land @ $40 sq ft. 12,000 Built Sq. Ft 10,000 leasable Sq Ft $1.57

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REAE 5311 Property AnalysisBy: Eddie Munoz

Subject Properties6,000 sq ft for land @ $40 sq ft.12,000 Built Sq. Ft10,000 leasable Sq Ft $1.57 sq ft/monthRent Increase: 2%/yr94% occupancy (dfwi)OI: Pet fees, storage fees$3600/yrStreet Parking30yr amt. loan @ 4%

ApartmentsClass A OfficeRetail6,000 sq ft for land @ $40 sq ft.12,000 Built Sq. Ft10,000 leasable Sq Ft$28.85 sq ft/yr (dfwi)Rent Increase: 3%91% occupancy (dfwi)OI: Signage fees$12,000/yr Street parking25 yr amt. loan @ 4.5%6,000 sq ft for land @ $40 sq ft.12,000 Built Sq. Ft10,000 leasable Sq Ft $14 sq ft/yr (Marcus & Millichap)Rent Increase: 2%/yr94% occupancy (dfwi)OI: Signage fees$12,000/yrStreet parking25 yr amt. loan @5%http://www.steelheadcapital.com/rates/

Apartments Pro-Forma

Class A Office Pro Forma

According to www.facilitiesnet.com Class A Office buildings typically incur 25-30% TOE

Retail Pro-Forma

Comparisons & Conclusion$17.71 sqft/yrUnder $18.84 sqft/yrESP $2,238,342IRR 24.4%Increased interest in living in downtown Fort Worth; however cautious of market discrepancies (Montgomery Plaza)2nd Best possible option for this scenarioApartmentsClass A OfficeRetail$21.41 sqft/yrUnder $28.85 sqft/yrESP $2,424,061IRR 32.38%According to Transwesterns DFW Outlook Report: Although FW CBDs vacancy rate is 9%, that number is declining due to increasing needs. Office jobs are on the rise particularly in the financial services industry.Opportunity for tax abatements for businesses to migrate to Downtown FWBest possible option for this scenario$17.80 sqft/yrOver $14.00 sqft/yrESP $1,843,818IRR 31.07%According to Marcus & Millichap: the 2013 Retail Forecast calls for growth in DFW employment, decline in vacancies, and increased asking rents3rd Possible option

Sheet1SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1513800.00= Total Expected Development Cost1753800.0080000X Loan to Value Ratio80%= Permanent Mortgage1403040.00X Annualized Mortgage Constant0.06TERM30= Cash Required for Debt Service80379.93RATE4%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI106474.91+ Estimated Operating Expenses (Not passed through to tenants)$60,000.00280,000.00= Required Effective Gross Income166474.91600000/ Expected Occupancy Rate94%= Required Gross Revenue177100.97/ Leaseable Square Feet10,000= Rent Required Per Square Foot$17.71SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot17.71= Projected Potential Gross Income (PGI)177100.00- Vacancy Allowance6%10626.00= Expected Effective Gross Income (EGI)172474.00- Projected Operating Expenses$60,000.00= Expected Net Operating Income112474.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.0572898355/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs1963245.2965704- Expected Construction Costs (Other than site)1513800.00= Maximum Supportable Site Acquisition Cost449445.30

Sheet2

Sheet1REAL ESTATE BEFORE-TAX CASH FLOW STATEMENT:Leasable SqFt:10,000Rent PSF/YR:$17.10PGI for Yr 1 =$171,000.00Rent % Increase:2.00%Vacancy as % of PGI:6.00%Vacancy for Yr 1 =$(10,260.00)Other Inc. PSF/YR:$0.60OI for Yr 1 =$6,000.00Oth. Inc. % Increase:1.00%OpEx as % of EGI:35.00%Purchase Price:$1,753,800.00Acquisition Costs:LTV Ratio:80.00%Loan Amt =$1,403,040.00Loan Term in Years:30Balance at Sale =$(1,269,014.79)Loan Interest Rate:4.00%Loan Pmt ADS =$(80,379.93)Loan Fees:Ann. Finc. Cost =0.0Prepayment Penalty:Penalty in $ =0.0Annual Value Incr.:5.00%Future Value =$2,238,342.60Selling Expenses:8.00%Selling Exp $ =$(179,067.41)Holding Period in Yrs:5Int. Cost Yr 1 =$(55,671.89)Year 1Year 2Year 3Year 4Year 5PGI$171,000.00$174,420.00$177,908.40$181,466.57$185,095.90-VCL$(10,260.00)$(10,465.20)$(10,674.50)$(10,887.99)$(11,105.75)+OI$6,000.00$6,060.00$6,120.60$6,181.81$6,243.62=EGI$166,740.00$170,014.80$173,354.50$176,760.38$180,233.77-TOE$(58,359.00)$(59,505.18)$(60,674.07)$(61,866.13)$(63,081.82)=NOI$108,381.00$110,509.62$112,680.42$114,894.25$117,151.95-ADS$(80,379.93)$(80,379.93)$(80,379.93)$(80,379.93)$(80,379.93)=BTCF$28,001.07$30,129.69$32,300.49$34,514.32$36,772.02ESP$2,238,342.60-SE$(179,067.41)=NSP$2,059,275.20-UMB$(1,269,014.79)=BTER$790,260.41BT Cash Flows0$(350,760.00)1$28,001.072$30,129.693$32,300.494$34,514.325$827,032.43IRR =24.40%BT RRR:12.00%Before-Tax Required Rate of ReturnNPV =$212,465.89

Sheet1SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1513800.00= Total Expected Development Cost1753800.0080000X Loan to Value Ratio80%= Permanent Mortgage1403040.00X Annualized Mortgage Constant0.06TERM30= Cash Required for Debt Service80379.93RATE4%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI106474.91+ Estimated Operating Expenses (Not passed through to tenants)$60,000.00280,000.00= Required Effective Gross Income166474.91600000/ Expected Occupancy Rate94%= Required Gross Revenue177100.97/ Leaseable Square Feet10,000= Rent Required Per Square Foot$17.71SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot17.71= Projected Potential Gross Income (PGI)177100.00- Vacancy Allowance6%10626.00= Expected Effective Gross Income (EGI)172474.00- Projected Operating Expenses$60,000.00= Expected Net Operating Income112474.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.0572898355/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs1963245.2965704- Expected Construction Costs (Other than site)1513800.00= Maximum Supportable Site Acquisition Cost449445.30

Sheet2SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1571400.00= Total Expected Development Cost1811400.0080000X Loan to Value Ratio80%1571400= Permanent Mortgage1449120.00X Annualized Mortgage Constant0.07TERM25= Cash Required for Debt Service96656.16RATE5%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI132820.19+ Estimated Operating Expenses (Not passed through to tenants)$62,000.00280,000.00= Required Effective Gross Income194820.19600000/ Expected Occupancy Rate91%= Required Gross Revenue214088.13/ Leaseable Square Feet10,000= Rent Required Per Square Foot$21.41SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot21.41= Projected Potential Gross Income (PGI)214100.00- Vacancy Allowance9%19269.00= Expected Effective Gross Income (EGI)206831.00- Projected Operating Expenses$62,000.00= Expected Net Operating Income144831.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.0666998974/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs2171382.65188335- Expected Construction Costs (Other than site)1571400.00= Maximum Supportable Site Acquisition Cost599982.65

Compatibility ReportCompatibility Report for front-backdoor model apts.xlsRun on 6/28/2013 14:02The following features in this workbook are not supported by earlier versions of Excel. These features may be lost or degraded when opening this workbook in an earlier version of Excel or if you save this workbook in an earlier file format.Minor loss of fidelity# of occurrencesVersionSome cells or styles in this workbook contain formatting that is not supported by the selected file format. These formats will be converted to the closest format available.3Excel 97-2003

Sheet1REAL ESTATE BEFORE-TAX CASH FLOW STATEMENT:Leasable SqFt:10,000Rent PSF/YR:$21.41PGI for Yr 1 =$214,100.00Rent % Increase:3.00%Vacancy as % of PGI:9.00%Vacancy for Yr 1 =$(19,269.00)Other Inc. PSF/YR:$1.20OI for Yr 1 =$12,000.00Oth. Inc. % Increase:2.00%OpEx as % of EGI:30.00%Purchase Price:$1,811,400.00Acquisition Costs:LTV Ratio:80.00%Loan Amt =$1,449,120.00Loan Term in Years:25Balance at Sale =$(1,273,166.45)Loan Interest Rate:4.50%Loan Pmt ADS =$(96,656.16)Loan Fees:Ann. Finc. Cost =0.0Prepayment Penalty:Penalty in $ =0.0Annual Value Incr.:6.00%Future Value =$2,424,061.81Selling Expenses:8.00%Selling Exp $ =$(193,924.94)Holding Period in Yrs:5Int. Cost Yr 1 =$(64,553.66)Year 1Year 2Year 3Year 4Year 5PGI$214,100.00$220,523.00$227,138.69$233,952.85$240,971.44-VCL$(19,269.00)$(19,847.07)$(20,442.48)$(21,055.76)$(21,687.43)+OI$12,000.00$12,240.00$12,484.80$12,734.50$12,989.19=EGI$206,831.00$212,915.93$219,181.01$225,631.59$232,273.19-TOE$(62,049.30)$(63,874.78)$(65,754.30)$(67,689.48)$(69,681.96)=NOI$144,781.70$149,041.15$153,426.71$157,942.11$162,591.24-ADS$(96,656.16)$(96,656.16)$(96,656.16)$(96,656.16)$(96,656.16)=BTCF$48,125.54$52,385.00$56,770.55$61,285.96$65,935.08ESP$2,424,061.81-SE$(193,924.94)=NSP$2,230,136.87-UMB$(1,273,166.45)=BTER$956,970.42BT Cash Flows0$(362,280.00)1$48,125.542$52,385.003$56,770.554$61,285.965$1,022,905.50IRR =32.38%BT RRR:12.00%Before-Tax Required Rate of ReturnNPV =$382,230.77

Sheet1SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1513800.00= Total Expected Development Cost1753800.0080000X Loan to Value Ratio80%= Permanent Mortgage1403040.00X Annualized Mortgage Constant0.06TERM30= Cash Required for Debt Service80379.93RATE4%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI106474.91+ Estimated Operating Expenses (Not passed through to tenants)$60,000.00280,000.00= Required Effective Gross Income166474.91600000/ Expected Occupancy Rate94%= Required Gross Revenue177100.97/ Leaseable Square Feet10,000= Rent Required Per Square Foot$17.71SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot17.71= Projected Potential Gross Income (PGI)177100.00- Vacancy Allowance6%10626.00= Expected Effective Gross Income (EGI)172474.00- Projected Operating Expenses$60,000.00= Expected Net Operating Income112474.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.0572898355/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs1963245.2965704- Expected Construction Costs (Other than site)1513800.00= Maximum Supportable Site Acquisition Cost449445.30

Sheet2SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1571400.00= Total Expected Development Cost1811400.0080000X Loan to Value Ratio80%1571400= Permanent Mortgage1449120.00X Annualized Mortgage Constant0.07TERM25= Cash Required for Debt Service96656.16RATE5%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI132820.19+ Estimated Operating Expenses (Not passed through to tenants)$62,000.00280,000.00= Required Effective Gross Income194820.19600000/ Expected Occupancy Rate91%= Required Gross Revenue214088.13/ Leaseable Square Feet10,000= Rent Required Per Square Foot$21.41SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot21.41= Projected Potential Gross Income (PGI)214100.00- Vacancy Allowance9%19269.00= Expected Effective Gross Income (EGI)206831.00- Projected Operating Expenses$62,000.00= Expected Net Operating Income144831.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.0666998974/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs2171382.65188335- Expected Construction Costs (Other than site)1571400.00= Maximum Supportable Site Acquisition Cost599982.65

Sheet3SFFA "Front Door" ProcedureSite Acquisition Costs240000.00+ Construction Costs1204680.00= Total Expected Development Cost1444680.0080000X Loan to Value Ratio80%1204680= Permanent Mortgage1155744.00X Annualized Mortgage Constant0.07TERM25= Cash Required for Debt Service81076.37RATE5%1104290X Lender Required Debt Service Coverage Ratio1.250= Required Net Operating Income or NOI113345.46+ Estimated Operating Expenses (Not passed through to tenants)$54,000.00280,000.00= Required Effective Gross Income167345.46600000/ Expected Occupancy Rate94%= Required Gross Revenue178027.09/ Leaseable Square Feet10,000= Rent Required Per Square Foot$17.80SFFA "Back Door" ProcedureTotal Leasable Square Feet10000.00X Expected Average Rent Per Square Foot17.80= Projected Potential Gross Income (PGI)178000.00- Vacancy Allowance6%10680.00= Expected Effective Gross Income (EGI)179320.00- Projected Operating Expenses$55,000.00= Expected Net Operating Income124320.00/ Debt Service Coverage Ratio1.250/ Annualized Mortgage Constant0.070150805/ Maximum Loan to Value Ratio80%= Maximum Supportable Total Project Costs1772182.08734378- Expected Construction Costs (Other than site)1204680.00= Maximum Supportable Site Acquisition Cost567502.09

Compatibility ReportCompatibility Report for front-backdoor model apts.xlsRun on 6/28/2013 14:02The following features in this workbook are not supported by earlier versions of Excel. These features may be lost or degraded when opening this workbook in an earlier version of Excel or if you save this workbook in an earlier file format.Minor loss of fidelity# of occurrencesVersionSome cells or styles in this workbook contain formatting that is not supported by the selected file format. These formats will be converted to the closest format available.3Excel 97-2003

Sheet1REAL ESTATE BEFORE-TAX CASH FLOW STATEMENT:Leasable SqFt:10,000Rent PSF/YR:$17.80PGI for Yr 1 =$178,000.00Rent % Increase:2.00%Vacancy as % of PGI:6.00%Vacancy for Yr 1 =$(10,680.00)Other Inc. PSF/YR:$1.20OI for Yr 1 =$12,000.00Oth. Inc. % Increase:2.00%OpEx as % of EGI:30.00%Purchase Price:$1,444,680.00Acquisition Costs:LTV Ratio:80.00%Loan Amt =$1,155,744.00Loan Term in Years:25Balance at Sale =$(1,023,760.22)Loan Interest Rate:5.00%Loan Pmt ADS =$(81,076.37)Loan Fees:Ann. Finc. Cost =0.0Prepayment Penalty:Penalty in $ =0.0Annual Value Incr.:5.00%Future Value =$1,843,818.45Selling Expenses:8.00%Selling Exp $ =$(147,505.48)Holding Period in Yrs:5Int. Cost Yr 1 =$(57,246.01)Year 1Year 2Year 3Year 4Year 5PGI$178,000.00$181,560.00$185,191.20$188,895.02$192,672.92-VCL$(10,680.00)$(10,893.60)$(11,111.47)$(11,333.70)$(11,560.38)+OI$12,000.00$12,240.00$12,484.80$12,734.50$12,989.19=EGI$179,320.00$182,906.40$186,564.53$190,295.82$194,101.73-TOE$(53,796.00)$(54,871.92)$(55,969.36)$(57,088.75)$(58,230.52)=NOI$125,524.00$128,034.48$130,595.17$133,207.07$135,871.21-ADS$(81,076.37)$(81,076.37)$(81,076.37)$(81,076.37)$(81,076.37)=BTCF$44,447.63$46,958.11$49,518.80$52,130.70$54,794.84ESP$1,843,818.45-SE$(147,505.48)=NSP$1,696,312.97-UMB$(1,023,760.22)=BTER$672,552.75BT Cash Flows0$(288,936.00)1$44,447.632$46,958.113$49,518.804$52,130.705$727,347.59IRR =31.07%BT RRR:12.00%Before-Tax Required Rate of ReturnNPV =$269,277.16