You will need you to create an excel spreadsheet /proforma of the cash flows from a property.

This assignment is to create an analysis for purchasing a property, projecting rents, expense pass throughs, expenses, capital over a holding period through the sale. Below are is all the information that you need to do the calculations and determine the metrics behind the investment.

Market rent $30/sf for gross leases

$22/sf for net leases

Growth rate 3% annually for everything

Rent Roll

Tenant SF Rent/yr /sf Stop Lease Start Mo. Term Steps

Tenant A 25,000 $33.00 BY $9.40/sf 1 10 yrs 3%/year

Tenant B 30,000 $27.00 BY $8.50/sf 1 8 yrs $32/sf in yr 5

Tenant C 35,000 $20.00 Net 1 3 yrs N/A

Tenant 10,000 $30.00 BY $10.00/sf 13 10 yrs 36 in month 67

Total

Base year (BY) The tenant will pay for expenses that have risen to a level above their expense stop. Net leases have a stop of zero, so they pay all reimbursable expense.

Tenants A, B and D are modified gross with expenses passed through over a base year while tenant C is Net.

Vacancy/Credit Loss 5% of PGI

Expense Category Expense per foot

Taxes $ 5.00/sf

R&M $ 1.00/sf

Insurance $ 0.25/sf

Utilities $ 2.00/sf

Payroll $ 0.85/sf

Security $ 0.50/sf

G&A $ 0.40/sf

Total Reimbursable $10.00/sf

Non Reimbursable

Management 3% of EGI

Assume zero rollover possibility. Downtime (vacancy at end of lease) 6 months

Total Capital at rollover 25/sf growing at inflation

From the above information, you should be able to create a proforma.

Reversion 7.5%

Discount Rate 10.0%

Term 5 years

Amortization 30 years

Rate 4% rate

LTV 70%

Create a proforma for a five year hold aggregating the cash flows from each lease.

Calculate

Value

IRR

Cash flow after debt Service

Cash on Cash Return

Debt service coverage Ratio

Leveraged IRR

Debt Yield

Break-even ratio

Start by creating a column for each month of the hold period and additional 12 months for the reveersion year. In these columns enter in the first line 1 increasing each month by 1.

The next line put in the dates. Starting with 1/1/19 seems reasonable.

Then for each lease put in the monthly rent that is due for each month.

Add a line for the sum.

Then put in the pass through that is due in each month for each tenant.

Add a line for the sum of the pass throughs.

Calculate andy other income by month.

Apply the vacancy for the property

Calculate EGI.

Enter in each column the appropriate expense for each line for each column.

Sum the expenses

Subtract the expenses from the EGI