For more information contact: MIC PROPERTIES micproperties@gmail.com 8 Buildings. 115 Total Units Rehabbed Buildings with all Separate Mechanicals Large Units with an Attractive Mix (86-3BR and 29-2BR) Management on site with over 95% occupancy and collection Phone: Fax: 312-268-7043 1658 N Milwaukee, STE 524 Chicago, IL 60647
Table of Contents Real Estate Investment Details... 3 Property Description... 4 Property Photos... 5 Maps and Aerials... 6 Executive Summary... 7 Pro Forma Summary... 8 Resale Report... 10 Internal Rate of Return Analysis... 11 Cash Flow Analysis... 12 Cash In Cash Out... 13 Annual Property Operating Data... 15 Annual Property Operating Data per Sq. Ft.... 16 Unit Rent Roll... 18 Unit Mix Report... 18 Unit Mix Base Rent Report... 19 Detailed General Expenses... 20 Property Resale Analysis... 21 Financial Indicators... 22 Loan Analysis... 23 Investment Return Analysis... 24 Cumulative Analysis... 25 Property Equity Analysis... 26 Equity vs. Debt... 27 Cumulative Wealth Analysis... 28 Operating Income Analysis... 29 Gross Income Vs. Operating Expenses... 30
Real Estate Investment Details ANALYSIS Analysis Date December 2013 PROPERTY Property Property Address Year Built 1970 Baric Lawndale PURCHASE INFORMATION Property Type MultiFamily Purchase Price $8,050,000 Fair Market Value $8,050,000 Units 115 Total Rentable Sq. Ft. 0 Resale Valuation 1.0% (annual appreciation) FINANCIAL INFORMATION Down Payment $2,012,500 LOANS Debt Term Amortization Rate Payment LO Costs Fixed $6,037,500 30 years 30 years 5.0% $32,411 INCOME & EXPENSES Gross Operating Income $904,176 Monthly GOI $75,348 Total Annual Expenses ($303,520) Monthly Expenses ($25,293) CONTACT INFORMATION micproperties@gmail.com The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 3 of 30
Property Description The subject property is 115 units, 8 building affordable housing complex located at 1840 South Karlov in Chicago's North Lawndale community. The properties were extensively renovated in the last 5 years. With all units having separate mechanicals. Hands on Management on site with over 95% occupancy and collection. There is laundry onsite at each building. The machines are owned. page 4 of 30
Property Photos page 5 of 30
Maps and Aerials page 6 of 30
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $8,050,000 Investment - Cash $2,012,500 First Loan $6,037,500 INVESTMENT INFORMATION Purchase Price $8,050,000 Price per Unit $70,000 Price per Sq. Ft. NA Income per Unit $8,546 Expenses per Unit ($2,639) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $982,800 Total Vacancy and Credits ($78,624) Operating Expenses ($303,520) Net Operating Income $600,656 Debt Service ($388,927) Cash Flow Before Taxes $211,729 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 10.52% Debt Coverage Ratio 1.54 Capitalization Rate 7.46% Gross Rent Multiplier 8.19 Gross Income / Square Feet $0.00 Gross Expenses / Square Feet $0.00 Operating Expense Ratio 33.57% page 7 of 30
Pro Forma Summary INCOME Actual Per Unit Market Per Unit Gross Potential Rent $982,800 $8,546 $982,800 $8,546 Less: Vacancy ($78,624) ($684) ($98,280) ($855) Effective Gross Income $904,176 $7,862 $884,520 $7,691 OPERATING EXPENSES Actual Per Unit Market Per Unit Building Insurance $40,819 $355 $40,819 $355 Janitorial* $23,000 $200 $23,000 $200 Management Fees* $45,000 $391 $45,000 $391 Repairs* $46,000 $400 $50,000 $435 Reserves $17,250 $150 $17,250 $150 Taxes - Real Estate $42,111 $366 $42,111 $366 Trash Removal $18,642 $162 $18,642 $162 Utility - Electricity $32,976 $287 $32,976 $287 Utility - Gas $1,497 $13 $1,497 $13 Utility - Water $36,225 $315 $36,225 $315 Total Expenses ($303,520) ($2,639) ($307,520) ($2,674) Net Operating Income $600,656 $5,223 $577,000 $5,017 page 8 of 30
Pro Forma Summary UNIT MIX & ANNUAL SCHEDULED INCOME Type Units Actual Total Market Total 3 Bedrooms 86 $9,000 $774,000 $9,000 $774,000 2 Bedrooms 29 $7,200 $208,800 $7,200 $208,800 TOTALS 115 $982,800 $982,800 INVESTMENT SUMMARY Price: $8,050,000 Year Built: 1970 Units: 115 Price/Unit: $70,000 RSF: 1 Price/RSF: $8,050,000.0 ANNUALIZED INCOME Actual Market Gross Potential Rent $982,800 $982,800 Less: Vacancy ($78,624) ($98,280) Effective Gross Income $904,176 $884,520 Less: Expenses ($303,520) ($307,520) Net Operating Income $600,656 $577,000 Debt Service ($388,927) ($388,927) Net Cash Flow after Debt Service $211,729 $188,073 Principal Reduction $89,075 $89,075 Total Return $300,804 $277,148 Lot Size: 195,000 sf Floors: 3 Parking Spaces: 100% Cap Rate: 7.46% Market Cap Rate: 7.17% GRM: 8.2 Market GRM: 8.2 FINANCING SUMMARY Loan Amount: $6,037,500 Down Payment: $2,012,500 Loan Type: Fixed Interest Rate: 5% Term: 30 years Monthly Payment: $32,411 DCR: 1.54 ANNUALIZED EXPENSES Actual Market Building Insurance $40,819 $40,819 Janitorial* $23,000 $23,000 Management Fees* $45,000 $45,000 Repairs* $46,000 $50,000 Reserves $17,250 $17,250 Taxes - Real Estate $42,111 $42,111 Trash Removal $18,642 $18,642 Utility - Electricity $32,976 $32,976 Utility - Gas $1,497 $1,497 Utility - Water $36,225 $36,225 Total Expenses $303,520 $307,520 Expenses Per RSF $303,520.00 $307,520.00 Expenses Per Unit $2,639 $2,674 page 9 of 30
Resale Report NET PROCEEDS FROM SALE Adjusted Basis Basis At Acquisition $8,050,000 -Depreciation $2,902,508 Adjusted Basis at Sale $5,147,492 Capital Gain Sale Price $8,892,208 -Sale Expenses $0 -Adjusted Basis at Sale $5,147,492 Gain or (Loss) $3,744,716 -Depreciation (limited to gain) $2,902,508 Capital Gain from Appreciation $842,208 Sales Proceeds After Tax Sale Price $8,892,208 -Sale Expenses $0 -Mortgage Balance $4,911,027 Sale Proceeds Before Tax $3,981,181 -Tax On Depreciation $725,627 -Tax On Capital Gain Sale Proceeds After Tax $3,255,554 page 10 of 30
Internal Rate of Return Analysis BEFORE TAX IRR Time Future Cash Flows Initial Investment ($2,012,500) End of Year 1 $211,729 End of Year 2 $229,812 End of Year 3 $248,257 End of Year 4 $267,072 End of Year 5 $286,262 End of Year 6 $305,836 End of Year 7 $325,802 End of Year 8 $346,167 End of Year 9 $366,939 End of Year 10* $4,369,308 IRR = 17.75% * ($388,127 + $3,981,181) AFTER TAX IRR Time Future Cash Flows Initial Investment ($2,012,500) End of Year 1 $211,729 End of Year 2 $229,812 End of Year 3 $248,257 End of Year 4 $267,072 End of Year 5 $286,262 End of Year 6 $305,836 End of Year 7 $325,802 End of Year 8 $346,167 End of Year 9 $366,939 End of Year 10* $3,643,681 IRR = 16.45% * ($388,127 + $3,255,554) page 11 of 30
Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 Turnover Vacancy ($78,624) ($80,196) ($81,800) ($83,436) ($85,105) ($86,807) ($88,543) ($90,314) ($92,121) ($93,963) Total Operating Expenses ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) NET OPERATING INCOME $600,656 $618,740 $637,185 $655,999 $675,189 $694,763 $714,729 $735,094 $755,866 $777,054 Loan Payment ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) ($388,927) NET CASH FLOW (b/t) $211,729 $229,812 $248,257 $267,072 $286,262 $305,836 $325,802 $346,167 $366,939 $388,127 Cash On Cash Return b/t 10.52% 11.42% 12.34% 13.27% 14.22% 15.20% 16.19% 17.20% 18.23% 19.29% Footnotes: b/t = before taxes;a/t = after taxes page 12 of 30
Cash In Cash Out Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 GROSS SCHEDULED INCOME $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 Turnover Vacancy ($78,624) ($80,196) ($81,800) ($83,436) ($85,105) ($86,807) ($88,543) ($90,314) ($92,121) ($93,963) GROSS OPERATING INCOME $904,176 $922,260 $940,705 $959,519 $978,709 $998,283 $1,018,249 $1,038,614 $1,059,386 $1,080,574 Expenses Building Insurance ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) Janitorial* ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) Management Fees* ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) Repairs* ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) Reserves ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) Taxes - Real Estate ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) Trash Removal ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) Utility - Electricity ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) Utility - Gas ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) Utility - Water ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) TOTAL OPERATING EXPENSES ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) NET OPERATING INCOME $600,656 $618,740 $637,185 $655,999 $675,189 $694,763 $714,729 $735,094 $755,866 $777,054 Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 13 of 30
Cash In Cash Out Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Debt Service Loan Interest ($299,852) ($295,295) ($290,504) ($285,469) ($280,176) ($274,612) ($268,763) ($262,615) ($256,153) ($249,360) Principal Payments ($89,075) ($93,632) ($98,423) ($103,458) ($108,751) ($114,315) ($120,164) ($126,312) ($132,774) ($139,567) NET CASH FLOW (b/t) $211,729 $229,812 $248,257 $267,072 $286,262 $305,836 $325,802 $346,167 $366,939 $388,127 Cash Flow IRR N/A N/A N/A N/A N/A 1.90% 6.41% 9.67% 12.07% 13.89% Projected Property Value $8,130,500 $8,211,805 $8,293,923 $8,376,862 $8,460,631 $8,545,237 $8,630,690 $8,716,996 $8,804,166 $8,892,208 Resale Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Proceeds b/f Debt Payoff $8,130,500 $8,211,805 $8,293,923 $8,376,862 $8,460,631 $8,545,237 $8,630,690 $8,716,996 $8,804,166 $8,892,208 Loan Principal Balance ($5,948,425) ($5,854,792) ($5,756,370) ($5,652,911) ($5,544,160) ($5,429,844) ($5,309,680) ($5,183,368) ($5,050,594) ($4,911,027) Net Proceeds From Sale $2,182,075 $2,357,013 $2,537,554 $2,723,951 $2,916,471 $3,115,393 $3,321,009 $3,533,628 $3,753,572 $3,981,181 Net Resale IRR 18.95% 18.76% 18.59% 18.43% 18.29% 18.16% 18.04% 17.94% 17.84% 17.75% Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 14 of 30
Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 GROSS SCHEDULED INCOME $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 Turnover Vacancy ($78,624) ($80,196) ($81,800) ($83,436) ($85,105) ($86,807) ($88,543) ($90,314) ($92,121) ($93,963) GROSS OPERATING INCOME $904,176 $922,260 $940,705 $959,519 $978,709 $998,283 $1,018,249 $1,038,614 $1,059,386 $1,080,574 Expenses Building Insurance ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) Janitorial* ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) Management Fees* ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) Repairs* ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) Reserves ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) Taxes - Real Estate ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) Trash Removal ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) Utility - Electricity ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) Utility - Gas ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) Utility - Water ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) TOTAL OPERATING EXPENSES ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) NET OPERATING INCOME $600,656 $618,740 $637,185 $655,999 $675,189 $694,763 $714,729 $735,094 $755,866 $777,054 page 15 of 30
Annual Property Operating Data per Sq. Ft. Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $982,800.00 $1,002,456.0 $1,022,505.1 $1,042,955.2 $1,063,814.3 $1,085,090.6 $1,106,792.4 $1,128,928.2 $1,151,506.8 $1,174,536.9 Miscellaneous Income $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 GROSS SCHEDULED INCOME $982,800.00 $1,002,456.0 $1,022,505.1 $1,042,955.2 $1,063,814.3 $1,085,090.6 $1,106,792.4 $1,128,928.2 $1,151,506.8 $1,174,536.9 Turnover Vacancy ($78,624.00) ($80,196.48) ($81,800.41) ($83,436.42) ($85,105.15) ($86,807.25) ($88,543.39) ($90,314.26) ($92,120.55) ($93,962.96) GROSS OPERATING INCOME $904,176.00 $922,259.52 $940,704.71 $959,518.80 $978,709.18 $998,283.36 $1,018,249.0 $1,038,614.0 $1,059,386.2 $1,080,574.0 Expenses Building Insurance ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) ($40,819.00) Janitorial* ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) ($23,000.00) Management Fees* ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) ($45,000.00) Repairs* ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) ($46,000.00) Reserves ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) ($17,250.00) Taxes - Real Estate ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) ($42,111.00) Trash Removal ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) ($18,642.00) Utility - Electricity ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) ($32,976.00) Utility - Gas ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) ($1,497.00) Utility - Water ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) ($36,225.00) TOTAL OPERATING EXPENSES ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 ($303,520.00 page 16 of 30
Annual Property Operating Data per Sq. Ft. Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NET OPERATING INCOME $600,656.00 $618,739.52 $637,184.71 $655,998.80 $675,189.18 $694,763.36 $714,729.03 $735,094.01 $755,866.29 $777,054.02 page 17 of 30
Unit Mix Report UNIT MIXES Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly 86 3 Bedrooms 0 $750 $64,500 $750 $64,500 29 2 Bedrooms 0 $600 $17,400 $600 $17,400 115 0 $81,900 $81,900 UNIT MIX UNIT MIX SQUARE FEET 3 Bedrooms 2 Bedrooms 3 Bedrooms 2 Bedrooms UNIT MIX INCOME UNIT MIX MARKET INCOME 3 Bedrooms 2 Bedrooms 3 Bedrooms 2 Bedrooms page 18 of 30
Unit Mix Base Rent Report Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 1-86 3 Bedrooms 86 Units $750.00 per unit $774,000 $789,480 $805,270 $821,375 $837,802 $854,559 $871,650 $889,083 $906,864 $925,002 87-115 2 Bedrooms 29 Units $600.00 per unit $208,800 $212,976 $217,236 $221,580 $226,012 $230,532 $235,143 $239,846 $244,642 $249,535 Total Income $982,800 $1,002,456 $1,022,505 $1,042,955 $1,063,814 $1,085,091 $1,106,792 $1,128,928 $1,151,507 $1,174,537 page 19 of 30
Detailed General Expenses Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Expenses ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) ($303,520) Building Insurance ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) ($40,819) Janitorial* ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) ($23,000) Management Fees* ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) ($45,000) Repairs* ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) ($46,000) Reserves ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) ($17,250) Taxes - Real Estate ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) ($42,111) Trash Removal ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) ($18,642) Utility - Electricity ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) ($32,976) Utility - Gas ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) ($1,497) Utility - Water ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) ($36,225) page 20 of 30
Property Resale Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Property Value $8,130,500 $8,211,805 $8,293,923 $8,376,862 $8,460,631 $8,545,237 $8,630,690 $8,716,996 $8,804,166 $8,892,208 Resale Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Proceeds b/f Debt Payoff $8,130,500 $8,211,805 $8,293,923 $8,376,862 $8,460,631 $8,545,237 $8,630,690 $8,716,996 $8,804,166 $8,892,208 Basis at Acquisition $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 $8,050,000 Depreciation ($280,462) ($573,160) ($865,858) ($1,158,556) ($1,451,254) ($1,743,952) ($2,036,650) ($2,329,348) ($2,622,046) ($2,902,508) Adjusted Tax Basis $7,769,538 $7,476,840 $7,184,142 $6,891,444 $6,598,746 $6,306,048 $6,013,350 $5,720,652 $5,427,954 $5,147,492 Resale Tax Gain (Loss) $360,962 $734,965 $1,109,781 $1,485,418 $1,861,885 $2,239,189 $2,617,340 $2,996,344 $3,376,212 $3,744,716 Resale Tax Benefit (Cost) ($70,116) ($143,290) ($216,465) ($289,639) ($362,814) ($435,988) ($509,163) ($582,337) ($655,512) ($725,627) Loan Principal Balance ($5,948,425) ($5,854,792) ($5,756,370) ($5,652,911) ($5,544,160) ($5,429,844) ($5,309,680) ($5,183,368) ($5,050,594) ($4,911,027) Net Resale Proceeds $2,111,960 $2,213,723 $2,321,089 $2,434,312 $2,553,658 $2,679,405 $2,811,847 $2,951,291 $3,098,061 $3,255,554 Footnotes: b/f = before page 21 of 30
Financial Indicators Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier 8.27 8.19 8.11 8.03 7.95 7.88 7.80 7.72 7.65 7.57 Capitalization Rate 7.46% 7.69% 7.92% 8.15% 8.39% 8.63% 8.88% 9.13% 9.39% 9.65% Cash On Cash Return b/t 10.52% 11.42% 12.34% 13.27% 14.22% 15.20% 16.19% 17.20% 18.23% 19.29% Cash On Cash Return a/t 10.52% 11.42% 12.34% 13.27% 14.22% 15.20% 16.19% 17.20% 18.23% 19.29% Debt Coverage Ratio 1.54 1.59 1.64 1.69 1.74 1.79 1.84 1.89 1.94 2.00 Gross Income per Sq. Ft. $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Expenses per Sq. Ft. $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Net Income Multiplier 13.54 13.27 13.02 12.77 12.53 12.30 12.08 11.86 11.65 11.44 Operating Expense Ratio 33.57% 32.91% 32.27% 31.63% 31.01% 30.40% 29.81% 29.22% 28.65% 28.09% Loan To Value Ratio 73.16% 71.30% 69.40% 67.48% 65.53% 63.54% 61.52% 59.46% 57.37% 55.23% Footnotes: b/t = before taxes; a/t = after taxes page 22 of 30
Loan Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 LOAN 1 Debt Service Analysis Principal Payments $89,075 $93,632 $98,423 $103,458 $108,751 $114,315 $120,164 $126,312 $132,774 $139,567 Interest Payments $299,852 $295,295 $290,504 $285,469 $280,176 $274,612 $268,763 $262,615 $256,153 $249,360 Total Debt Service $388,927 $388,927 $388,927 $388,927 $388,927 $388,927 $388,927 $388,927 $388,927 $388,927 Principal Balance Analysis Beginning Principal Balance $6,037,500 $5,948,425 $5,854,792 $5,756,370 $5,652,911 $5,544,160 $5,429,844 $5,309,680 $5,183,368 $5,050,594 Principal Reductions $89,075 $93,632 $98,423 $103,458 $108,751 $114,315 $120,164 $126,312 $132,774 $139,567 Ending Principal Balance $5,948,425 $5,854,792 $5,756,370 $5,652,911 $5,544,160 $5,429,844 $5,309,680 $5,183,368 $5,050,594 $4,911,027 page 23 of 30
Investment Return Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cash Flow - To Date $211,729 $441,541 $689,798 $956,870 $1,243,132 $1,548,968 $1,874,770 $2,220,936 $2,587,876 $2,976,002 Net Resale Proceeds $2,111,960 $2,213,723 $2,321,089 $2,434,312 $2,553,658 $2,679,405 $2,811,847 $2,951,291 $3,098,061 $3,255,554 Invested Capital ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) Net Return on Investment $311,188 $642,764 $998,387 $1,378,682 $1,784,290 $2,215,873 $2,674,117 $3,159,728 $3,673,436 $4,219,056 Internal Rate of Return 15.46% 15.58% 15.72% 15.86% 15.99% 16.11% 16.21% 16.30% 16.38% 16.45% Modified IRR 15.46% 14.86% 14.37% 13.93% 13.54% 13.17% 12.84% 12.52% 12.23% 11.97% NPV (cash flow + reversion) $311,188 $642,764 $998,387 $1,378,682 $1,784,290 $2,215,873 $2,674,117 $3,159,728 $3,673,436 $4,219,056 PV (NOI + reversion) $8,731,156 $9,431,201 $10,150,503 $10,889,441 $11,648,399 $12,427,769 $13,227,950 $14,049,351 $14,892,387 $15,757,483 Footnotes: a/t = after taxes; Modified IRR = Modified Internal Rate of Return; PV = Present Value; NPV = Net Present Value; NOI = Net Operating Income Reversion = Amount received from the resale; Net Return on Investment = Cash Flow (a/t To Date) + Net Proceeds from Resale - Invested Capital. page 24 of 30
Cumulative Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Equity (appreciation) $80,500 $161,805 $243,923 $326,862 $410,631 $495,237 $580,690 $666,996 $754,166 $842,208 Equity (loan reduction) $89,075 $182,708 $281,130 $384,589 $493,340 $607,656 $727,820 $854,132 $986,906 $1,126,473 CASH FLOW (a/t) $211,729 $441,541 $689,798 $956,870 $1,243,132 $1,548,968 $1,874,770 $2,220,936 $2,587,876 $2,976,002 Totals - To Date $381,304 $786,054 $1,214,852 $1,668,321 $2,147,103 $2,651,861 $3,183,279 $3,742,065 $4,328,948 $4,944,683 Invested Capital ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ($2,012,500) ROIC - To Date 18.95% 39.06% 60.37% 82.90% 106.69% 131.77% 158.18% 185.94% 215.10% 245.70% Footnotes: a/t = after taxes; ROIC = Return On Invested Capital page 25 of 30
Property Equity Analysis $4,000,000 $3,600,000 $3,200,000 $2,800,000 $2,400,000 $2,000,000 $1,600,000 $1,200,000 $800,000 $400,000 Year 1 2 3 4 5 6 7 8 9 10 Legend Initial Equity Equity (loan reduction) Equity (appreciation) page 26 of 30
Equity vs. Debt $6,000,000 $5,400,000 $4,800,000 $4,200,000 $3,600,000 $3,000,000 $2,400,000 $1,800,000 $1,200,000 $600,000 Year 1 2 3 4 5 6 7 8 9 10 Legend Equity Loan Principal Balance page 27 of 30
Cumulative Wealth Analysis $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Year 1 2 3 4 5 6 7 8 9 10 Legend Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t) page 28 of 30
Operating Income Analysis $1,100,000 $990,000 $880,000 $770,000 $660,000 $550,000 $440,000 $330,000 $220,000 $110,000 Year 1 2 3 4 5 6 7 8 9 10 Legend GROSS OPERATING INCOME NET OPERATING INCOME NET CASH FLOW (b/t) page 29 of 30
Gross Income Vs. Operating Expenses $1,200,000 $1,080,000 $960,000 $840,000 $720,000 $600,000 $480,000 $360,000 $240,000 $120,000 Year 1 2 3 4 5 6 7 8 9 10 Legend GROSS SCHEDULED INCOME Total Operating Expenses page 30 of 30