Commercial Real Estate Valuation and Financial Feasibility

ASSUMPTIONS
Annual Gross Rent, first year
Vacancy and Collection factor
Operating Expenses, first year
Annual % change in rent
Annual % change in expenses
Loan to Value ratio
Stated Annual Interest rate
Loan Term (years)
Percent of price in improvements
CPI Annual Increase
After tax, Real Discount rate
Cap Rate assumed at date of sale
Transaction costs as % of sales price
Cap Rate at Purchase

182,400
5%
55,540
3.0%
3.0%
75.0%
6.0%
25
85.0%
3.0%
8.0%
8.0%
9.0%
9.1%

DEFINED VARIABLES
Recovery period (years)
Income tax rate (Corporate)
Capital Gains tax rate
Property Valuation:

NOI
Assumptions

Source
39 Omnibus Budget Reconciliation Act of 19
15.0% IRS - Varies based on taxable income
5.0% IRS - Varies based on income tax bracke
$

ECONOMIC VALUES, CALCULATED BY MODEL

Loan Amount
Equity Required
Mortgage Loan Constant

1,299,558.50

974,669
324,890
7.82%

DECISION ANALYSIS FACTORS

year
Real Cash Flow to Owner
Present Value of Real Cash Flow
NPV of Real Cash Flow:
After Tax Real Internal Rate of Return:

0
(324,890)
(324,890)

1,154,313.90
45.71%

PROFORMA INCOME STATEMENT

year
Annual Gross Rental Income
Vacancy and Collection Losses
Effective Rental
Operating Expenses
Net Operating Income
Interest Expense
Depreciation (cost recovery)
Taxable Income
Income Tax Liability
Net Income After Tax

0
na
na
na
na
na
na
na
na
na
na

PROFORMA CASH FLOW STATEMENT

year

0
na
na
na
na
na
na
na
na
(324,890)
(324,890)
na
(324,890)

year

Annual Gross Rental Income

Vacancy and Collection Loses
Effective Rental
Operating Expenses
Net Operating Income
Debt Service
Income Tax Liability
Equity Dividend (cash to owner)
Down Payment/Reversion
Total Cash Flow to Owner
Purchasing Power Adjustment
Real Cash Flow to Owner

MORTGAGE LOAN AMORTIZATION SCHEDULE

Balance Owed, beginning of year
Annual Mortgage Payment
Interest Portion of Payment
Amortization of principal
Balance Owed, end of year

ANALYSIS OF REVERSION ON SALE

Net Operating Income Projected, Year After Sale (Year 11)
Cap Rate At Sale Date
Capitalized Value (Sale Price)
Transaction Cost
Net Sales Price
Book Value At Sales Date (cost-dep)
Capital Gain ( Net Price - BV)
Capital Gains Tax
Mortgage Balance Owed
Reversion in nominal dollars to owner at sales date

42956.2
74533.82
47966.58

0.012696

867.6558

253913

0.732727

0.01824
0.015802

0.043248

0.030238
0.092582

0.023333
0.018334

0.009235

al Feasibility
Commercial Real Estate Valuation and Financial Feasibility
NOI
Assumptions

INSTRUCTIONS:
1.) Conduct comparables analysis of similar properties to estimate the cap rate at purchase.
2.) Define all assumption distributions to reflect current and local market conditions.
3.) Run simulation.
4.) Analyze results.

Model developed by Questor Consulting LLC, Better Analysis. Better Decisions.

For information regarding this model or for requests, please call us at (561) 417-5515.

Omnibus Budget Reconciliation Act of 1993

IRS - Varies based on taxable income
IRS - Varies based on income tax bracket

1
35,781
33,131

2
204,398
175,238

3
195,471
155,171

4
192,448
141,455

5
189,509
128,977

6
186,650
117,621

7
183,870
107,286

8
181,165
97,878

1
182,400
(9,120)
173,280
(55,540)
117,740
(58,480)
(28,324)
30,936
(4,640)
26,296

2
187,872
(9,394)
178,478
(57,206)
121,272
(57,414)
(28,324)
35,534
(5,330)
30,204

3
193,508
(9,675)
183,833
(58,922)
124,910
(56,284)
(28,324)
40,302
(6,045)
34,257

4
199,313
(9,966)
189,348
(60,690)
128,658
(55,087)
(28,324)
45,247
(6,787)
38,460

5
205,293
(10,265)
195,028
(62,511)
132,517
(53,817)
(28,324)
50,376
(7,556)
42,820

6
211,452
(10,573)
200,879
(64,386)
136,493
(52,472)
(28,324)
55,698
(8,355)
47,343

7
217,795
(10,890)
206,905
(66,318)
140,588
(51,045)
(28,324)
61,219
(9,183)
52,036

8
224,329
(11,216)
213,113
(68,307)
144,805
(49,533)
(28,324)
66,949
(10,042)
56,906

1
182,400
(9,120)
173,280
(55,540)
117,740
(76,245)
(4,640)
36,854
na
36,854
103%
35,781

2
187,872
(9,394)
178,478
(57,206)
127,444
94,732
(5,330)
216,845
na
216,845
106%
204,398

3
193,508
(9,675)
183,833
(58,922)
124,910
94,732
(6,045)
213,597
na
213,597
109%
195,471

4
199,313
(9,966)
189,348
(60,690)
128,658
94,732
(6,787)
216,602
na
216,602
113%
192,448

5
205,293
(10,265)
195,028
(62,511)
132,517
94,732
(7,556)
219,693
na
219,693
116%
189,509

6
211,452
(10,573)
200,879
(64,386)
136,493
94,732
(8,355)
222,870
na
222,870
119%
186,650

7
217,795
(10,890)
206,905
(66,318)
140,588
94,732
(9,183)
226,137
na
226,137
123%
183,870

8
224,329
(11,216)
213,113
(68,307)
144,805
94,732
(10,042)
229,495
na
229,495
127%
181,165

1
974,669
76,245
(58,480)
17,765
956,904

2
956,904
76,245
(57,414)
18,831
938,073

3
938,073
76,245
(56,284)
19,961
918,112

4
918,112
76,245
(55,087)
21,158
896,954

5
896,954
76,245
(53,817)
22,428
874,526

6
874,526
76,245
(52,472)
23,774
850,752

7
850,752
76,245
(51,045)
25,200
825,552

8
825,552
76,245
(49,533)
26,712
798,840

158,233
8.00%
1,977,909
(178,012)
1,799,897
(1,016,321)
783,576
39,179
740,512
1,020,206

easibility

ate at purchase.

9
178,535
89,312

10
935,104
433,134

9
231,059
(11,553)
219,506
(70,356)
149,150
(47,930)
(28,324)
72,895
(10,934)
61,961

10
237,991
(11,900)
226,091
(72,467)
153,624
(46,232)
(28,324)
79,069
(11,860)
67,208

11
0
0

11
245,130
(12,257)
232,874
(74,641)
158,233
(44,431)
(28,324)
85,478
(12,822)
72,657

9
10
231,059
237,991
(11,553)
(11,900)
219,506
226,091
(70,356)
(72,467)
149,150
153,624
94,732
94,732
(10,934)
(11,860)
232,947
236,496
na
1,020,206
232,947 1,256,702
130%
134%
178,535
935,104

11
245,130
(12,257)
232,874
(74,641)
158,233
na
na
na
na
na
na
na

9
798,840
76,245
(47,930)
28,315
770,525

11
740,512
76,245
(44,431)
31,814
708,697

10
770,525
76,245
(46,232)
30,014
740,512