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Let's practice creating the multi-period proforma
Let's consider a 10-year analysis period on a perfectly average 200,000 sf single-tenant industrial property in Kent, WA. There is currently no tenant, but we can sign one at "market rate" next year (starting in year 2) No other income produced by the property. Operating expenses are $2.75psf and it doesn't matter if the space is vacant or not. CapEx Reserves are 2% of NOI (if there is any) Use the Cushman Wakefield Market Report or other sources to come up with your assumptions for rent, rent growth, opex growth, vacancy *NOTE: Cushman Wakefield Report uses monthly "Net rent", so you must convert to annual rent. Assume Gross Rent = Net Rent + Operating Expenses. Cap Rate for the property are assumed to hold steady who a while at 4.5% The current owner says he's offering you a "great deal" for the property. You can purchase it for $30 million. You can sell the property with 2% selling fees on sale price Build your proforma below:
Year
PGI
Vacancy
Other Income
EGI
Operating Expenses
NOI
Cap Ex
Purchase Price
Exit Value
NCF (PBTCF)
MARKET STATISTICS \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline SUBMARKET & \begin{tabular}{l} INVENTORY \\ (SF) \end{tabular} & \begin{tabular}{l} OVERALL \\ VACANT (SF) \end{tabular} & \begin{tabular}{c} OVERALL \\ VACANCY RATE \end{tabular} & \begin{tabular}{c} CURRENT QTR \\ OVERALL NET \\ ABSORPTION \\ (SF) \end{tabular} & \begin{tabular}{c} YTD OVERALL \\ NET \\ ABSORPTION \\ (SF) \end{tabular} & \begin{tabular}{c} UNDER \\ CONSTRUCTION \\ (5F) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT (HT) \end{tabular} & \begin{tabular}{l} OVERALL \\ WEIGHTED AVG \\ NET RENT (OS) \end{tabular} & \begin{tabular}{l} OVERALL \\ WEIGHTED AVG \\ NET RENT (MF) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT (WID) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT \end{tabular} \\ \hline South Seattle & 36,425,221 & 1,191,597 & 3.3% & 186,707 & 177,591 & 343,008 & $2.04 & $1.57 & $1.26 & $1.21 & $1.28 \\ \hline Queen Anne to SODO & 5,278,477 & 397,643 & 7.5% & 48,603 & 17,177 & 0 & $0.00 & $1.28 & $1.32 & $1.08 & $1.20 \\ \hline N of Ship Canal to 205hn & 2,874,725 & 115,976 & 4.0% & 2,766 & 99,135 & 0 & $0.00 & $1.98 & $1.15 & $1.39 & $1.42 \\ \hline SEATTLE IN-CITY & 44,578,423 & 1,705.216 & 3.8% & 135,338 & 61,279 & 343,008 & $2.04 & $1.62 & $1.28 & $1.20 & $1.27 \\ \hline SeaTac & 6,613,001 & 27,472 & 0.4% & -8.555 & 73,325 & 0 & $0.00 & $0.00 & $0.00 & $0.85 & $0.85 \\ \hline Tukwila & 13,224,038 & 708,512 & 5.4% & 25,590 & 163,128 & 414,528 & $1.25 & $1.21 & $0.00 & $1.13 & $1.15 \\ \hline Renton & 15,344,002 & 409,612 & 2.7% & 67 & 178,607 & 0 & $0.00 & $1.08 & $0.00 & $0.91 & $0.78 \\ \hline Auburn & 29,701,921 & 571,364 & 1.9% & 23,382 & 195,013 & 440,248 & $0.00 & $0.99 & $0.90 & $0.87 & $0.87 \\ \hline Federal Way & 1,325,657 & 6,763 & 0.5% & 3,820 & 3,887 & 440,490 & $0.00 & $0.00 & $0.00 & $1.15 & $1.15 \\ \hline SO. KING COUNTY & 114,183,910 & 4,063,621 & 3.6% & 77,787 & 876,937 & 2,485,337 & $1.19 & $1.20 & $1.02 & $0.94 & $0.94 \\ \hline Sumner & 17,681,269 & 498,835 & 2.8% & 170,235 & 658,829 & 1,228,555 & $0.00 & $0.00 & $0.00 & $0.78 & $0.79 \\ \hline Puyallup & 7,315,522 & 219,254 & 3.0% & 129,147 & 480,879 & 0 & $1.54 & $0.00 & $0.00 & $0.89 & $1.37 \\ \hline Fife/Milton & 13,578,899 & 130,244 & 1.0% & 53,828 & 89,183 & 1,496,215 & $0.00 & $0.00 & $0.00 & $0.98 & $0.98 \\ \hline Tacoma & 23,241,994 & 504,574 & 2.2% & 117,897 & 3,499 & 248,033 & $0.00 & $0.00 & $0.68 & $0.71 & $0.69 \\ \hline NO. PIERCE COUNTY & 61,817,684 & 1,352,907 & 2.2% & 105,156 & 1,225,392 & 2,972,803 & $1.54 & $0.00 & $0.68 & $0.80 & $0.92 \\ \hline Parkland/Spanaway & 986,478 & 8,089 & 0.8% & 1,824 & 1,015 & 0 & $0.00 & $0.00 & $0.00 & $1.18 & $1.18 \\ \hline Lakewood & 6,723,734 & 682,106 & 10.1% & 6,245 & 535,324 & 50,218 & $0.00 & $0.00 & $0.00 & $0.89 & $0.75 \\ \hline Dupont & 4,683,054 & 525,940 & 11.3% & 0 & 31,040 & 0 & $0.00 & $0.00 & $0.00 & $0.00 & $0.00 \\ \hline Lacey & 9,100,895 & 356,243 & 3.9% & 39,065 & 401,928 & 87,060 & $0.00 & $0.00 & $0.00 & $0.64 & $0.65 \\ \hline SOUTH SOUND & 31,454,624 & 2,126,407 & 6.8% & 34,644 & 2,030,701 & 4,454,576 & $0.00 & $0.00 & $0.00 & $0.71 & $0.69 \\ \hline SEATTLE TOTALS & 252,034,641 & 9,248,151 & 3.7% & 352,925 & 4,071,751 & 10,255,724 & $1.54 & $1.31 & $1.09 & $0.92 & $0.95 \\ \hline \end{tabular} MARKET STATISTICS \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline SUBMARKET & \begin{tabular}{l} INVENTORY \\ (SF) \end{tabular} & \begin{tabular}{l} OVERALL \\ VACANT (SF) \end{tabular} & \begin{tabular}{c} OVERALL \\ VACANCY RATE \end{tabular} & \begin{tabular}{c} CURRENT QTR \\ OVERALL NET \\ ABSORPTION \\ (SF) \end{tabular} & \begin{tabular}{c} YTD OVERALL \\ NET \\ ABSORPTION \\ (SF) \end{tabular} & \begin{tabular}{c} UNDER \\ CONSTRUCTION \\ (5F) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT (HT) \end{tabular} & \begin{tabular}{l} OVERALL \\ WEIGHTED AVG \\ NET RENT (OS) \end{tabular} & \begin{tabular}{l} OVERALL \\ WEIGHTED AVG \\ NET RENT (MF) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT (WID) \end{tabular} & \begin{tabular}{c} OVERALL \\ WEIGHTED AVG \\ NET RENT \end{tabular} \\ \hline South Seattle & 36,425,221 & 1,191,597 & 3.3% & 186,707 & 177,591 & 343,008 & $2.04 & $1.57 & $1.26 & $1.21 & $1.28 \\ \hline Queen Anne to SODO & 5,278,477 & 397,643 & 7.5% & 48,603 & 17,177 & 0 & $0.00 & $1.28 & $1.32 & $1.08 & $1.20 \\ \hline N of Ship Canal to 205hn & 2,874,725 & 115,976 & 4.0% & 2,766 & 99,135 & 0 & $0.00 & $1.98 & $1.15 & $1.39 & $1.42 \\ \hline SEATTLE IN-CITY & 44,578,423 & 1,705.216 & 3.8% & 135,338 & 61,279 & 343,008 & $2.04 & $1.62 & $1.28 & $1.20 & $1.27 \\ \hline SeaTac & 6,613,001 & 27,472 & 0.4% & -8.555 & 73,325 & 0 & $0.00 & $0.00 & $0.00 & $0.85 & $0.85 \\ \hline Tukwila & 13,224,038 & 708,512 & 5.4% & 25,590 & 163,128 & 414,528 & $1.25 & $1.21 & $0.00 & $1.13 & $1.15 \\ \hline Renton & 15,344,002 & 409,612 & 2.7% & 67 & 178,607 & 0 & $0.00 & $1.08 & $0.00 & $0.91 & $0.78 \\ \hline Auburn & 29,701,921 & 571,364 & 1.9% & 23,382 & 195,013 & 440,248 & $0.00 & $0.99 & $0.90 & $0.87 & $0.87 \\ \hline Federal Way & 1,325,657 & 6,763 & 0.5% & 3,820 & 3,887 & 440,490 & $0.00 & $0.00 & $0.00 & $1.15 & $1.15 \\ \hline SO. KING COUNTY & 114,183,910 & 4,063,621 & 3.6% & 77,787 & 876,937 & 2,485,337 & $1.19 & $1.20 & $1.02 & $0.94 & $0.94 \\ \hline Sumner & 17,681,269 & 498,835 & 2.8% & 170,235 & 658,829 & 1,228,555 & $0.00 & $0.00 & $0.00 & $0.78 & $0.79 \\ \hline Puyallup & 7,315,522 & 219,254 & 3.0% & 129,147 & 480,879 & 0 & $1.54 & $0.00 & $0.00 & $0.89 & $1.37 \\ \hline Fife/Milton & 13,578,899 & 130,244 & 1.0% & 53,828 & 89,183 & 1,496,215 & $0.00 & $0.00 & $0.00 & $0.98 & $0.98 \\ \hline Tacoma & 23,241,994 & 504,574 & 2.2% & 117,897 & 3,499 & 248,033 & $0.00 & $0.00 & $0.68 & $0.71 & $0.69 \\ \hline NO. PIERCE COUNTY & 61,817,684 & 1,352,907 & 2.2% & 105,156 & 1,225,392 & 2,972,803 & $1.54 & $0.00 & $0.68 & $0.80 & $0.92 \\ \hline Parkland/Spanaway & 986,478 & 8,089 & 0.8% & 1,824 & 1,015 & 0 & $0.00 & $0.00 & $0.00 & $1.18 & $1.18 \\ \hline Lakewood & 6,723,734 & 682,106 & 10.1% & 6,245 & 535,324 & 50,218 & $0.00 & $0.00 & $0.00 & $0.89 & $0.75 \\ \hline Dupont & 4,683,054 & 525,940 & 11.3% & 0 & 31,040 & 0 & $0.00 & $0.00 & $0.00 & $0.00 & $0.00 \\ \hline Lacey & 9,100,895 & 356,243 & 3.9% & 39,065 & 401,928 & 87,060 & $0.00 & $0.00 & $0.00 & $0.64 & $0.65 \\ \hline SOUTH SOUND & 31,454,624 & 2,126,407 & 6.8% & 34,644 & 2,030,701 & 4,454,576 & $0.00 & $0.00 & $0.00 & $0.71 & $0.69 \\ \hline SEATTLE TOTALS & 252,034,641 & 9,248,151 & 3.7% & 352,925 & 4,071,751 & 10,255,724 & $1.54 & $1.31 & $1.09 & $0.92 & $0.95 \\ \hline \end{tabular}
