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olivecrab193Lv1
28 Sep 2019
How do I calculate Investor Return on Equity, Debt Coverage Ratio, Investor IRR Levered and Investor IRR Unlevered?
Grand Avenue Tower Rent Assumptions Rent Square Feet Growth Assumptions Rent Tenant #1 $29.00 20,000 Income Growth 2.00% Rent Tenant #2 $30.00 15,000 Expense Growth 2.50% Rent Tenant #3 $32.00 15,000 Tenant 1 Escalator 2.00% Expense Stop for Tenant #1 $5.50 20,000 Tenant 2 Escalator 2.50% Expense Stop for Tenant #2 $7.00 15,000 Tenant 3 Escalator 0.00% Expense Stop for Tenant #3 $9.00 15,000 Building Net Rentable Area 50,000 Financing Assumptions Debt (30 year amortization) $10,000,000 Miscellaneous Income 28,000 Interest Rate (assume annual pmt) 5.50% Vacancy 7.00% Annnual Payment $688,054 Management Fee 4.50% Equity $4,000,000 Tenant 3 Tenant Improvements $24.00 Purchase Price $14,000,000 Tenant 3 Leasing Commissions (per yr of lease) 2.50% Sale Cap Rate 7.00% Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Rent Tenant #1 580,000 591,600 603,432 615,501 627,811 640,367 Rent Tenant #2 450,000 461,250 472,781 484,601 496,716 509,134 Rent Tenant #3 480,000 480,000 480,000 480,000 480,000 480,000 Expense Pass-through Tenant #1 90,000 95,000 100,125 105,378 110,763 116,282 Expense Pass-through Tenant #2 45,000 48,750 52,594 56,534 60,572 64,711 Expense Pass-through Tenant #3 15,000 18,750 22,594 26,534 30,572 34,711 Miscellaneous Income 28,000 28,560 29,131 29,714 30,308 30,914 Gross Potential Income 1,688,000 1,723,910 1,760,657 1,798,261 1,836,741 1,876,119 Vacancy 118,160 120,674 123,246 125,878 128,572 131,328 Effective Gross Income 1,569,840 1,603,236 1,637,411 1,672,382 1,708,169 1,744,791 Expenses Real Estate Taxes 200,000 205,000 210,125 215,378 220,763 226,282 Insurance 20,000 20,500 21,013 21,538 22,076 22,628 Utilities 150,000 153,750 157,594 161,534 165,572 169,711 Janitorial 50,000 51,250 52,531 53,845 55,191 56,570 Maintenance 80,000 82,000 84,050 86,151 88,305 90,513 Management Fee 70,643 72,146 73,683 75,257 76,868 78,516 Total Expenses 570,643 584,646 598,996 613,703 628,774 644,220 Net Operating Income 999,197 1,018,591 1,038,415 1,058,680 1,079,395 1,100,571 Tenant Improvments 360,000 Leasing Commissions 72,000 Cash Flow Available for Debt Service 567,197 1,018,591 1,038,415 1,058,680 1,079,395 Debt Service 688,054 688,054 688,054 688,054 688,054 Cash Flow After Debt Service -120,857 330,537 350,361 370,626 391,341 Sale Price 15,722,442 Outstanding Loan Balance 9,229,509 Net Sale Proceeds 6,492,933 Investor Cash Flows Levered -4,000,000 -120,857 330,537 350,361 370,626 6,884,274 Investor Cash Flows Unlevered (14,000,000) 567,197 1,018,591 1,038,415 1,058,680 16,801,837 Investor Return on Equity -3.0% 8.3% 8.8% 9.3% 9.8% Debt Coverage Ratio 0.82 1.48 1.51 1.54 1.57 Investor IRR Levered 15.06% Investor IRR Unlevered 8.74%
How do I calculate Investor Return on Equity, Debt Coverage Ratio, Investor IRR Levered and Investor IRR Unlevered?
| Grand Avenue Tower | |||||||
| Rent Assumptions | Rent | Square Feet | Growth Assumptions | ||||
| Rent Tenant #1 | $29.00 | 20,000 | Income Growth | 2.00% | |||
| Rent Tenant #2 | $30.00 | 15,000 | Expense Growth | 2.50% | |||
| Rent Tenant #3 | $32.00 | 15,000 | Tenant 1 Escalator | 2.00% | |||
| Expense Stop for Tenant #1 | $5.50 | 20,000 | Tenant 2 Escalator | 2.50% | |||
| Expense Stop for Tenant #2 | $7.00 | 15,000 | Tenant 3 Escalator | 0.00% | |||
| Expense Stop for Tenant #3 | $9.00 | 15,000 | |||||
| Building Net Rentable Area | 50,000 | Financing Assumptions | |||||
| Debt (30 year amortization) | $10,000,000 | ||||||
| Miscellaneous Income | 28,000 | Interest Rate (assume annual pmt) | 5.50% | ||||
| Vacancy | 7.00% | Annnual Payment | $688,054 | ||||
| Management Fee | 4.50% | Equity | $4,000,000 | ||||
| Tenant 3 Tenant Improvements | $24.00 | Purchase Price | $14,000,000 | ||||
| Tenant 3 Leasing Commissions (per yr of lease) | 2.50% | Sale Cap Rate | 7.00% | ||||
| Revenue | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | |
| Rent Tenant #1 | 580,000 | 591,600 | 603,432 | 615,501 | 627,811 | 640,367 | |
| Rent Tenant #2 | 450,000 | 461,250 | 472,781 | 484,601 | 496,716 | 509,134 | |
| Rent Tenant #3 | 480,000 | 480,000 | 480,000 | 480,000 | 480,000 | 480,000 | |
| Expense Pass-through Tenant #1 | 90,000 | 95,000 | 100,125 | 105,378 | 110,763 | 116,282 | |
| Expense Pass-through Tenant #2 | 45,000 | 48,750 | 52,594 | 56,534 | 60,572 | 64,711 | |
| Expense Pass-through Tenant #3 | 15,000 | 18,750 | 22,594 | 26,534 | 30,572 | 34,711 | |
| Miscellaneous Income | 28,000 | 28,560 | 29,131 | 29,714 | 30,308 | 30,914 | |
| Gross Potential Income | 1,688,000 | 1,723,910 | 1,760,657 | 1,798,261 | 1,836,741 | 1,876,119 | |
| Vacancy | 118,160 | 120,674 | 123,246 | 125,878 | 128,572 | 131,328 | |
| Effective Gross Income | 1,569,840 | 1,603,236 | 1,637,411 | 1,672,382 | 1,708,169 | 1,744,791 | |
| Expenses | |||||||
| Real Estate Taxes | 200,000 | 205,000 | 210,125 | 215,378 | 220,763 | 226,282 | |
| Insurance | 20,000 | 20,500 | 21,013 | 21,538 | 22,076 | 22,628 | |
| Utilities | 150,000 | 153,750 | 157,594 | 161,534 | 165,572 | 169,711 | |
| Janitorial | 50,000 | 51,250 | 52,531 | 53,845 | 55,191 | 56,570 | |
| Maintenance | 80,000 | 82,000 | 84,050 | 86,151 | 88,305 | 90,513 | |
| Management Fee | 70,643 | 72,146 | 73,683 | 75,257 | 76,868 | 78,516 | |
| Total Expenses | 570,643 | 584,646 | 598,996 | 613,703 | 628,774 | 644,220 | |
| Net Operating Income | 999,197 | 1,018,591 | 1,038,415 | 1,058,680 | 1,079,395 | 1,100,571 | |
| Tenant Improvments | 360,000 | ||||||
| Leasing Commissions | 72,000 | ||||||
| Cash Flow Available for Debt Service | 567,197 | 1,018,591 | 1,038,415 | 1,058,680 | 1,079,395 | ||
| Debt Service | 688,054 | 688,054 | 688,054 | 688,054 | 688,054 | ||
| Cash Flow After Debt Service | -120,857 | 330,537 | 350,361 | 370,626 | 391,341 | ||
| Sale Price | 15,722,442 | ||||||
| Outstanding Loan Balance | 9,229,509 | ||||||
| Net Sale Proceeds | 6,492,933 | ||||||
| Investor Cash Flows Levered | -4,000,000 | -120,857 | 330,537 | 350,361 | 370,626 | 6,884,274 | |
| Investor Cash Flows Unlevered | (14,000,000) | 567,197 | 1,018,591 | 1,038,415 | 1,058,680 | 16,801,837 | |
| Investor Return on Equity | -3.0% | 8.3% | 8.8% | 9.3% | 9.8% | ||
| Debt Coverage Ratio | 0.82 | 1.48 | 1.51 | 1.54 | 1.57 | ||
| Investor IRR Levered | 15.06% | ||||||
| Investor IRR Unlevered | 8.74% | ||||||
Casey DurganLv2
28 Sep 2019