Question
In: Finance
Market rent is currently $50/sqft per year for 100,000 sqft. Market rent increases 2% annually. Vacancy...
Market rent is currently $50/sqft per year for 100,000 sqft. Market rent increases 2% annually. Vacancy is 7% of PGI each year. Operating expenses are $30/sqft per year and increasing by 3$ annually. Create the pro forma cash flow statement for the next five years showing PGI, EGI, and NOI.
Solutions
Expert Solution
Solution
| Year | Today (0) | 1 | 2 | 3 | 4 | 5 |
| Market Rent | $50.00 | $51.00 | $52.02 | $53.06 | $54.12 | $55.20 |
| growth rate | 2% | |||||
| Area | $1,00,000 | $1,00,000 | $1,00,000 | $1,00,000 | $1,00,000 | $1,00,000 |
| Potential Gross Income (PGI) | ||||||
| (Area * market rent) | $50,00,000 | $51,00,000 | $52,02,000 | $53,06,040 | $54,12,161 | $55,20,404 |
| Vacancy (%) | 7% | 7% | 7% | 7% | 7% | 7% |
| Vacancy | $3,50,000 | $3,57,000 | $3,64,140 | $3,71,423 | $3,78,851 | $3,86,428 |
| (PGI * Vacancy %) | ||||||
| Effective Gross Income (EGI) | $46,50,000 | $47,43,000 | $48,37,860 | $49,34,617 | $50,33,310 | $51,33,976 |
| (PGI - Vacancy) | ||||||
| Operating Expenses Rate | $30 | $33 | $36 | $39 | $42 | $45 |
| growth | $3 | |||||
| Operating Expenses (OPE) | $30,00,000 | $33,00,000 | $36,00,000 | $39,00,000 | $42,00,000 | $45,00,000 |
| (Area * OE rate) | ||||||
| Net Operating Income (NOI) | $16,50,000 | $14,43,000 | $12,37,860 | $10,34,617 | $8,33,310 | $6,33,976 |
| (EGI - OPE) |
jeff jeffy answered 1 year agoRelated Solutions
You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which...
You currently pay $10,000 per year in rent to a landlord for a
$100,000 house, which you are considering purchasing. You can
qualify for a loan of $80,000 at 9% if you put $20,000 down on the
house. To raise money for the down payment, you would have to
liquidate stock earning you a 15% return. We neglect other
concerns, like closing costs, capital gains, and tax consequences
of owning.
1. Explain the concept of opportunity cost.
2. Explain the...
Currently the tea market is in equilibrium at price $4.00 per bag of tea and 100,000...
Currently the tea market is in equilibrium at price $4.00 per
bag of tea and 100,000 bags of tea. Now, suppose the price of
coffee decreases by 10%. This will lead to a 25% change in the
equilibrium price of tea. The Price Elasticity of Demand (Ed) for
Tea has been calculated to be 1.20 and the Price Elasticity of
Supply for Tea has been calculated to be 0.90. Answer the following
questions based on these events and facts.
(a)...
Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $ ...
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10 per $100 of R.C.)
$
(4,000)
$ (354,800)
Estimated Net...
Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $ ...
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10 per $100 of R.C.)
$
(4,000)
$ (354,800)
Estimated Net...
Triangle Pediatrics currently provides 1,000 visits per year at a price of $50 per visit. The...
Triangle Pediatrics currently provides 1,000 visits per year at
a price of $50 per visit. The variable cost per visit (variable
cost rate) is $30, and total fixed costs are $15,000. The business
manager suggests that Triangle Pediatrics can increase the number
of visits to 1,200 per year by cutting the price per visit by $5
and increasing the fixed advertising budget by $5,000.
Based on this scenario, what are the profits for a volume of
1,200 units?
Five Year Discounted Cash Flow,Property is 5,000 square feet,Rent is $20 per square foot and increases...
Five Year Discounted Cash Flow,Property is 5,000 square
feet,Rent is $20 per square foot and increases $2 per annum,Vacancy
and Collection is 5% of PGI,Real Estate Taxes are $20,000 in year 1
and increase 5% per annum,Operating Expenses are $25,000 in year 1
and increases $1 per square foot per annum,Management is 5% of EGI,
Discount Rate is 11%,Capitalization Rate is 9%,Calculate the
NPV.
Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 40% total operating...
Underwriting information: 200 unit apartment building 1,000 per
month average rent 8% vacancy 40% total operating expense ratio 3%
growth rate Purchase price is $20 million Exit cap rate is 7.5%
Unlevered discount rate is 8% Assume 5 year holding period
2. Assume the above but now with the following loan information:
Loan principal of $10 million 5% interest rate 30 year term with
amortization 2% loan fees
Calculate levered cash flows
Calculate net sales proceeds after debt repayment
What...
Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating...
Underwriting information:
200 unit apartment building
1,000 per month average rent
8% vacancy
38% total operating expense ratio
Replacement Reserves of $250 per unit per year
3% growth rate
Purchase price is $20 million
Exit cap rate is 7.5%
Sales costs are 2%
Unlevered discount rate is 8%
Assume 5 year holding period
Part 1 - Prepare 5 year pro forma operating
statement
What is cap rate on the purchase price?
Determine the sales price at the end of year...
Affordable art company has a print division that is currently producing 100,000 prints per year but...
Affordable art company has a print division that is currently
producing 100,000 prints per year but has capacity of 150,000
prints. The variable costs of each print are $28, and the annual
fixed costs are $120,000. The prints sell for $40 in the open
market. The company's Retail Division wants to buy 50,000 prints at
$22 each. The Print Division manager refuses the order because the
prices is below variable cost. The Retail Division manager argues
that the order should...
Consider a bond paying a coupon rate of 20% per year, compounded annually, when the market...
Consider a bond paying a coupon rate of 20% per year, compounded
annually, when the market interest rate (YTM) is only 10% per year.
The market interest rate (return for an investment of like risk)
will remain at 10% for the next two years. The bond has
two years until maturity. What is the HOLDING PERIOD
RETURN (or rate of return) over the first year on this
bond?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Kathleen Allen has $100,000 to divide among several investments. The alternative investments are municipal bonds with...
- “Checking Facts in a Post-Truth World” by Alexander Tesar, The Walrus, 17 November, 2016 Response Essay...
- Attribute melting temperature, lattice constant, and elastic properties to the corresponding features of the interatomic potential.
- Westlake Research Hospital It is imperative that the database be ready before the actual clinical trials...
- 1. Describe the idea of color temperature? a. What are the advantages and disadvantages of using...
- Cost of Units Completed and in Process The charges to Work in Process—Assembly Department for a...
- Broussard Skateboard's sales are expected to increase by 20% from $7.0 million in 2018 to $8.40...
ADVERTISEMENT