Description

Property Valuation Analysis

Property Name Building I Want
Units 160
Total Sq Ft 2,58,656
Transaction Date 31/03/2017
Scenario 1 1 2 3 Must cycle through all options for returns (B30:M54) to work.
Purchase Price $ 8,00,00,000 $ 8,00,00,000 $ 7,50,00,000 $ 7,00,00,000
Loan $ 5,20,00,000 $ 5,20,00,000 $ 4,87,50,000 $ 4,55,00,000
LTV 65% 65% 65% 65%
Equity $ 2,80,00,000 $ 2,80,00,000 $ 2,62,50,000 $ 2,45,00,000
Hold Period 7 Years
Unleveraged Return 6.03%
Leveraged Return 9.00%
Returns Summary ‐ Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Unleveraged 7 YR IRR 6.03%
Leveraged 7 YR IRR 9.00%
Capitalization Rate 6.12% 6.41% 6.59% 6.79% 6.99% 7.20% 7.42% 7.64% 7.87% 8.10% 8.35%
Leveraged Cash Return 9.40% 10.22% 10.74% 8.28% 8.85% 9.43% 10.04% 21.43% 22.07% 22.73% 23.42%
7 YR AVG Cash Return 9.57%
Returns Summary ‐ Scenario Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Scenario 1
Unleveraged 7 YR IRR 6.03%
Leveraged 7 YR IRR 9.00%
Capitalization Rate 6.12% 6.41% 6.59% 6.79% 6.99% 7.20% 7.42% 7.64% 7.87% 8.10% 8.35%
Leveraged Cash Return 9.40% 10.22% 10.74% 8.28% 8.85% 9.43% 10.04% 21.43% 22.07% 22.73% 23.42%
7 YR AVG Cash Return 9.57%
Scenario 2
Unleveraged 7 YR IRR 7.21%
Leveraged 7 YR IRR 12.05%
Capitalization Rate 6.52% 6.83% 7.03% 7.24% 7.46% 7.68% 7.91% 8.15% 8.39% 8.64% 8.90%
Leveraged Cash Return 10.55% 11.42% 11.97% 9.54% 10.15% 10.78% 11.43% 22.86% 23.54% 24.25% 24.98%
7 YR AVG Cash Return 10.83%
Scenario 3
Unleveraged 7 YR IRR 8.51%
Leveraged 7 YR IRR 15.18%
Capitalization Rate 6.99% 7.32% 7.53% 7.76% 7.99% 8.23% 8.48% 8.73% 8.99% 9.26% 9.54%
Leveraged Cash Return 11.85% 12.79% 13.38% 11.00% 11.65% 12.32% 13.01% 24.49% 25.22% 25.98% 26.76%
7 YR AVG Cash Return 12.29%

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 Projection

Cash Flow Projections

SCENARIO 1
High Mid Low
Pricing Total Scenario 1 Scenario 2 Scenario 3 Per Unit PSF
Purchase Price 8,00,00,000 8,00,00,000 7,50,00,000 7,00,00,000 5,00,000 309
Acquisitions Reserves ‐ ‐ ‐ ‐ ‐ ‐
Loan Amount (5,20,00,000) (5,20,00,000) (4,87,50,000) (4,55,00,000) (3,25,000) (201)
Loan Origination Fee (1%) 5,20,000 5,20,000 4,87,500 4,55,000 3,250 2
Total Equity Required 2,85,20,000 2,85,20,000 2,67,37,500 2,49,55,000 1,78,250 110

New Loan Scenario 1 Scenario 2 Scenario 3

New Loan Amount 5,20,00,000 5,20,00,000 4,87,50,000 4,55,00,000
LTV 65% 65% 65% 65%
Interest Rate 4.25% 4.25% 4.25% 4.25%
Start Date Mar‐17 Mar‐17 Mar‐17 Mar‐17
Maturity Mar‐24 Mar‐24 Mar‐24 Mar‐24
Term 7 Years 7 Years 7 Years 7 Years
Amortization 30 Years 30 Years 30 Years 30 Years
Years of Interest Only 3 Years 3 Years 3 Years 3 Years
First Year Principal Payment Required 4 Years 4 Years 4 Years 4 Years
Amortization Period Years 4‐7 Years 4‐7 Years 4‐7 Years 4‐7
Annual Payment $30,69,705
Loan Constant 5.90%

Calculation of Residual Per Unit

Holding Period 7 Years
Exit Year 8 Years
Residual Cap Rate 8.00%
Gross Residual 7,63,91,801 4,77,449
Cost of Sale (% of Gross Residual) 1.50%
Cost of Sale (11,45,877) (7,162)
Net Residual Value 7,52,45,924 4,70,287
Outstanding Loan Balance (4,82,58,788) (3,01,617)
Net Residual After OLB 2,69,87,136 1,68,670

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Gross Residual Value Calc. 6,11,50,145 6,40,71,483 6,58,96,239 6,78,73,126 6,99,09,319 7,20,06,599 7,41,66,797 7,63,91,801 7,86,83,555 8,10,44,062 8,34,75,383

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 Projection

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
INCOME
Effective Rental Income
Current Market Rents 95,58,520 99,40,861 1,03,38,496 1,06,48,650 1,09,68,110 1,12,97,153 1,16,36,068 1,19,85,150 1,23,44,704 1,27,15,046 1,30,96,497
Loss to Lease ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Gross Potential Income 95,58,520 99,40,861 1,03,38,496 1,06,48,650 1,09,68,110 1,12,97,153 1,16,36,068 1,19,85,150 1,23,44,704 1,27,15,046 1,30,96,497
Vacancy (3,82,341) (3,97,634) (5,16,925) (5,32,433) (5,48,405) (5,64,858) (5,81,803) (5,99,257) (6,17,235) (6,35,752) (6,54,825)
Concessions / Discounts (4,779) (4,970) (5,169) (5,324) (5,484) (5,649) (5,818) (5,993) (6,172) (6,358) (6,548)
Bad Debt (19,117) (19,882) (20,677) (21,297) (21,936) (22,594) (23,272) (23,970) (24,689) (25,430) (26,193)
Effective Rental Income 91,52,283 95,18,375 97,95,725 1,00,89,596 1,03,92,284 1,07,04,053 1,10,25,174 1,13,55,930 1,16,96,607 1,20,47,506 1,24,08,931
Other Income 5,65,600 5,82,568 6,00,045 6,18,046 6,36,588 6,55,685 6,75,356 6,95,617 7,16,485 7,37,980 7,60,119
GROSS INCOME 97,17,883 1,01,00,943 1,03,95,770 1,07,07,643 1,10,28,872 1,13,59,738 1,17,00,530 1,20,51,546 1,24,13,093 1,27,85,485 1,31,69,050
YOY Growth (%) 3.9% 2.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
EXPENSES
Variable Expenses 38,36,800 39,51,904 40,70,461 41,92,575 43,18,352 44,47,903 45,81,340 47,18,780 48,60,343 50,06,154 51,56,338
Management Fee 4,85,894 5,05,047 5,19,788 5,35,382 5,51,444 5,67,987 5,85,027 6,02,577 6,20,655 6,39,274 6,58,452
Real Estate Taxes 3,19,177 3,28,753 3,38,615 3,48,774 3,59,237 3,70,014 3,81,115 3,92,548 4,04,324 4,16,454 4,28,948
Property/Liability Insurance 1,44,000 1,48,320 1,52,770 1,57,353 1,62,073 1,66,935 1,71,944 1,77,102 1,82,415 1,87,887 1,93,524
Total Fixed Expenses 9,49,072 9,82,120 10,11,173 10,41,509 10,72,754 11,04,936 11,38,085 11,72,227 12,07,394 12,43,616 12,80,924
TOTAL EXPENSES 47,85,872 49,34,024 50,81,635 52,34,084 53,91,106 55,52,839 57,19,424 58,91,007 60,67,737 62,49,769 64,37,263
% of Gross Income 49.2% 48.8% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9%
NET OPERATING INCOME 49,32,012 51,66,919 53,14,135 54,73,559 56,37,766 58,06,899 59,81,106 61,60,539 63,45,355 65,35,716 67,31,787
CAPITAL EXPENDITURES
Capital Expenditures [Capital Reserves] 40,000 41,200 42,436 43,709 45,020 46,371 47,762 49,195 50,671 52,191 53,757
CASH FLOW FROM OPERATIONS 48,92,012 51,25,719 52,71,699 54,29,850 55,92,746 57,60,528 59,33,344 61,11,344 62,94,684 64,83,525 66,78,031
DEBT FINANCING
Debt Service 22,10,000 22,10,000 22,10,000 30,69,705 30,69,705 30,69,705 30,69,705 ‐ ‐ ‐ ‐
CASH FLOW AFTER DEBT FINANCING 26,82,012 29,15,719 30,61,699 23,60,145 25,23,041 26,90,823 28,63,639 61,11,344 62,94,684 64,83,525 66,78,031
Debt Service Coverage Ratio 1.59 1.67 1.72 1.77 1.82 1.88 1.93

ASSUMPTIONS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Market Rent Growth 6.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Loss to Lease 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Vacancy ‐4.0% ‐4.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0% ‐5.0%
Non Revenue / Respite Units 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Concessions / Discounts ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1%
Bad Debt ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2% ‐0.2%
Inflation Factor 0.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Management Fee 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

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 Projection

Unleveraged Return Acquisition Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
CF (8,00,00,000) 48,92,012 51,25,719 52,71,699 54,29,850 55,92,746 57,60,528 59,33,344
Capital Events 7,52,45,924
6.03% (8,00,00,000) 48,92,012 51,25,719 52,71,699 54,29,850 55,92,746 57,60,528 8,11,79,268 ‐ ‐ ‐ ‐

Leveraged Return Acquisition Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
CF (2,85,20,000) 26,82,012 29,15,719 30,61,699 23,60,145 25,23,041 26,90,823 28,63,639
Capital Events 2,69,87,136
9.00% (2,85,20,000) 26,82,012 29,15,719 30,61,699 23,60,145 25,23,041 26,90,823 2,98,50,774 ‐ ‐ ‐ ‐

Returns
Unleveraged 7 YR IRR 6.03%
Leveraged 7 YR IRR 9.00%
Capitalization Rate 6.12% 6.41% 6.59% 6.79% 6.99% 7.20% 7.42% 7.64% 7.87% 8.10% 8.35%
Leveraged Cash Return 9.40% 10.22% 10.74% 8.28% 8.85% 9.43% 10.04% 21.43% 22.07% 22.73% 23.42%
7 YR AVG Cash Return 9.57%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
7 YR AVG Cash Return Calculation 9.40% 10.22% 10.74% 8.28% 8.85% 9.43% 10.04%

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