|
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|
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
| ASSUMPTIONS |
|
|
ANNUAL INCOME & EXPENSES |
|
Base Year |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
GAIN ON SALE |
|
| Land |
(owned by U of M) |
|
Rental Rate Increase |
|
|
3.0% |
3.0% |
3.0% |
3.0% |
|
| Building |
$2,213,750 |
|
Rental Rate |
|
$20.00 |
$ 20.60 |
$
21.22 |
$
21.85 |
$
22.51 |
|
Selling price |
5,207,000
|
|
| General Contractors Fee |
(included) |
|
Vacancy |
|
30% |
3% |
3% |
3% |
3% |
|
Less: Sales Fees |
(208,000) |
|
| Construction Eng'g Fee |
$66,413
|
|
Operating Expenses: |
|
|
|
|
Less: Cost |
(2,828,463) |
|
| Architectural Fee |
$132,825
|
|
Property taxes |
|
70,712 |
0% |
3% |
3% |
3% |
|
Add back depreciation |
308,230 |
|
| Developer Fee |
$221,375
|
|
Gas and Electric |
|
|
3% |
3% |
3% |
3% |
|
Taxable Gain |
2,478,767
|
|
| Closing Costs |
$194,100 |
|
Water/sewer |
|
|
3% |
3% |
3% |
3% |
|
Tax on sale |
495,753
|
|
| Total Cost |
$2,828,463
|
|
Insurance |
|
|
3% |
3% |
3% |
3% |
|
|
|
|
|
|
Maintenance-snow, garden, etc |
|
|
4% |
4% |
4% |
4% |
|
| Land Value |
15% |
|
Janitorial |
|
|
3% |
3% |
3% |
3% |
|
Sales Proceeds |
4,999,000 |
|
|
|
|
|
|
|
0% |
0% |
0% |
0% |
|
Loan Payoff |
(1,861,113) |
|
| Square Footage |
25,000 |
|
Depreciation |
|
61,646 |
|
|
Income Taxes |
(495,753) |
|
| Total Cost/Sq Ft |
$113.14
|
|
|
|
|
|
|
Cash Flow |
2,642,134
|
|
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
| Exit Capitalization Rate |
9.00% |
|
Rental Income |
|
500,000 |
515,000 |
530,450 |
|
562,754
|
|
| Discount Rate |
12.00% |
|
Vacancy |
|
(150,000) |
(15,450) |
(15,914) |
(16,391) |
(16,883) |
|
|
|
|
Gross Effective Income |
|
350,000 |
499,550 |
514,537 |
529,973
|
545,872
|
|
| DEPRECIATION |
|
| # Years |
39.0 |
|
Less Operating Expenses: |
|
|
|
| Depreciation Base |
$2,404,193
|
|
Property taxes |
|
70,712 |
70,712 |
72,833
|
75,018
|
77,268
|
|
| Depreciation/Year |
$61,646
|
|
Gas/Electric |
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| |
|
Water/sewer |
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| FINANCING |
|
Insurance |
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| Loan to Value |
75% |
|
Maintenance |
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| Total Debt |
$2,121,347 |
|
Janitorial |
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| Interest Rate |
8.00% |
|
|
|
0 |
0 |
0 |
0 |
0 |
|
|
|
| Amortization Period |
20 |
|
Total Operating
Expenses |
|
70,712 |
70,712 |
72,833
|
75,018
|
77,268
|
|
|
|
| Annual Payment |
$216,064 |
|
|
|
|
|
|
|
| Equity |
$707,116 |
|
NET OPERATING INCOME |
|
279,288 |
428,838
|
441,704
|
454,955
|
468,603
|
|
|
|
|
|
|
|
15% of NOI to University for land |
|
41,893 |
64,326
|
66,256
|
68,243
|
70,291
|
|
|
|
| TAX RATES |
|
Less Debt Service ** |
|
216,064
|
216,064
|
216,064 |
216,064 |
216,064 |
|
| Capital Gains |
20.0% |
|
BEFORE TAX CASH FLOW |
|
21,331
|
148,449
|
159,384
|
170,648
|
182,249
|
|
| Marginal |
30.0% |
|
As a % of Equity |
|
3.02% |
20.99% |
22.54% |
24.13% |
25.77% |
|
|
|
|
Debt Service Coverage |
|
1.29 |
1.98 |
2.04 |
2.11 |
2.17 |
|
| CLOSING COST ESTIMATES |
|
Plus Principal |
|
46,356 |
50,065 |
54,070 |
54,687 |
55,057 |
|
| Loan Fee - 2% |
44,275 |
|
Less Depreciation |
|
(61,646) |
(61,646) |
(61,646) |
(61,646) |
(61,646) |
|
| Appraisal - .25% |
5,000 |
|
| Survey - .25% |
5,000 |
|
TAXABLE INCOME |
|
6,041
|
136,867
|
151,808
|
163,689
|
175,660
|
|
| Improvements |
0 |
|
TAX SAVINGS (BURDEN) |
|
(1,812) |
(41,060) |
(45,542) |
(49,107) |
(52,698) |
|
| Title - .25% |
5,000 |
|
BEFORE TAX CASH FLOW |
|
21,331 |
148,449 |
159,384 |
170,648 |
182,249 |
|
| Recording Fee - .1% |
2,000 |
|
Less: Income Tax |
|
(1,812) |
(41,060) |
(45,542) |
(49,107) |
(52,698) |
|
| Interest Res. (12% Constr
loan) |
132,825 |
|
Sales Proceeds |
|
|
|
2,642,134
|
|
|
|
|
TOTAL CASH FLOWS |
-707115.625 |
19,519
|
107,389
|
113,842
|
121,541
|
2,771,685
|
|
| Total Closing |
194,100 |
|
|
|
|
VALUATION AND RETURN
MEASURES: |
IRR |
|
37.7% |
|
Blue numbers
are variables |
|
|
|
NPV |
|
1,006,180 |
|
Red numbers
are results |
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