Case Study - Avenge Corp Center High Table Real Estate is looking to acquire Avenge Corp Center located in a newly established master-planned community in Mew York City, Mew York. The six-story office buildine will hawe only one tenant per floor and is a highly desirable building within the complex. It has approximately 80,000 SF of rentable space. High Table Real Estate estimates the purchase price to be $12,000,000. 80.0% of the purchase price will be financed for 300 months at 7.0% interest for the first 2 years and .0% thereafter. The loan will be interest-only for the first two years. A 1.0% Loan Cost will be calculated, and it will be included in the loan. Ensure Reporting - Show Loan Proceeds is set to Yes, High Table Real Estatewould like touse a 10.0% annual discount rate to determine if the estimated $12,000,000 purchase price is enough to achieve this type of return. They estimate the purchase to happen in Janwary 2020, so they would fike the analysis to begin at that time. They would also like to show the analysis with a 5-year holding period. The other property assumptions are as follows: Inflation s 300% General Inflation Rate s 5.00% Market Inflation Rate = J00% Expense Inflation Rate Calendar Recovery using Calendar Inflation Miscellaneous Revenues * Vending Machines that are in the lobby will generate $700.00 a2 month in additional revenue, which is 100.0% variable, and will grow by the General Inflation Rate. * Athree-story Parking Garage is located next to the sqguare. It generates revenue only when a major event is taking place at a local park, which is four times a year. The estimated revenue is $4,000 for each of the four events happening in May, July, October and December for atotal of $16,000 per year, growing by the General Inflation Rate Operating Expenses Allexpenses are 100.0% Fixed and Recoverable and growing with the Expense Inflation Rate, unless otherwise noted. s Real Estate Taxes are estimated to be $120,000 annually split evenly into two equal payments. One $60,000 payment will be made in June and the other will be paid in November of each year. + Common Area Maintenance (CAM) on the interior portion of the building will be $2.10 per rentable square foot per year, while the exterior portion will be $136,000 annually. Interior CAM is 15.0% fixed, however Exterior CAM is 100.0% fixed. (Enter as sub-line expenses to CAM). s Property Insurance will be $16,000 a year. = A non-recoverable Management Fee will be 3.0% of the Effective Gross Revenue, Capital Expenditures + For unexpected expenses we will include a Capital Reserve of $0.10 per rentable square foot per year. Rent Roll The rent roll and tenant assumptions are summarized below. They will all pay reimbursements over a 2019 Stop Amount. The Stop Amount for 2019 is $410,000. Available/Start Base Rent Tenant Suite Size Date Rental Increase (Base & Step) Term Bowery July 1, 2019 $17.25 /SF / Year 100 16,000 Messengers 6 years $100/5F / Year - Fixed Step Wild Mustang 200 16,000 March 1, 2019 $17.50 /SF / Year One-time 4.0% Base Rent Exports 8 years increase after 2 years Continental $18.25 /SF / Year 300 16,000 May 1, 2019 Management 5 years 3.0% Increase - Fixed Step September 1, 2019 Parabellum Armory 400 16,000 4 years $18.00 /SF / Year Market Data This Market Leasing profile will apply to all the leases. New Market Renew Market Name: Market Profile Term (Yrs/Mos): 5/0 Renewal %: 75.0% Months Vacant: 6.00 Base Rent: $18.00 /SF / Year $17.00/SF / Year Market Inflation Rate Market Inflation Rate Fixed Steps: 3.0% Increase Free Rent (Mo): 3.00 0.00 Recoveries: Base Year Stop $12.00/ Area $7.00 / Area Improvements: Expense Inflation Rate | Expense Inflation Rate Leasing Commissions: 6.0% - Fixed % 3.0% - Fixed % Vacant Space At the beginning of the analysis, two spaces remain vacant, each are 8,000 SF. Although both spaces are currently available, High Table Real Estate estimates that the first tenant would move into the building April 1, 2020, with a second tenant moving in three months later. They will use the market assumptions from the Market Leasing profile for the current lease terms. Resale Assumptions High Table Real Estate is wanting to capitalize the NOI for the year of sale using a 6.0% cap rate. There are two adjustments that need to be entered in as commissions. Commission 1 should be 0.5%% of Adjusted Gross Sales Price, and Commission 2 should be 2.5% of Adjusted Gross Sales Price. Both adjustments should be considered a Selling Costs Type.Property Reports - Cash Flow Forecast Forecast Forecast Forecast Forecast Forecast Forecast Year 1 Year 2 Year 3 Year 4 Year Year & For the Years Ending Doc-2020 Dog-2022 DEC-20M Dec-2072 Total Mental Revenue Potential Base Rent 1 433,340 1,477,909 1,513,380 1,558,427 1,614,111 1,658,287 9.295,055 Absorption & Turnover Vacancy 103,500 53,231 -35,913 117/418 -330,082 Free Rent -72,000 -19,950 -20,957 -44,032 -156,968 Scheduled Base Rent 1,257 640 1,477,509 1,513,380 1,403,208 1,507,230 1,496,838 8,768,004 TotalRental Revenue 1,257 840 1,477.509 1,513,380 1,485,208 1.537,230 1,496,834 8, 768,004 Other Tenant Revenue Total Expense Recoverles 15,432 39,342 52,930 17,367 52,240 38,470 253,789 Total Other Tenant Revenue 59.342 52,938 57,367 52,240 38,470 255,780 Total Tenant Revenue 1,273,272 1,516,851 1,566,318 1,542,575 1,589,470 1,535,307 9/023,703 Other Revenue Vending Machines 7,770 8,052 1,912 8,873 9,139 32.434 Pariung Garage 16,000 16,460 16.974 17.484 18,008 18.548 103,495 Total Other Revenue 23,770 25,132 25,804 20,357 27,147 27,637 153 929 Potential Gross Revenue 1,257,042 1,541,983 1,592,204 1,560,901 1,616,617 1,562,944 9,179,722 Effective Gross Revenue 1,297,042 1,541,983 1,592,204 1,560,931 1,416,617 1,562,944 9,179,722 Operating Expenses Real Estate Taxes 120,000 123,400 127,308 131,127 135,061 139,113 776,209 Common Area Maintenance 293,290 313,120 322,514 326,988 336,797 341,383 1,934/092 CAM - Interior 157,290 171,040 178,231 17,327 183,728 183,722 1,054.388 CAM - Exterior 136,000 140,080 144,282 148,611 153,069 157,661 879,704 Property Insurance 16,000 16,480 16.974 18,008 18548 103.495 Management Fee 38,901 46,250 47.756 47.068 48,420 16,BBB 275,392 Total Operating Expenses 468,201 499.459 514.362 122.060 538.365 #45.93 1.089,187 Net Operating Income 128,041 1,042,523 1,077,642 1,046,285 1,071, 252 1/017/012 6,090.535 Leasing Costs Tenant Improvements 192,000 144,240 148,567 306,048 790,855 Leasing Commess 87/422 16,005 130,611 354,900 Total Leasing Costs 279,432 207,102 214,572 444,659 1,145,756 Capital Expenditures Capital Reserve 8,000 1,240 8,407 0.742 9/004 9,274 51,747 Total Capital Expenditures 8,000 8,240 8,487 5.742 9.004 9.274 51,747 Total Leasing & Capital Costs 247.432 8,240 8.487 215,844 223,576 453.934 1.197.503 Cash Flow Before Debt Service 541.419 1,034,283 1,069,155 830,421 854,676 543,078 4,893,032ARGUS Enterprise v1210515 AE Training Manual - Updated December 9, 2019 Property Reports - Cash Flow - Continued Forecast Forecast Forecast Forecast Forecast Forecast Year 1 Year 2 Year ] Year 4 Year S Year L For the Years Ending Dec 2020 Our-2031 Dec 3023 Dec 2024 Debt Service Interest Debt Fmancing 670.768 678,788 576.324 563.867 550.641 3,048,406 Total Interest 678,768 678,788 576,324 560,067 550,041 3,048,408 Principal Debt Financing 201.971 214,428 727.654 64 4,053 Total Principal 201,971 214,420 227.654 6-44,053 Total Debt Service 670,760 770,293 770,293 770,293 J.692,461 Cash Flow After Debt Service 137,309 335/493 52.126 76.381 563,078 1,200,571ARGUS Enterprise v12.10.515 AE Training Manual - Updated December 9, 2019 Debt Reports - Loan Amortization Loan Name Debt Financing Loan Type Amortizing loan Start Date 1/1/2020 Loan Term 300 Months Amortize Start Date 1/1/2032 Amortization Term 300 Months Beginning Loan Interest Amortized hterest Principal Balloon Ending Balance Proceeds Payments Payments Payment Balance 2020 678 788 678,788 4.606 470 2021 9,696 970 70 708 9.696 570 2022 9,696.970 576.124 201.971 9.494.939 2023 5.494,900 778,205 563,867 214,428 1,280,571 2024 5,200,571 770,290 560/641 277,654 9,052,917 Final Totals 9.696.970 Varies 3-692 461 3.048.408 614051 9.052.917 Valuation Reports - Valuation & Return Summary Py Coloration Date Total PV (Unleveraged) Fornod to Cop Tolel PV (Unreached 53 an opening hours Mel Sole Pics Divided by Cop Wile 9,132.917 Adand Grows Sole Frica Inding Procedu 419.272 17411.794 Pvel fiel Sales Five atment A Cash Flow Summary Leveraged Leveraged Isar Hanth 1 SIN 317