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<br />ATTACHMENT C
<br />WG Development MUPTE Application
<br />Staff Pro Forma Analysis
<br />
<br />Applicant
<br />WG Development
<br />th
<br />10 & Charnelton Project
<br />541 Willamette St., Ste. 106
<br />Eugene, OR 97401
<br />
<br />
<br />Sources
<br />
<br />Total Cost
<br />
<br />EQ
<br />$ 9,579,68127%
<br /> Permanent Debt$ 25,900,61973%
<br />Total project
<br />$ 35,480,300
<br />
<br />
<br />Pro-Forma
<br />
<br />
<br />Without MUPTEYear 1Year 2Year 10
<br />
<br />Rent Income$ 3,095,179$ 3,157,083$ 3,699,025
<br />
<br />
<br /> - Vacancy (5%)$ 154,759$ 157,854$ 184,951
<br />
<br /> = Effective Gross Rent$ 2,940,420$ 2,999,228$ 3,514,074
<br />
<br /> - Operating Exp (25%)$ 773,795$ 789,271$ 924,756
<br />
<br /> = NOI
<br />$ 2,166,625$ 2,209,958$ 2,589,318
<br />
<br /> - Debt Service$ 2,050,301$ 2,050,301$ 2,050,301
<br />
<br />
<br /> = CF
<br />$ 116,324$ 159,656$ 539,016
<br />
<br />Cash on Cash Return 1%2%6%
<br />
<br />Value
<br />$ 32,098,000$ 32,740,000$ 38,360,000
<br />
<br />Debt Coverage Ratio
<br /> 1.06
<br />
<br />
<br />The pro-forma uses conservative assumptions about property value growth and market
<br />assumptions about vacancy and operating expenses. The model assumes that assessed property
<br />values increase by 2% per year. The vacancy rate is assumed at 5% of rental income and
<br />operating expenses are estimated at 25% of rental income, both standard assumptions in financial
<br />underwriting. The above listed financial information is based on projections prior to financing,
<br />tenanting, and construction. The cap rate was estimated at 6.75%.
<br />
<br />Conclusion
<br />The above Pro-Forma for WG shows three key reasons that the project would not be built
<br />without MUPTE. First, the debt coverage ratio is low at 1.06 instead of the common bank
<br />1
<br />preference for 1.25 or higher. Second, the perceived risk is high demonstrated by the Cash on
<br />
<br />
<br />1
<br /> Debt Coverage Ratio = Net Operating Income (NOI) divided by debt service
<br />
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