Analysis to arrive at NOI Model Limitations:
5 year structure Lease revenue buildup uses manual analysis Vacancy assumptions (three levels) require manual analysis Input Data:
Current Market Rent Gross square feet of building Net rentable square feet of building Projected Increase in Market Rent Management costs Estimated increase in CPI Vacancy rate Year 1 - 3 Vacancy rate Year 4 Vacancy rate Year 5 on
$17.00 101,350
per s.f. s.f.
96,500
s.f.
2.50% 5.00% 2.50% 0.00% 5.00% 8.00%
per year of EGI per year per year
SUMMARY LEASE INFORMATION
Tenant
Sq. ft.
Tenant 1 Tenant 2 Tenant 3 new Tenant 4 Tenant 5 new Tenant 6 new
20,000 15,000 15,000 9,000 16,000 21,500
Total
96,500
Base Rent per s.f. $15.00 $15.50 $17.00 $14.50 $17.00 $16.75
Base Rent
Remaining term (yrs)
$300,000 232,500 255,000 130,500 272,000 360,125
Expense stop per s.f.
3 4 5 4 5 5
CPI adjustment %
$4.00 4.25 4.50 4.25 4.50 4.50
40.00% 50.00% 50.00% 50.00% 50.00% 0.00%
1,550,125
Note 1: Bolded rents are new
N o t e 2 : E x p e n s e s t o p e x c l u d e s m a n a g em em e n t expenses
Summary Expense Information - Assumptions
Dollars Property tax Insurance Utilities Janitorial Maintenance Subtotal (before mgt fee) Management (estimated using base rent) (EGI not yet known) Total
Year
per s.f.
$196,000 14,000 120,000 79,000 25,000
2.03 0.15 1.24 0.82 0.26
434,000
4.50
$77,506
0.80
$511,506
$5.30
increase increase increase increase increase
3.00% 2.50% 3.50% 3.00% 2.50%
per year per year per year per year per year
(before management expenses) 5.00%
of EGI
Summary of Reimbursable Expenses - By year 1 2 3
4
5
6
Property tax Insurance Utilities Janitorial Maintenance Total before management
196,000 14,000 120,000 79,000 25,000 434,000
201,880 14,350 124,200 81,370 25,625 447,425
207,936 14,709 128,547 83,811 26,266 461,269
214,174 15,076 133,046 86,325 26,922 475,545
220,600 15,453 137,703 88,915 27,595 490,266
227,218 15,840 142,522 91,583 28,285 505,448
4.50
4.64
4.78
4.93
5.08
5.24
Per s.f. (rounded)
PROJECTED REVENUE 1 2 3
Year Base Rents
4
5
6
Tenant 1
300,000
300,000
300,000
366,143
366,143
366,143
Tenant 2
232,500
232,500
232,500
232,500
281,472
281,472
Tenant 3
255,000
255,000
255,000
255,000
255,000
288,509
Tenant 4
130,500
130,500
130,500
130,500
168,883
168,883
Tenant 5
272,000
272,000
272,000
272,000
272,000
307,743
Tenant 6
360,125
360,125
360,125
360,125
360,125
413,530
1,550,125
1,550,125
1,616,268
1,703,623
1,826,280
3,661
7,359
Total base
1,550,125
CPI Tenant 1
3,000
6,030
9,090
0
Tenant 2
2,906
5,849
8,828
11,845
Tenant 3
0
Tenant 4
1,631
Tenant 5 Tenant 6
0 0
Total CPI
3,187
6,415
9,683
3,283
4,955
6,648
3,400
6,843 0
10,328
38,504
0
0
3,518
12,991
0 0
13,857 0
7,538
21,749
36,131
Tenant 1
10,000
12,800
15,600
Tenant 2
3,750
5,850
7,950
10,200
2,100
4,200
6,450
3,510
4,770 4,480 6,020
6,120
2,111 0 0
0
30,510
12,989
3,000
6,200
Expense Recoveries
Tenant 3 Tenant 4 Tenant 5 Tenant 6 Total Reimbursements
Total Revenues
0 2,250 0 0
2,240 3,010
16,000
29,510
1,573,663
1,601,384
43,020
1,629,276
0
0
2,400
8,700 6,880 9,245
0
0 9,280 12,470
1,440 0 0
38,895
33,450
10,040
1,693,667
1,767,583
1,849,309
Year
PROJECTED NET OPERATING INCOME 1 2 3
Base income Plus CPI Adjustment
1,550,125 7,538
1,550,125 21,749
Plus Reimbursements
16,000
29,510
Total Potential Income Less Vacancy Effective Gross Income Less operating expenses: Reimbursable expenses Management Fee NOI
1,573,663
1,601,384
Average compound increase in NOI
1,550,125 36,131 43,020
0 1,573,663
0 1,601,384
1,629,276 0 1,629,276
434,000 78,683 $1,060,979
447,425 80,069 $1,073,890
461,269 81,464 $1,086,543
0.92%
4
5
6
1,616,268 38,504
1,703,623 30,510
1,826,280 12,989
38,895
33,450
10,040
1,693,667 84,683 1,608,983
1,767,583 141,407 1,626,176
1,849,309 147,945 1,701,364
475,545 80,449 $1,052,989
490,266 81,309 $1,054,601
505,448 85,068 $1,110,849
(from year 1 to 6)
Deal Analysis Partnership Cash Flows and Distributions Property Assumptions 11,500,000
Purchase Price Estimated closing costs (% of PP) Annual "capex" reserve req't
1.0% 1.0%
Going-out "cap rate" Selling expenses %
(capitalized - non financing)
8.50% 4.0% 3rd Party Financing (Loan A shown here)
Loan To Value Maximum DCR Closing Points & Fees Interest rate Amortization Term Term Loan Calculations Established Year 1 NOI Implied Debt Service max Implied Loan max (DCR) Implied Loan max (LTV) Max Actual Loan (lesser of two)
85.0% 1.35 2.5% 7.5% 30 10
$1,060,979 785,911 9,366,590 9,775,000 9,366,590
Estimated debt payment
years years
[See NOI schedule] [NOI/DCR] [PV supported by above]
785,911 Equity Funding
Requirements: Initial Reserve Requirement Total Amount required to close Less Loan Proceeds (net of pts.) Total Equity Required Source: Limited Partners Funding % General Partner Funding % Admin Fee Admin Fee Max
On-going cash reserve "Pref" on equity Residual flow to Limiteds Residual flow to General
25,000 11,615,000 9,132,425 2,507,575 Equity Contrib. 2,382,196 125,379 1.0% 30,000 CF Distribution Rules 50,000 8.0% 70.0% 30.0%
95.0% 5.0% of Ltd Ptr equity
(non-accruing)
Loan Analysis Year Mortgage Balance (EOY) Payments Principal Interest
0
1
2
3
4
5
6
9,366,590
9280245.23 785,911 86,344 699,566
9187197.64 785,911 93,048 692,863
9086926.52 785,911 100,271 685,640
8978871.10 785,911 108,055 677,855
8862427.05 785,911 116,444 669,467
8736943.14 785,911 125,484 660,427
4 1,052,989
5 1,054,601
Cash Flow Analysis (Partnership Level) Year 0 NOI
1 1,060,979
2 1,073,890
3 1,086,543
Capex expenditures/reserve
10,610
10,739
10,865
10,530
10,546
Debt Service
785,911
785,911
785,911
785,911
785,911
Partnership Admin Fee Before-tax Cash Flow
23,822 240,637
23,822 253,418
23,822 265,945
23,822 232,727
23,822 234,323
50,000 25,000
50,000 0
50,000 0
50,000 0
50,000 0
215,637
253,418
265,945
232,727
234,323
(1.350)
(1.366)
(1.383)
(1.340)
(1.342)
Cash reserve requirement Increase in reserve
25,000
Cash available for distribution (Ops) DCR (info only)
Property Sale Property Sale Gross Proceeds
13,068,807
Selling expenses:
(522,752)
Debt retirement: Release of cash held in reserve Cash available (on Sale)
(8,862,427)
Total "ptshp level" CF Total "Ptshp level" IRR
50,000 3,733,628
(2,507,575) 16.58%
215,637
253,418
265,945
232,727
3,967,950
6 1,110,849
Distributions to Partners Operations Cash Flow Waterfall
Cash Available
215,637
253,418
265,945
232,727
234,323
Pref to Ltds
190,576
190,576
190,576
190,576
190,576
Remaining
25,061
62,843
75,370
42,151
43,747
Pref to RCP
10,030
10,030
10,030
10,030
10,030
Remaining
15,031
52,812
65,339
32,121
33,717
Residual to Ltds
10,522
36,969
45,737
22,485
23,602
Residual to RCP
4,509
15,844
19,602
9,636
10,115
Remaining
0
0
0
0
0
Sale Proceeds Cash Flow Waterfall
Cash Available
3,733,628
Ltds payback
2,382,196
Remaining
1,351,432
RCP payback
125,379
Remaining
1,226,053
Special distribution to Ltds Special distribution to RCP
430,700
Remaining
795,353
Residual to Ltds
556,747
Residual to RCP
238,606
Remaining
0
Calculation of special distribution C/F pre final dist.
(2,382,196)
201,097
227,544
236,313
213,060
214,177
Ltds payback
2,382,196
Special pref.
430,700
Total Initial IRR to Ltd
(2,382,196) 12.000%
201,097
227,544
236,313
213,060
3,027,074
SUMMARY RECAP BY PARTNER
0 Ltds Ltds - ops
(2,382,196)
1 201,097
2 227,544
3 236,313
4 213,060
- from sale Total IRR
RCP - ops
IRR
214,177 3,369,643
(2,382,196) 15.26%
201,097
227,544
236,313
213,060
3,583,821
(125,379)
14,540
25,874
29,632
19,667
20,145
- from sale Total
5
363,985 (125,379) 35.84%
14,540
25,874
29,632
19,667
384,130
Deal Analysis Partnership Cash Flows and Distributions Property Assumptions 11,500,000
Purchase Price Estimated closing costs (% of PP) Annual "capex" reserve req't
1.0% 1.0%
Going-out "cap rate" Selling expenses %
(capitalized - non financing)
8.50% 4.0% 3rd Party Financing (Loan B shown here)
Loan To Value Maximum DCR Closing Points & Fees Interest rate Amortization Term Term Loan Calculations Established Year 1 NOI Implied Debt Service max Implied Loan max (DCR) Implied Loan max (LTV) Max Actual Loan (lesser of two)
75.0% 1.40 1.5% 6.0% 30 10
$1,060,979 757,842 10,533,480 8,625,000 8,625,000
Estimated debt payment
years years
[See NOI schedule] [NOI/DCR] [PV supported by above]
620,535 Equity Funding
Requirements: Initial Reserve Requirement Total Amount required to close Less Loan Proceeds (net of pts.) Total Equity Required Source: Limited Partners Funding % General Partner Funding % Admin Fee Admin Fee Max
On-going cash reserve "Pref" on equity Residual flow to Limiteds Residual flow to General
25,000 11,615,000 8,495,625 3,144,375 Equity Contrib. 2,987,156 157,219 1.0% 30,000 CF Distribution Rules 50,000 8.0% 70.0% 30.0%
95.0% 5.0% of Ltd Ptr equity
(non-accruing)
Loan Analysis Year Mortgage Balance (EOY) Payments Principal Interest
0 8,625,000
Cash Flow Analysis (Partnership Level) Year 0 NOI
1
2
3
4
5
6
8519083.99 620,535 105,916 514,619
8406635.31 8406635.31 620,535 112,449 508,086
8287251.05 620,535 119,384 501,151
8160503.42 620,535 126,748 493,787
8025938.28 620,535 134,565 485,970
7883073.45 620,535 142,865 477,670
1 1,060,979
2 1,073,890
3 1,086,543
4 1,052,989
5 1,054,601
6 1,110,849
Capex expenditures/reserve
10,610
10,739
10,865
10,530
10,546
Debt Service
620,535
620,535
620,535
620,535
620,535
Partnership Admin Fee Before-tax Cash Flow
29,872 399,963
29,872 412,745
29,872 425,272
29,872 392,053
29,872 393,649
25,000
50,000 25,000
50,000 0
50,000 0
50,000 0
50,000 0
Cash available for distribution (Ops)
374,963
412,745
425,272
392,053
393,649
(1.710)
(1.731)
(1.751)
(1.697)
(1.700)
Cash reserve requirement Increase in reserve
DCR (info only)
Property Sale Property Sale Gross Proceeds
13,068,807
Selling expenses:
(522,752)
Debt retirement: Release of cash held in reserve Cash available (on Sale)
(8,025,938)
Total "ptshp level" CF Total "Ptshp level" IRR
50,000 4,570,117
(3,144,375)
374,963
412,745
425,272
392,053
4,963,765
18.91%
Distributions to Partners Operations Cash Flow Waterfall
Cash Available
374,963
412,745
425,272
392,053
393,649
Pref to Ltds
238,973
238,973
238,973
238,973
238,973
Remaining
135,991
173,772
186,299
153,080
154,676
Pref to RCP
12,578
12,578
12,578
12,578
12,578
Remaining
123,413
161,195
173,722
140,503
142,099
Residual to Ltds
86,389
112,836
121,605
98,352
99,469
Residual to RCP
37,024
48,358
52,116
42,151
42,630
0
Remaining
0
0
0
0
Sale Proceeds Cash Flow Waterfall
Cash Available
4,570,117
Ltds payback
2,987,156
Remaining
1,582,960
RCP payback
157,219
Remaining
1,425,742
Special distribution to Ltds Special distribution to RCP
102,451
Remaining
1,323,291
Residual to Ltds
926,304
Residual to RCP
396,987 0
Remaining
Calculation of special distribution C/F pre final dist.
(2,987,156)
325,362
351,809
360,578
337,325
338,442
Ltds payback
2,987,156
Special pref.
102,451
Total Initial IRR to Ltd
(2,987,156) 12.000%
325,362
351,809
360,578
337,325
3,428,049
SUMMARY RECAP BY PARTNER
0 Ltds Ltds - ops
(2,987,156)
1 325,362
2 351,809
3 360,578
4 337,325
5 338,442
- from sale Total IRR RCP - ops
4,015,911 (2,987,156) 16.42%
325,362
351,809
360,578
337,325
4,354,352
(157,219)
49,601
60,936
64,694
54,728
55,207
- from sale Total IRR
554,206 (157,219) 53.56%
49,601
60,936
64,694
54,728
609,413
