Real Estate Finance Case Study

8/18/2019 Real Estate Finance Case Study

1/57

EXHIBIT 1: INVESTMENT CHARACTERISTICS AND ASSUMPTIONS

Sunset

Apartments

Property Attr!utes

Location Up&Coming Neighborhood Los Angeles

Building Use Mixed-Use

Building Age (in Years)

!entable Area"Units"#paces $%'*

%%'+,*

st-.r A/erage Annual Base !ent 0$1

0%*1

0'1

Ac2uisition Cost 0 ''

Ac2uisition Cost (per s213t"per unit) 0 *,

4olding 5eriod (in Years)

6oing-7ut Capitali8ation !ate ,19

st Year Base !ent !e/enues 0 %'+'

Base !ent 6ro:th !ate $19

Ancillar. ;ncome (5aracanc. 19Bad ?ebt $19

st Year Annual 7perating @xpense 0 '*'

Brea< operating expenses into di33erent section

Annual 7perating @xpense ;ncrease $19

irst Year !@ axes *19

Annual !eal @state ax ;ncrease $19

Annual !eplacement !eser/e $19

Annual Lease 5a.ments 0 -

Bro


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#econd Mortgage Loan Amount

#econd Mortgage L>

irst Mortgage ;nterest !ate (9) 19

#econd Mortgage ;nterest !ate

irst Mortgage erm-to-Maturit. (in Years) #econd Mortgage erm-to-Maturit. (in Years)

irst Mortgage 5rincipal Balance at @nd-o3-erm $60,540,433

#econd Mortgage 5rincipal Balance at @nd-o3-erm

irst Mortgage Amorti8ation erm (in Years) $

#econd Mortgage Amorti8ation erm (in Years)

irst Mortgage Annual ?ebt 5a.ment 0 '+%'*$+

#econd Mortgage Annual ?ebt 5a.ment

irst Mortgage Loan 5oints 1%

#econd Mortgage Loan 5oints

irst Mortgage Lender Yield (9) 6.65%

#econd Mortgage Lender Yield (9)

?ebt-to-@2uit. !atio 2.16

Year

2013

2016

2020


3/57

T%e Du&e

Chicago near the loop

Class B

$

!esidential *' Commercial

!etail 5ar


4/57

19

0 *'*$'++

*

0 *'*'$$

$ 717,500 19 0 %'

5.72%

1.50

Sf Annual %Net Rentable area Annual Base Rent

68806 33.00% $ 1,764,984.00

59197 28.40% $ 2,382,647.00

80092 38.50% $ 2,686,367.00


5/57

By'ne

Dstr!uton Center

#outhern Cit.

lex arehouse

,*;ndustrial

'* 733ice space

5ar


6/57

**

*19

19

*19

0 $','$,

0 '*'*

*

0$*,'$

0*'%%

19 $ 62,705

*19 $ 30,402

6.23%

12.36%

3.00

S! % "f #"tal Reburesent S!

$ 25.65 25.10% $ 6.79

$ 40.25 34.00% $ 3.92

$ 33.54 39.00% $ 8.00


7/57

EXHIBIT (: INCOME)AND)EXPENSE PRO)"ORMA: SUNSET APARTMENTS

* * **

* $

Base !ental !e/enues %'+' 0%'+*', 0'*'+

5arancancies ('') (',*%'$%) (+,$',)

@33ecti/e 6ross ;ncome (@6;) $'%$' $'+'* '*%'+

LessD Bad ?ebt (%%') (%'$) (%,'$,)

LessD 7perating @xpenses (%'%%'+) (%'*'%+) (%',+')

!eal @state axes (',$'$) (',$'*) ('*%'$)

!eplacement !eser/e ($'*$) (%'%) (,',)

Net 7perating ;ncome (N7;) '$+',$ '$'+, ,',',*

LessD 6round Lease 5a.ments

?ebt #er/ice irst Mortgage ('+%'*$+) ('+%'*$+) ('+%'*$+)

?ebt #er/ice #econd Mortgage?#C! (1%) (1+) (1$,)

Unle/ered Cash lo: Be3ore axes *+,(-./( *1-,..-00+ *(-,+1-/


8/57

*$ *% * * *, *

% , +

0',$+'++ 0'*+', 0''**% 0,'%'$$* 0''+$ 0'+$'*$

0'%*',*% 0',%' 0''** 0'$+'%* 0',$'+ 0'*'$

','+*$ ,'$%',, ,'+'%%+ '+',%% +'*$%' +'+*'$%

(','$) ('%$') (',+'%) (','%) (''+) ('+'+,)

',,%'+* '$*'+,* ''$ ,'%,*'$%% ',',+ ','%,

(%,$'**$) (%+'*+) (') (*%',) (%*'$%) (')

(%''+) (''+*) (','$) ('$') ('%,'*) ('$'$%*)

('',%) ('+%'+) (*'*$'**,) (*'+%'%) (*','$$) (*'*%$')

(,'$,) (,',%$) (*'*) ('%) (,$'*%) (+',)

,'+$',$ '*'$ ','%* '+'%* +'**%'* +'',+

('+%'*$+) ('+%'*$+) ('+%'*$+) ('+%'*$+) ('+%'*$+) ('+%'*$+)

(1%*) (1%) (1$) (1+) (1) (1,)

*(-0/-.0. *(-002-0(. *(-/20-+, *-(/2-., *-0(/-+. *-/2.-330


9/57

*+ **

0+'$%,'%+ 0*'*%',

0'*%', 0'**'%+

*'+*' *'$,',

('*$'*) ('**'*%*)

+'$$' *'*%'$$

(') (',%)

('%'%*) ('+,'$%)

(*'$*'++) (*'%*'++)

(,*',%) (,%',%)

+'+*'** '*+'%,

('+%'*$+)

(1,,)

*.-1-/+/ *1,-(/0-+.2


10/57

EXHIBIT 2: INCOME-AND-EXPENSE PRO-FORMA: THE DUKE

* *

*

Base Rental Re&enues ,'**%'$, ,'**%'$,

'()ense Reburseent Re&enue '$%'$ '$'*$

*)eratn+ '()ense Rebuersent '$*

r")ert #a( Reburesent '$

ar-n+ an *t/er n"e +' *$'+%

S+na+e Re&enue *%%' *'$*

#"tal "tental r"ss Re&enue +''$%, +',,',

ess >ancancies ($'*) ($'*)

>acanc. !eco/er.

'et&e r"ss n"e ' '%'$ ''+

ess Bad ?ebt

ess 7perating @xpenses ($''%) ($','+)

!eal @state axes ($'*) ($,*'*)

!eplacement !eser/e (,*'*%$) (,*'*%$)

enant ;mpro/ements

Leasing Commisions

Reburesent "n S !t.

Net *)eratn+ n"e N* %'' %',%'+

ess 6round Lease 5a.ments ($$') ($$')

?ebt #er/ice irst Mortgage (*'*'$$) (*'*'$$)

?ebt #er/ice #econd Mortgage

?#C! *1 *1

nle&ere :as/ !l"; Bef"re #a(es *(-12-223 *(-21-(0


11/57

2010 2011

Rent nrease /)"t/etal $ 7,224,317.00 $ 7,441,046.51

Rent S! $ 34.72 $ 35.76

*r+nal eases Rent aents $ 7,224,317.00 $ 7,224,317.00

*&erall S !t

Suare !eet R"lln+ *&er

erenta+e Res+nn+ Tenant Impr!emen

S. !t Res+nn+ 2014

Ne; Rent er S. !t *n Res+nn+ $ 206,418.00

Rent !r" Res+ners *n Ne; eases $ 963,284.00

Suare feet #ea"$n% Cmm$"$

eretan+e Ne; ease 2014

S !t. *n Res+nn+ eases $ 494,000.37Ne; Rent er S. !t *n Ne; eases $ 988,000.73

Rent Re&enue Su $ 1,482,001.10

ess


12/57

Suare !eet R"lln+ *&er

erenta+e Res+nn+

S. !t Res+nn+

Ne; Rent er S. !t

Rent !r" Res+ners

Suare feet

eretan+e Ne; ease

S !t.

Ne; Rent er S. !t

Rent Re&enue

ess


13/57

** *$ *% * *

$ % ,

,'**%'$, ,'**%'$, '%**'+ '%,',, '%,',,

'%*'$ '%%'*, ''* '$'%* ''

+',* $'* '% +'+$ *$'

'* '%+ '% *'+, *'*

*' *'$ ***' **+'$ *$'%**

*' *'* *,%'*% **'$ *+'$%+

+'*$',* +'*+' ''$* '$%',$ '%',

($'*) ($'*) ($*'$%) (%,'$+) (%,'$+)

%,'+$

',%'% '+$%'+ ',*'+ +'+$'$%* '%'*

($',,'$*%) ($''$%%) ($'++',%) (%'',) (%'*%')

($$'*%) ($+%',) (%'*) (%',%) (%$'$)

(,*'*%$) (,*'*%$) (%'**,) ('%,) ('%,)

('+',*)

(,%') (,%')

%'', %','+* *'$*%'% %''%+ '*'$$

($$') ($$') ($$') ($$') ($$')

(*'*'$$) (*'*'$$) (*'*'$$) (*'*'$$) (*'*'$$)

*1 *1* 1++ *1 *1%%

*(-,+-/ *(-(..-20, 4*1+-2+5 *(-(2-0(2 *(-/,+-3,.


14/57

2012 201* 201) 201, 201

$ 7,664,277.91 >>> $ 8,131,032.43 $ 8,374,963.40 >>>

$ 36.83 $ 37.93 $ 39.07 $ 40.24 $ 41.45

$ 7,224,317.00 >>> $ 5,459,333.00 $ 5,459,333.00 >>>

208100

68806

" 30%

2017 20641.8 20641.8 20641.8

$ 177,591.00 $ 39.07 $ 39.07 $ 39.07

$ 828,758.00 $ 806,531.21 $ 806,531.21 $806,531.21

68806

2017 70%

$ 199,037.79 48164.2 48164.2 48164.2 $ 928,843.03 $ 39.07 $ 39.07 $ 39.07

$ 1,127,880.83 $ 1,881,906.16 $ 1,881,906.16 >>>

$ 1,411,429.62

$ 313,651.03

$ 156,825.51 $ 1,881,906.16 >>>

$ 806,531.21 $ 806,531.21 $806,531.21

$ 156,825.51 $ 1,881,906.16 >>>

$ 5,459,333.00 $ 5,459,333.00 >>>

$ 6,422,689.73 $ 8,147,770.37 >>>


15/57

2012 201* 201) 201, 201

&'(22)(*1'+00 ... & ()22(/+'* & /(1)'(''0+*' ...


16/57

*, * *+ **

+

',',+ '*+*', ''%$ ''%$

'%' '+,' ',%'%$ ''

*,'* $'* $%'+ $+'

*'+$+ $'$*, $',*, %'$+

*%$' *'* *'$% *'+

$'+ $+'+* $'$ $*,'+

+'*'% '+%'$ '$'* '+'%,

($$$'%) (%%'*+) (%*',*) (%*',*)

*$*'*

'+'* '*,+',*+ ','$ ''$+

(%'$,'$) (%'%+'$*) (%'$$'$$$) (%',,*'$$$)

(%%%'*) (%,',,) (%,'$) (%'%%%)

(',) (*'+*) ('%) ('%)

(''$%+)

($'+%) ($'+%)

*'%*' %','+$ '%'+$ '$$',

($$') ($$') ($$') ($$')

(*'*'$$) (*'*'$$) (*'*'$$)

1 *1 *1$

*1,/-0+0 *(-.-,21 *-,2.-,/+ *3-,,+-,,2


17/57

201' 201/ 201 2020

>>> >>> >>> >>>

$ 42.70 $ 43.98 $ 45.30 $ 46.65

>>> >>> >>> >>>

20641.8 20641.8 20641.8 20641.8 20641.8 20641.8

$ 39.07 $ 39.07 $ 42.98 $ 42.98 $ 42.98 $ 42.98

$806,531.21 $806,531.21 $887,184.33 $887,184.33 >>> >>>

48164.2 48164.2 48164.2 48164.2 48164.2 48164.2 $ 39.07 $ 39.07 $ 42.98 $ 42.98 $ 42.98 $ 42.98

>>> >>> >>> >>> >>> >>>

>>> >>> >>> >>>

$806,531.21 $806,531.21 $887,184.33 $887,184.33

>>> >>> >>> >>>

>>> >>> >>> >>>

2017 2018 2019 2020

208100


18/57

59197

30%

17759.1 17759.1 17759.1 17759.1 17759.1 17759.1

$ 42.70 $ 42.70 $ 42.70 $ 42.70 $ 42.70 $ 46.97

$758,239.21 $758,239.21 $758,239.21 $758,239.21 >>> >>>

59197

70%

41437.9 41437.9 41437.9 41437.9 41437.9 41437.9

$ 42.70 $ 42.70 $ 42.70 $ 42.70 $ 42.70 $ 46.97

>>> >>> >>> >>> >>> >>>

>>>

>>>

$147,435.40 >>> >>> >>>

$758,239.21 $758,239.21 $758,239.21 $758,239.21

$147,435.40 >>> >>> >>>

>>> >>> >>> >>>

>>> >>> >>> >>>

201' 201/ 201 2020

... ... ... ...


19/57


20/57

20641.8

$ 42.98

>>>

48164.2 $ 42.98

>>>


21/57

17759.1 17759.1 17759.1 17759.1

$ 46.97 $ 46.97 $ 46.97 $ 46.97

>>> >>> >>> >>>

41437.9 41437.9 41437.9 41437.9

$ 46.97 $ 46.97 $ 46.97 $ 46.97

>>> >>> >>> >>>


22/57

EXHIBIT (: INCOME)AND)EXPENSE PRO)"ORMA: B6'INE DISTRIBUTION CENTER

* * **

* $

Base !ental !e/enues 0$'*1 0$'*1 0$'*1

@xpense !eimbursement !e/enue 0 *'$*1,$ 0 $'%+1$+ 0 $%'$,1,

otal 5otential 6ross !e/enue 0 *'$*1,$ 0 %'+1$+ 0 ,'*$,1,

LessD >ancancies

@33ecti/e 6ross ;ncome (@6;) 0 *'$*1,$ 0 %'+1$+ 0 ,'*$,1,

LessD Bad ?ebt

LessD 7perating @xpenses 0 (*',%1%) 0 (**'%1+) 0 (*$',*1+$)

!eal @state axes 0 (*'$*1,$) 0 ($'%+1$+) 0 ($%'$,1,)

!eplacement !eser/e 0 ($'1) 0 ($'1) 0 ($'1)

Net 7perating ;ncome (N7;) 0 '%1 0 ,',++1 0 ,'*,1,

LessD 6round Lease 5a.ments

?ebt #er/ice irst Mortgage ($*,'$) ($*,'$) ($*,'$)

?ebt #er/ice #econd Mortgage (*'%%) (*'%%) (*'%%)

?#C! 1*+ 1*+ 1*+

Unle/ered Cash lo: Be3ore axes *1./-,(. *1.+-21 *1.2-0//

2008 2009 2010 2011

$ 8.00 $ 8.16 $ 8.32 $ 8.49


23/57

*$ *% * * *,

% ,

0$'*1 0$'*1 0$'*1 0$'*1 0$'*1

0 $',1$$ 0 $+'%*1+ 0 %*'*%1, 0 %'1 0 %,'+1$

0 +'+1$$ 0 **'*1+ 0 *'%%1, 0 *'*1 0 $'1$

0 +'+1$$ 0 **'*1+ 0 *'%%1, 0 *'*1 0 $'1$

0 (*$',1*) 0 (*%'%,1,) 0 (*'**1%) 0 (*'+1,+) 0 (*',%,1)

0 ($',1$$) 0 ($+'%*1+) 0 (%*'*%1,) 0 (%'1) 0 (%,'+1$)

0 ($'1) 0 ($'1) 0 ($'1) 0 ($'1) 0 ($'1)

0 '%$%1 0 ',*1+$ 0 %'+,1+ 0 %'*$1* 0 $'%*1

($*,'$) ($*,'$) ($*,'$) ($*,'$) ($*,'$)

(*'%%) (*'%%) (*'%%) (*'%%) (*'%%)

1*+ 1*+ 1*+ 1* 1*

*1.2-,,2 *1.0-(/. *1.3-30, *1..-+, *1..-,(.

2012 2013 2014 2015 2016

$ 8.66 $ 8.83 $ 9.01 $ 9.19 $ 9.37


24/57

* *+ **

+

0$*' 0$*' 0$*'

0 '+%1 0 $'+,1% 0 ,'%1$

0 +$'+1 0 +',1% 0 ++'+1$

0 +$'+1 0 +',1% 0 ++'+1$

0 (*,'1*+) 0 (*'$,1,+) 0 (*+'**1)

0 ('+%1) 0 ($'+,1%) 0 (,'%1$)

0 ($'1) 0 ($'1) 0 ($'1)

0 *'++1, 0 '*,$1* 0 '%*1+

($*,'$) ($*,'$)

(*'%%) (*'%%)

1, 1,

*(/(-02( *(/1-+.3 *+,,-.((

2017 2018

$ 9.56 $ 9.75


25/57


26/57

EXHIBIT : PURCHASE AND OPERATIN7 COMPARAB'ES

Sunset

Apartments T%e Du&e

Number o3 Units"#21 t1 $'$% *'

Ac2uisition Cost 5er Unit or !entable #21 t 0*, 0*

7perating-@xpense !atio

(7perating @xpenses"@33ecti/e 6ross ;ncome) $$19 %19

!eal-@state-ax !atio

(!eal @state axes"@33ecti/e 6ross ;ncome) *19 %1*9

A/erage Monthl. !ent (Apartments) or 0*'$* 0$%1,*

A/erage Annual !ent"#21t1 (733ice)

Actual or 5ro=ected Annual 7ccupanc. +%9 +9


27/57

By'ne

Dstr!uton Center

'%

0+

*1,9

1+9

01

9


28/57

EXHIBIT ): PRE#IMINAR RISK ANA#SIS - FIRST EAR

Sn"et B3#$neApartment" T4e D5e $"tr$6t$n Center

:urrent "r r"?ete *u)an 94% 95% 100%

Brea-@'&en *u)an Rat" ;t/ lease NA 40.1% NA ;t/"ut lease 47.1% 59.9% 100.0%

ebt Ser&e :"&era+e Rat" 1.14 2.15 1.29"an@t"@


29/57


30/57

EXHIBIT 3: ANA'6SIS O" 'ENDER 6IE'DS

*+ * *

*

Sunset Apartments

First Mortgage Holder

Loan 5roceeds ?isbursed (,',') - -

Loan 5oints !ecei/ed ++' ++'?ebt #er/ice 5a.ment !ecei/ed '%+%'%$ '%+%'%$

5articipation in Cash lo: - -

5articipation in Capital Appreciation - -

!epa.ment o3 Loan Balance - -

Be3ore-ax Cash lo: (,',') '+%'*$+ '+%'*$+

Yield to Lender (;!!) 19

T%e Du&e


Loan 5roceeds ?isbursed (*,'') - -

Loan 5oints !ecei/ed %' - -?ebt #er/ice 5a.ment !ecei/ed *'*'$$ *'*'$$




Be3ore-ax Cash lo: (*'+') *'*'$$ *'*'$$

Yield to Lender (;!!) 1,*9

By'ne Dstr!uton Center


Loan 5roceeds ?isbursed (%''$$1) - -

Loan 5oints !ecei/ed *',%1+ - -?ebt #er/ice 5a.ment !ecei/ed $*,'$ $*,'$




Be3ore-ax Cash lo: (%','*) $*,'$ $*,'$

Yield to Lender (;!!) 1*$9

By'ne Dstr!uton Center

Second Mortgage Holder

Loan 5roceeds ?isbursed ('*'*1) - -

Loan 5oints !ecei/ed $'%*1% - -?ebt #er/ice 5a.ment !ecei/ed *'%% *'%%




Be3ore-ax Cash lo: ('%+',) *'%% *'%%

Yield to Lender (;!!) *1$9


31/57

** *$ *% * * *, *

$ % , +

- - - - - - -

++' ++' ++' ++' ++' ++' ++''%+%'%$ '%+%'%$ '%+%'%$ '%+%'%$ '%+%'%$ '%+%'%$ '%+%'%$

- - - - - - -

- - - - - - -

- - - - - - -

'+%'*$+ '+%'*$+ '+%'*$+ '+%'*$+ '+%'*$+ '+%'*$+ '+%'*$+

- - - - - - -

- - - - - - -*'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$

- - - - - - -

- - - - - - -

- - - - - - -

*'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$ *'*'$$

- - - - - - -

- - - - - - -$*,'$ $*,'$ $*,'$ $*,'$ $*,'$ $*,'$ $*,'$

- - - - - - -

- - - - - - -

- - - - - - -

$*,'$ $*,'$ $*,'$ $*,'$ $*,'$ $*,'$ $*,'$

- - - - - - -

- - - - - - -*'%% *'%% *'%% *'%% *'%% *'%% *'%%

- - - - - - -

- - - - - - -

- - - - - - -

*'%% *'%% *'%% *'%% *'%% *'%% *'%%


32/57

*+ **

-

++''%+%'%$

-

-

'%'%$$

'$%',*

-

-*'*'$$

-

-

*'*$'++

**'*'*

-

-$*,'$

-

-

$','$,

$'$'

-

-*'%%

-

-

'*'*

',*'$%


33/57

EXHIBIT 6: COMPUTATION OF GAIN-ON-SALE & NET SALES PROCEEDS

SUNSET APARTMENTS

NET SALES PROCEEDS: THE INVESTMENT (CASH FLOW) ANALYSIS

Gross Sales Price $,'*+'$

Less ro!era"e Co##issio$ *',%'*

Ne% Sales Price $%'%'%,%

Less O&%s%a$'i$" Mor%"a"e ala$ce ('%'%$$)

Ne% Sales Procee's ,%''%


34/57


THE DUKE


Gross Sales Price *'',,

Less ro!era"e Co##issio$ '*'*

Ne% Sales Price '%%',

Less O&%s%a$'i$" Mor%"a"e ala$ce (*'*$'++)

Ne% Sales Procee's %'$%'


35/57


BYLINE DISTRIBUTION CENTER


Gross Sales Price EEE

Less ro!era"e Co##issio$ EEE

Ne% Sales Price +''

Less O&%s%a$'i$" Mor%"a"e ala$ce (%'+',)

Ne% Sales Procee's '+'*


36/57

EXHIBIT +: DISCOUNTED CASH "'O8 ANA'6SIS: SUNSET APARTMENTS

ANNUAL

;M@ @FU;Y CA#4 L7 N@ #AL@#5@!;7? ;N>@#M@N B@7!@ AG@# 5!7C@@?#

- ($$'*') - -

*'%+* -

* '%%' -

$ *''+$$ -

% *'$+'%% -

*','*% -

*'+,'$ -

, $'*+,'%$ $'*+'%$

+ $'+,%'

%'$$'++ ,%''%

'*+'%,

0 ($$'*') 0 *,',',,% 0 ,%''% 0 -

N@ 5!@#@N >ALU@ H +9 999

;N@!NAL !A@ 7 !@U!N 1.+;

PARTITIONIN7 O" VA'UE ANA'6SIS: SUNSET APARTMENTS

ANNUAL

CA#4 L7

ANNUAL B@7!@ AG@#

;M@ Cash lo: ?;#C7UN@? N@ #AL@#

5@!;7? B@7!@ AG@# A ;!! 5!7C@@?#

0 - EEE 0 -

*'%+* ,,'%+ -

* '%%' '$ -

$ *''+$$ '%*%'%+ -

% *'$+'%% '%*', -

*','*% '%,'$% -

*'+,'$ '$+$',, -

, $'*+,'%$ '$'$+

$'*+'%$ '$+'*$


37/57

+ $'+,%' '*,$'*,

%'$$'++ '***'+, ,%''%

'*+'%,

*'$',$

7AL ?;#C7UN@? CA#4 ;NL7# $$'*'

5@!C@NA6@ B!@AI?7N

B@7!@-AG CA#4 L7 !7M 75@!A;7N# $,1,9

N@ #AL@# 5!7C@@?# *1$9


38/57

7AL

CA#4 L7B@7!@ AG@#

($$'*')

*'%+*

'%%'

*''+$$

*'$+'%%

*','*%

*'+,'$

$'*+,'%$$'*+'%$

$'+,%'

,'$$,'$

0 ,'+$'

N@ #AL@#

5!7C@@?#

?;#C7UN@?

A ;!!

0 -

-

-

-

-

-

-

-

-


39/57

-

*'+'*,

*'+'*,


40/57

EXHIBIT +: DISCOUNTED CASH "'O8 ANA'6SIS: THE DU@#M@N B@7!@ AG@# 5!7C@@?#

- ('') - -

*'$,',, -

* *'$,'*$ -

$ *'$'+$$ -

% *'*%%', -

('$,) -

*'*$,'*, -

, *'+'% +'

+ *'$$%',

$',%'+ ,',$+'$,

'',

0 ('') 0 +''$* 0 ,',$+'$,

N@ 5!@#@N >ALU@ H +9

;N@!NAL !A@ 7 !@U!N

PARTITIONIN7 O" VA'UE ANA'6SIS: THE D

ANNUAL

CA#4 L7

ANNUAL B@7!@ AG@#

;M@ CA#4 L7 ?;#C7UN@?

5@!;7? B@7!@ AG@# A ;!!

0 - 0 -

*'$,',, '+$$',*

* *'$,'*$ ''

$ *'$'+$$ '$%'+$

% *'*%%', ','

('$,) (,'%*+)

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EXHIBIT +: DISCOUNTED CASH "'O8 ANA'6SIS: B6'INE DISTRIBUTION CENTER

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@G4;B; +D #UMMA!Y 7 ;NANC;AL ANALY#;#

Sunset

Apartments T%e Du&e

@2uit. !e2uired >>> 18,000,000

Cash-on-Cash 2.4% 12.9%

?iscounted Measures o3 !eturnD

Net 5resent >alue >>> $ 19,226,701

Interna= Rate o> Return 1*+)/7 1+/7


49/57

By'ne

Dstr!uton Center

1,900,150

7.8%

3,312,853

22+,07


50/57

Sunset Apartments Senst?ty Ana=yss

Assumptions

Base !ental !ate 6ro:th $19

7perating @xpense 6ro:th $19

6oing 7ut Cap !ate ,19;!! 1.+;

Rental Rate Growth


51/57

Going Out Cap Rate

1.+; 19 19 ,19 19 +19

19 +1$9 ,19 1*9 1+9 1*9

*19 19 +19 1%9 ,1+9 1$9

$19 *1%9 19 1,9 +19 1$+9%19 %19 *1,9 1+9 1,9 +19

19 19 %1+9 $19 *1*9 1$9


52/57

T%e Du&e Senst?ty Ana=yss

Assumptions

Base !ental !ate 6ro:th $19


6oing 7ut Cap !ate 19

;!! 1/+0;

Rental Rate Growth


53/57

Going Out Cap Rate

1/+0; 19 ,19 19 +19

19

*19

$19

%19

19


54/57

19


55/57

T%e By=ne Senst?ty Ana=yss

Assumptions

Base !ental !ate 6ro:th *19


6oing 7ut Cap !ate 19

;!! ((3,;


56/57

Going Out Cap Rat

((3,; 19 ,19

19

*19

$19

19

Operating Expense Growth ,19


57/57

19 +19 19

Real Estate Finance Case Study

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