FILL IN BLUE VARIABLES

Asking price R 7,500,000.00

Rental R 35.00
Lettable Area 6,000.00
Operating Expenses /Month R 70,000.00
Loan R 7.50
Term 180.00
Interest rate 11.50%
PMT R -0.09
Tax Rate 40.00%
Depreciation 5.00%
Selling expenses 5.00%
Compounding 12.00
Interest rate per period 0.96%
LTV 0%
Rental escalation 8%
Opex escalation 10%
Capital appreciation 10%
Holding period (years) 5.00
Amort start 1.00
Amort end 60.00
Deposit R 7,499,992.50
Vacancy and bad debts 5%

Cash Flow Year 1

Potential Gross Income R 2,520,000.00

Vacancy & Bad Debts R 126,000.00
Effective Gross Income R 2,394,000.00
Minus Operating Expenses R 840,000.00
Net Operating Income R 1,554,000.00
Less Debt Service -R 1.05
Before Tax Cash Flow (BTCF) R 1,553,998.95
Taxes (Savings) From Operations R 471,599.66
Cash Flow After Tax R 1,082,399.29
Plus After Tax Equity Reversion

Expected Taxes From Operations

Net Operating Income R 1,554,000.00

Less Interest on Debt -R 0.85
Depreciation Deduction R 375,000.00
Ordinary Taxable Income R 1,178,999.15
Times Investors Marginal Tax rate
Taxes (Savings) from Operations R 471,599.66

Expected Cash Flow From Sale Of Building

Expected Selling Price

Minus Selling Expenses
Net Selling Proceeds
Unpaid Mortgage Balance
Before Tax Equity Reversion
Tax Due On Sale
After Tax Equity Reversion

Expected Taxes Due On Sale

Net Selling Proceeds

Less Adjusted Basis [Cost - Acc Dep]
Gain On Sale
Times By Tax Rate

Initial Capital
Discount rate

0
-R 7,499,992.50

NPV R 2,023,590.15
IRR 18.93%

Market Value
MV = NOI / OCR R 1,554,000.00

OCR = NOI / MV R 1,554,000.00

R 7,500,000.00
20.72

MV = NOI/OCR R 1,554,000.00
What if the OCR is: 15%
 R 10,360,000.00

Ratios
LTV Loan/Value
R 7.50
R 7,500,000.00

GRM Value/EGI
R 7,500,000.00
R 2,394,000.00

DCR NOI/DS
R 1,554,000.00
R 1.05

ICR NOI/Interest
R 1,554,000.00
R 0.85

Cap rate (OCR) NOI/Value

R 1,554,000.00
R 7,500,000.00

NIM Value/NOI
R 7,500,000.00
R 1,554,000.00

Return on equity ATCF/Equity

R 1,082,399.29
R 7,499,992.50

Operating expense ratio TOE/EGI

R 840,000.00
R 2,394,000.00

Breakeven cash flow ratio OE + DS/EGI

R 840,001.05
R 2,394,000.00
Year 2 Year 3 Year 4 Year 5

R 2,721,600.00 R 2,939,328.00 R 3,174,474.24 R 3,428,432.18

R 136,080.00 R 146,966.40 R 158,723.71 R 171,421.61
R 2,585,520.00 R 2,792,361.60 R 3,015,750.53 R 3,257,010.57
R 924,000.00 R 1,016,400.00 R 1,118,040.00 R 1,229,844.00
R 1,661,520.00 R 1,775,961.60 R 1,897,710.53 R 2,027,166.57
-R 1.05 -R 1.05 -R 1.05 -R 1.05
R 1,661,518.95 R 1,775,960.55 R 1,897,709.48 R 2,027,165.52
R 514,607.67 R 560,384.32 R 609,083.90 R 660,866.33
R 1,146,911.28 R 1,215,576.23 R 1,288,625.57 R 1,366,299.19
R 9,134,924.02
R 10,501,223.20

R 1,661,520.00 R 1,775,961.60 R 1,897,710.53 R 2,027,166.57

-R 0.83 -R 0.80 -R 0.77 -R 0.74
R 375,000.00 R 375,000.00 R 375,000.00 R 375,000.00
 R 1,286,519.17 R 1,400,960.80 R 1,522,709.76 R 1,652,165.83

R 514,607.67 R 560,384.32 R 609,083.90 R 660,866.33

R 12,078,825.00
R 603,941.25
R 11,474,883.75
R 6.23
R 11,474,877.52
R 2,339,953.50
R 9,134,924.02

R 11,474,883.75
R 5,625,000.00
R 5,849,883.75
R 2,339,953.50

R 7,499,992.50
12%

1 2 3 4
R 1,082,399.29 R 1,146,911.28 R 1,215,576.23 R 1,288,625.57

Price Reasonable Asking Rate was 12% but got 12.17

Max Price Buyer Should Pay

0.00 Percent

3.13 Times

1478070.30 Times
Traditionally, a minimum of 1.25 times

1823472.90 Times
Traditionally, a minimum of 2 times

20.72 Percent

4.83 Times
Also, like a payback period

14.43 Percent

35.09 Percent

0.35 Times
Should be below 1
 5
R 10,501,223.20
FILL IN BLUE VARIABLES
Asking price R 7,500,000.00
Rental R 35.00
Lettable Area 6,000.00
Operating Expenses /Month R 70,000.00
Loan R 5,625,000.00
Term 180.00
Interest rate 11.50%
PMT R -65,710.68
Tax Rate 40.00%
Depreciation 5.00%
Selling expenses 5.00%
Compounding 12.00
Interest rate per period 0.96%
LTV 75%
Rental escalation 8%
Opex escalation 10%
Capital appreciation 10%
Holding period (years) 5.00
Amort start 1.00
Amort end 60.00
Deposit R 1,875,000.00
Vacancy and bad debts 5%

Cash Flow Year 1 Year 2 Year 3 Year 4

Potential Gross Income R 2,520,000.00 R 2,721,600.00 R 2,939,328.00 R 3,174,474.24

Vacancy & Bad Debts R 126,000.00 R 136,080.00 R 146,966.40 R 158,723.71
Effective Gross Income R 2,394,000.00 R 2,585,520.00 R 2,792,361.60 R 3,015,750.53
Minus Operating Expenses R 840,000.00 R 924,000.00 R 1,016,400.00 R 1,118,040.00
Net Operating Income R 1,554,000.00 R 1,661,520.00 R 1,775,961.60 R 1,897,710.53
Less Debt Service -R 788,528.12 -R 788,528.12 -R 788,528.12 -R 788,528.12
Before Tax Cash Flow (BTCF) R 765,471.88 R 872,991.88 R 987,433.48 R 1,109,182.41
Taxes (Savings) From Operations R 215,934.01 R 266,186.68 R 320,086.48 R 377,894.21
Cash Flow After Tax R 549,537.87 R 606,805.20 R 667,347.00 R 731,288.20
Plus After Tax Equity Reversion

Expected Taxes From Operations

Net Operating Income R 1,554,000.00 R 1,661,520.00 R 1,775,961.60 R 1,897,710.53

Less Interest on Debt -R 639,164.97 -R 621,053.30 -R 600,745.41 -R 577,975.01
Depreciation Deduction R 375,000.00 R 375,000.00 R 375,000.00 R 375,000.00
Ordinary Taxable Income R 539,835.03 R 665,466.70 R 800,216.19 R 944,735.52
Times Investors Marginal Tax rate
Taxes (Savings) Savings from Operations R 215,934.01 R 266,186.68 R 320,086.48 R 377,894.21

Expected Cash Flow From Sale Of Building

Expected Selling Price

Less: Selling Expenses
Equals: Net Selling Proceeds
Less: Unpaid Mortgage Balance
Equals: Before Tax Equity Reversion
Tax Due On Sale
Equals: After Tax Equity Reversion

Expected Taxes Due On Sale

Net Selling Proceeds

Less: Adjusted Basis [Cost - Acc Dep]
Equals: Gain On Sale
Times By Tax Rate

Initial Capital R 1,875,000.00

Discount rate 12%

0 1 2 3
-R 1,875,000.00 R 549,537.87 R 606,805.20 R 667,347.00

NPV R 3,023,781.51
IRR 44.94%

Market Value
MV = NOI / OCR R 1,554,000.00

OCR = NOI / MV R 1,554,000.00

R 7,500,000.00
20.72 Price Reasonable Asking Rate was 12% but got 12.17
MV = NOI/OCR R 1,554,000.00
What if the OCR is: 15%
R 10,360,000.00 Max Price Buyer Should Pay

Ratios
LTV Loan/Value
R 5,625,000.00
R 7,500,000.00 75.00 Percent

GRM Value/EGI
R 7,500,000.00
R 2,394,000.00 3.13 Times

DCR NOI/DS
R 1,554,000.00
R 788,528.12 1.97 Times
Traditionally, a minimum of 1.25 times

ICR NOI/Interest
R 1,554,000.00
R 639,164.97 2.43 Times
Traditionally, a minimum of 2 times

Cap rate (OCR) NOI/Value

R 1,554,000.00
R 7,500,000.00 20.72 Percent

NIM Value/NOI
 R 7,500,000.00
R 1,554,000.00 4.83 Times
Also, like a payback period
Return on equity ATCF/Equity
R 549,537.87
R 1,875,000.00 29.31 Percent

Operating expense ratio TOE/EGI

R 840,000.00
R 2,394,000.00 35.09 Percent

Breakeven cash flow ratio OE + DS/EGI

R 1,628,528.12
R 2,394,000.00 0.68 Times
Should be below 1
 Year 5

R 3,428,432.18
 R 171,421.61
R 3,257,010.57
R 1,229,844.00
R 2,027,166.57
-R 788,528.12
R 1,238,638.45
R 439,889.24
R 798,749.21
R 4,461,188.70
R 5,259,937.91

R 2,027,166.57
-R 552,443.48
R 375,000.00
R 1,099,723.09

R 439,889.24

R 12,078,825.00
R 603,941.25
R 11,474,883.75
R 4,673,741.55
R 6,801,142.20
R 2,339,953.50
 R 4,461,188.70

R 11,474,883.75
R 5,625,000.00
R 5,849,883.75
R 2,339,953.50

4 5
R 731,288.20 R 5,259,937.91
f 1.25 times
FILL IN BLUE VARIABLES
Asking price R 7,500,000.00
Rental R 35.00
Lettable Area 6,000.00
Operating Expenses /Month R 70,000.00
Loan R 7,499,992.50
Term 180.00
Interest rate 11.50%
PMT R -87,614.15
Tax Rate 40.00%
Depreciation 5.00%
Selling expenses 5.00%
Compounding 12.00
Interest rate per period 0.96%
LTV 100%
Rental escalation 8%
Opex escalation 10%
Capital appreciation 10%
Holding period (years) 5.00
Amort start 1.00
Amort end 60.00
Deposit R 7.50
Vacancy and bad debts 5%

Cash Flow Year 1

Potential Gross Income R 2,520,000.00

Vacancy & Bad Debts R 126,000.00
Effective Gross Income R 2,394,000.00
Minus Operating Expenses R 840,000.00
Net Operating Income R 1,554,000.00
Less Debt Service -R 1,051,369.78
Before Tax Cash Flow (BTCF) R 502,630.22
Taxes (Savings) From Operations R 130,712.36
Cash Flow After Tax R 371,917.87
Plus After Tax Equity Reversion

Expected Taxes From Operations

Net Operating Income R 1,554,000.00

Less Interest on Debt -R 852,219.11
Depreciation Deduction R 375,000.00
Ordinary Taxable Income R 326,780.89
Times Investors Marginal Tax rate
Taxes (Savings) Savings from Operations R 130,712.36
Expected Cash Flow From Sale Of Building

Expected Selling Price

Minus Selling Expenses
Net Selling Proceeds
Unpaid Mortgage Balance
Before Tax Equity Reversion
Tax Due On Sale
After Tax Equity Reversion

Expected Taxes Due On Sale

Net Selling Proceeds

Less Adjusted Basis [Cost - Acc Dep]
Gain On Sale
Times By Tax Rate

Initial Capital
Discount rate

0
-R 7.50

NPV R 3,357,177.74
IRR 4958919.62%

Market Value
MV = NOI / OCR R 1,554,000.00

OCR = NOI / MV R 1,554,000.00

R 7,500,000.00
20.72

MV = NOI/OCR R 1,554,000.00
What if the OCR is: 15%
R 10,360,000.00

Ratios
LTV Loan/Value
R 7,499,992.50
R 7,500,000.00
GRM Value/EGI
R 7,500,000.00
R 2,394,000.00

DCR NOI/DS
R 1,554,000.00
R 1,051,369.78

ICR NOI/Interest
R 1,554,000.00
R 852,219.11

Cap rate (OCR) NOI/Value

R 1,554,000.00
R 7,500,000.00

NIM Value/NOI
R 7,500,000.00
R 1,554,000.00

Return on equity ATCF/Equity

R 371,917.87
R 7.50

Operating expense ratio TOE/EGI

R 840,000.00
R 2,394,000.00

Breakeven cash flow ratio OE + DS/EGI

R 1,891,369.78
R 2,394,000.00
 Year 2 Year 3 Year 4

R 2,721,600.00 R 2,939,328.00 R 3,174,474.24

R 136,080.00 R 146,966.40 R 158,723.71
R 2,585,520.00 R 2,792,361.60 R 3,015,750.53
R 924,000.00 R 1,016,400.00 R 1,118,040.00
R 1,661,520.00 R 1,775,961.60 R 1,897,710.53
-R 1,051,369.78 -R 1,051,369.78 -R 1,051,369.78
R 610,150.22 R 724,591.82 R 846,340.75
R 183,379.91 R 239,987.41 R 300,831.18
R 426,770.32 R 484,604.41 R 545,509.57

R 1,661,520.00 R 1,775,961.60 R 1,897,710.53

-R 828,070.23 -R 800,993.08 -R 770,632.57
R 375,000.00 R 375,000.00 R 375,000.00
R 458,449.77 R 599,968.52 R 752,077.96

R 183,379.91 R 239,987.41 R 300,831.18

 R 7.50
12%

1 2 3
R 371,917.87 R 426,770.32 R 484,604.41

Price Reasonable Asking Rate was 12% but got 12.17

Max Price Buyer Should Pay

100.00 Percent
 3.13 Times

1.48 Times
Traditionally, a minimum of 1.25 times

1.82 Times
Traditionally, a minimum of 2 times

20.72 Percent

4.83 Times
Also, like a payback period

4958904.88 Percent

35.09 Percent

0.79 Times
Should be below 1
 Year 5

R 3,428,432.18
R 171,421.61
R 3,257,010.57
R 1,229,844.00
R 2,027,166.57
-R 1,051,369.78
R 975,796.79
R 366,230.40
R 609,566.39
R 2,903,281.08
R 3,512,847.47

R 2,027,166.57
-R 736,590.56
R 375,000.00
R 915,576.01

R 366,230.40
R 12,078,825.00
R 603,941.25
R 11,474,883.75
R 6,231,649.17
R 5,243,234.58
R 2,339,953.50
R 2,903,281.08

R 11,474,883.75
R 5,625,000.00
R 5,849,883.75
R 2,339,953.50

4 5
R 545,509.57 R 3,512,847.47
Ratios
0% Loan
LTV Loan/Value
R 7.50
R 7,500,000.00 0.00

GRM Value/EGI
R 7,500,000.00
R 2,394,000.00 3.13

DCR NOI/DS
R 1,554,000.00
R 1.05 1478070.30

ICR NOI/Interest
R 1,554,000.00
R 0.85 1823472.90

Cap rate (OCR) NOI/Value

R 1,554,000.00
R 7,500,000.00 20.72

NIM Value/NOI
R 7,500,000.00
R 1,554,000.00 4.83

Return on equity ATCF/Equity

R 1,082,399.29
R 7,499,992.50 14.43

Operating expense ratio TOE/EGI

R 840,000.00
R 2,394,000.00 35.09

Breakeven cash flow ratio (TOE + DS)/EGI

R 840,001.05
R 2,394,000.00 0.35

NPV R 2,023,590.15 Rands

IRR 18.93 Percent
75% Loan 100% Loan
Loan/Value Loan/Value
R 5,625,000.00 R 7,499,992.50
R 7,500,000.00 75.00 R 7,500,000.00 100.00

Value/EGI Value/EGI
R 7,500,000.00 R 7,500,000.00
R 2,394,000.00 3.13 R 2,394,000.00 3.13

NOI/DS NOI/DS
R 1,554,000.00 R 1,554,000.00
R 788,528.12 1.97 R 1,051,369.78 1.48

NOI/Interest NOI/Interest
R 1,554,000.00 R 1,554,000.00
R 639,164.97 2.43 R 852,219.11 1.82

NOI/Value NOI/Value
R 1,554,000.00 R 1,554,000.00
R 7,500,000.00 20.72 R 7,500,000.00 20.72

Value/NOI Value/NOI
R 7,500,000.00 R 7,500,000.00
R 1,554,000.00 4.83 R 1,554,000.00 4.83

ATCF/Equity ATCF/Equity
R 549,537.87 R 371,917.87
R 1,875,000.00 29.31 R 7.50 4958904.88

TOE/EGI TOE/EGI
R 840,000.00 R 840,000.00
R 2,394,000.00 35.09 R 2,394,000.00 35.09

(TOE + DS)/EGI (TOE + DS)/EGI

R 1,628,528.12 R 1,891,369.78
R 2,394,000.00 0.68 R 2,394,000.00 0.79

R 3,023,781.51 Rands R 3,357,177.74 Rands

44.94 Percent 4958919.62 Percent