Property-level cash flows based on 3-year hold Property-level cash flows from operations 2009 2010 2011 2012 Year 0 Year 1 Year 2 Year 3 Debt service Before-tax cash flow from operations Property-level cash flows from sale Repayment of principal Prepayment penalty Before-tax cash flow from sale Before-tax cash flow \begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{6}{|l|}{ Property-level cash flows based on 3-year hold } \\ \hline \multicolumn{6}{|l|}{ Terminal cap rate } \\ \hline \multicolumn{6}{|l|}{ Management fee (\% of funds from LP) } \\ \hline & 2009 & 2010 & 2011 & 2012 & 2013 \\ \hline & Year 0 & Year 1 & Year 2 & Year 3 & Year 4 \\ \hline Potential Gross Income & & 1,685,377.45 & 1,715,672.08 & 1,746,572.60 & 1,778,091.13 \\ \hline Vacancy & & 113,764.00 & 56,882.00 & 0.00 & 0.00 \\ \hline Effective Gross Income & & 1,571,613.45 & 1,658,790.08 & 1,746,572.60 & 1,778,091.13 \\ \hline Credit loss & & 55,006.47 & 58,057.65 & 61,130.04 & 62,233.19 \\ \hline Expense reimbursements & & 332,461.33 & 346,004.67 & 359,548.00 & 359,548.00 \\ \hline Total operating revenue & & 1,849,068.31 & 1,946,737.09 & 2,044,990.56 & 2,075,405.94 \\ \hline Operating expenses & & 958,684.20 & 982,651.31 & 1,007,217.59 & 1,032,398.03 \\ \hline \multicolumn{6}{|l|}{ Net Operating Income } \\ \hline Leasing commissions & & 1,137.64 & 1,137.64 & 1,137.64 & \\ \hline \multicolumn{6}{|l|}{ Management fee } \\ \hline \multicolumn{6}{|l|}{ Reversion sale price } \\ \hline \multicolumn{6}{|l|}{ Property-level cash flows from operations } \\ \hline \multicolumn{6}{|l|}{ Property-level cash flows from sale } \\ \hline Property-level cash flow & (10,400,000.00) & & & & \\ \hline \end{tabular} the LP is greater than the distribution needed to meet their preferred return, the difference does not go to paying down their balance and, instead, is subject to distribution based on the promote. Distribution of cash flows to investors Equity contribution Investor contribution percentage Investor contribution Wildcat contribution percentage Wildcat contribution Investor preferred return Wildcat subordinate return Promote: Investor share Promote: Wildcat share Investor IRR preference \begin{tabular}{|l|l|} \hline & \\ \hline & \\ \hline Before-tax cash flow from operations & \\ \hline Before-tax cash flow from sale & \\ \hline Before-tax cash flow & IRR \\ \hline \end{tabular} Investor Equity Capital Account: Beginning Equity Investment Balance Preferred Return Earned Preferred Return Paid Accrued But Unpaid Preferred Return Ending Equity Investment Balance Operational cash flow Investor Level Cash Flows: Wildcat Cash Flows (excluding management fee): Reversion Allocations: Investor Return of Equity (with preference) Wildcat Return of Equity Investor Additional proceeds Wildcat Additional proceeds Reversion cash flow: Investor Level Cash Flows: Wildcat Level Cash Flows: Total CF to partners: Investor Level Cash Flows: Wildcat Level Cash Flows: IRR IRR Distribution of cash flows to investors Equity contribution Investor contribution percentage Investor contribution Wildcat contribution percentage Wildcat contribution Investor preferred return Wildcat subordinate return Promote: Investor share Promote: Wildcat share Investor IRR preference Before-tax cash flow from operations Before-tax cash flow from sale Before-tax cash flow IRR Investor Equity Capital Account: Beginning Equity Investment Balance Preferred Return Earned Preferred Return Paid Accrued But Unpaid Preferred Return Ending Equity Investment Balance Operational cash flow Investor Level Cash Flows: Wildcat Cash Flows (excluding management fee): Reversion Allocations: Investor Return of Equity (with preference) Wildcat Return of Equity Investor Additional proceeds Wildcat Additional proceeds Reversion cash flow: Investor Level Cash Flows: Wildcat Level Cash Flows: Total CF to partners: Investor Level Cash Flows: Wildcat Level Cash Flows: IRR IRR Mortgage amortization LTV Initial balance Note rate Amortization Penalty \begin{tabular}{|l|l|l|l|l|l|} \hline Month & Balance & Payment & Interest & Principal & Penalty \\ \hline 0 & & & & & \\ \hline 1 & & & & \\ \hline 2 & & & & \\ \hline 3 & & & & \\ \hline 4 & & & & \\ \hline 5 & & & & \\ \hline 6 & & & & \\ \hline 7 & & & & \\ \hline 8 & & & & \\ \hline 9 & & & & \\ \hline 10 & & & & \\ \hline 11 & & & & \\ \hline 12 & & & & \\ \hline 13 & & & & \\ \hline 14 & & & & \\ \hline 15 & & & & \\ \hline 17 & & & & \\ \hline 18 & & & & \\ \hline \end{tabular} 1. You are putting together a deal to fund the acquisition of a medium-sized multi-family property in Hoboken. After obtaining both a first-lien mortgage and a layer of mezzanine debt, you need an additional $500,000 to close on the property. Before shopping the deal to potential investors, you decide to pencil out the cash flows from a joint venture where you will provide 5% of the required equity and your investors provide the rest. Cash flows are distributed on a parri passu basis until reaching a 10% return. Any cash flows remaining after attaining this 10% hurdle are distributed based on an 75/25 promote. The cash flows after debt service for the three-year holding period are: (a) How much equity do you contribute? How much equity is contributed by your investors? (b) Fill in the missing values in the capital account corresponding to the 10% return hurdle. Property-level cash flows based on 3-year hold Property-level cash flows from operations 2009 2010 2011 2012 Year 0 Year 1 Year 2 Year 3 Debt service Before-tax cash flow from operations Property-level cash flows from sale Repayment of principal Prepayment penalty Before-tax cash flow from sale Before-tax cash flow \begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{6}{|l|}{ Property-level cash flows based on 3-year hold } \\ \hline \multicolumn{6}{|l|}{ Terminal cap rate } \\ \hline \multicolumn{6}{|l|}{ Management fee (\% of funds from LP) } \\ \hline & 2009 & 2010 & 2011 & 2012 & 2013 \\ \hline & Year 0 & Year 1 & Year 2 & Year 3 & Year 4 \\ \hline Potential Gross Income & & 1,685,377.45 & 1,715,672.08 & 1,746,572.60 & 1,778,091.13 \\ \hline Vacancy & & 113,764.00 & 56,882.00 & 0.00 & 0.00 \\ \hline Effective Gross Income & & 1,571,613.45 & 1,658,790.08 & 1,746,572.60 & 1,778,091.13 \\ \hline Credit loss & & 55,006.47 & 58,057.65 & 61,130.04 & 62,233.19 \\ \hline Expense reimbursements & & 332,461.33 & 346,004.67 & 359,548.00 & 359,548.00 \\ \hline Total operating revenue & & 1,849,068.31 & 1,946,737.09 & 2,044,990.56 & 2,075,405.94 \\ \hline Operating expenses & & 958,684.20 & 982,651.31 & 1,007,217.59 & 1,032,398.03 \\ \hline \multicolumn{6}{|l|}{ Net Operating Income } \\ \hline Leasing commissions & & 1,137.64 & 1,137.64 & 1,137.64 & \\ \hline \multicolumn{6}{|l|}{ Management fee } \\ \hline \multicolumn{6}{|l|}{ Reversion sale price } \\ \hline \multicolumn{6}{|l|}{ Property-level cash flows from operations } \\ \hline \multicolumn{6}{|l|}{ Property-level cash flows from sale } \\ \hline Property-level cash flow & (10,400,000.00) & & & & \\ \hline \end{tabular} the LP is greater than the distribution needed to meet their preferred return, the difference does not go to paying down their balance and, instead, is subject to distribution based on the promote. Distribution of cash flows to investors Equity contribution Investor contribution percentage Investor contribution Wildcat contribution percentage Wildcat contribution Investor preferred return Wildcat subordinate return Promote: Investor share Promote: Wildcat share Investor IRR preference \begin{tabular}{|l|l|} \hline & \\ \hline & \\ \hline Before-tax cash flow from operations & \\ \hline Before-tax cash flow from sale & \\ \hline Before-tax cash flow & IRR \\ \hline \end{tabular} Investor Equity Capital Account: Beginning Equity Investment Balance Preferred Return Earned Preferred Return Paid Accrued But Unpaid Preferred Return Ending Equity Investment Balance Operational cash flow Investor Level Cash Flows: Wildcat Cash Flows (excluding management fee): Reversion Allocations: Investor Return of Equity (with preference) Wildcat Return of Equity Investor Additional proceeds Wildcat Additional proceeds Reversion cash flow: Investor Level Cash Flows: Wildcat Level Cash Flows: Total CF to partners: Investor Level Cash Flows: Wildcat Level Cash Flows: IRR IRR Distribution of cash flows to investors Equity contribution Investor contribution percentage Investor contribution Wildcat contribution percentage Wildcat contribution Investor preferred return Wildcat subordinate return Promote: Investor share Promote: Wildcat share Investor IRR preference Before-tax cash flow from operations Before-tax cash flow from sale Before-tax cash flow IRR Investor Equity Capital Account: Beginning Equity Investment Balance Preferred Return Earned Preferred Return Paid Accrued But Unpaid Preferred Return Ending Equity Investment Balance Operational cash flow Investor Level Cash Flows: Wildcat Cash Flows (excluding management fee): Reversion Allocations: Investor Return of Equity (with preference) Wildcat Return of Equity Investor Additional proceeds Wildcat Additional proceeds Reversion cash flow: Investor Level Cash Flows: Wildcat Level Cash Flows: Total CF to partners: Investor Level Cash Flows: Wildcat Level Cash Flows: IRR IRR Mortgage amortization LTV Initial balance Note rate Amortization Penalty \begin{tabular}{|l|l|l|l|l|l|} \hline Month & Balance & Payment & Interest & Principal & Penalty \\ \hline 0 & & & & & \\ \hline 1 & & & & \\ \hline 2 & & & & \\ \hline 3 & & & & \\ \hline 4 & & & & \\ \hline 5 & & & & \\ \hline 6 & & & & \\ \hline 7 & & & & \\ \hline 8 & & & & \\ \hline 9 & & & & \\ \hline 10 & & & & \\ \hline 11 & & & & \\ \hline 12 & & & & \\ \hline 13 & & & & \\ \hline 14 & & & & \\ \hline 15 & & & & \\ \hline 17 & & & & \\ \hline 18 & & & & \\ \hline \end{tabular} 1. You are putting together a deal to fund the acquisition of a medium-sized multi-family property in Hoboken. After obtaining both a first-lien mortgage and a layer of mezzanine debt, you need an additional $500,000 to close on the property. Before shopping the deal to potential investors, you decide to pencil out the cash flows from a joint venture where you will provide 5% of the required equity and your investors provide the rest. Cash flows are distributed on a parri passu basis until reaching a 10% return. Any cash flows remaining after attaining this 10% hurdle are distributed based on an 75/25 promote. The cash flows after debt service for the three-year holding period are: (a) How much equity do you contribute? How much equity is contributed by your investors? (b) Fill in the missing values in the capital account corresponding to the 10% return hurdle