Please do a 10 year cash flow analysis (with a sale at start of Yr 11) for a single tenant

office building. Assumptions are listed below and a template is provided.

Assumptions: 75,000sf building, Going in cap: 7.0%; Exit Cap: 8.5%; LTV: 75%;

Loan- 5.5%, 20 yr amort; Coverage 1.20; Vacancy allowance: 5% (apply only to the proforma,

not the 10 year cash flow), Cap Exp Reserve: $.10 psf (apply both to proforma and cash flow);

Project Cost: $9M (including Land: $500K); Rent of $12psf gross basis; RETax&CAM of

$2psf;

Annual Inflation of 2% applied both to rents and expenses but not CapExpRes.

No need to figure recovered reimbursable expenses over the orginal CAM/Tax.

Tax Rates

: 25% Ordinary; 20% Cap Gain; 25% DeprRecapture; Cost of sales: 4%;

Depreciable Life: 39 years

Use first year Gross Income to do the Proforma and then to calculate Loan.

Using above and the template, please calculate the:

1- BT Unlevered IRR

2- BT Levered IRR

3- AT Levered IRR

STATE STREET TOWER 2016 2017 2018 2019 2020 2021 2022 20232024 2025 2026 Year 1 Year S Year 10 Lease Lea LeasePremises End Rate SF Gross Rent State Real Estate Effectiv Gross income RE Tax &CAM 1//2016 12/30/2026 Less: Capital Exp Reserve Less: NET OPERATING INCOME Debt Service BT Cash Flow Taxable Income Taxes AT Cash Flow BT UNLEVERED IRR BT LEVERED IRR NUM! NUM! AT LEVERED IRR inflation Rate S0 RETaxes &CAM psflyr Loan Balance PRO FORMA CALCULATION Gross Potenial Income Less: Vacancy Allovw Effective Gross Income CAMRETax Cap Exp Reserve Cap Rate Loan Rate Loan Amt Loan Constant LTV Amort Valuc Sale Price Exit Cap Rate Sales Cost Land Value Depreciable Life Annual Depr BT Sales Proceeds BT Proceeds less MortBal Capital Gain Total Tax On Sale Cap Exp Net Operating Income Debt Service Cash Flow Equity Reqd Ordinary Tax Rate Cap Gains Rate Depr Recap Rate STATE STREET TOWER 2016 2017 2018 2019 2020 2021 2022 20232024 2025 2026 Year 1 Year S Year 10 Lease Lea LeasePremises End Rate SF Gross Rent State Real Estate Effectiv Gross income RE Tax &CAM 1//2016 12/30/2026 Less: Capital Exp Reserve Less: NET OPERATING INCOME Debt Service BT Cash Flow Taxable Income Taxes AT Cash Flow BT UNLEVERED IRR BT LEVERED IRR NUM! NUM! AT LEVERED IRR inflation Rate S0 RETaxes &CAM psflyr Loan Balance PRO FORMA CALCULATION Gross Potenial Income Less: Vacancy Allovw Effective Gross Income CAMRETax Cap Exp Reserve Cap Rate Loan Rate Loan Amt Loan Constant LTV Amort Valuc Sale Price Exit Cap Rate Sales Cost Land Value Depreciable Life Annual Depr BT Sales Proceeds BT Proceeds less MortBal Capital Gain Total Tax On Sale Cap Exp Net Operating Income Debt Service Cash Flow Equity Reqd Ordinary Tax Rate Cap Gains Rate Depr Recap Rate