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ANALYSIS – Phased Project
<br />The Phased Project lacks the ability to attract the needed equity. Capstone has indicated that their primary investor will require a minimum return of
<br />9%. Without the MUPTE savings, the Phased Project generates a 5% return, which is insufficient to attract the required $27.4 million equity
<br />investment. The Cash on Cash only reaches 8% by year 10 in the absence of the MUPTE.
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<br />WITH MUPTE
<br />Pro-Forma Phased Project
<br />
<br />
<br />With MUPTEYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
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<br />
<br />Income$ 9,946,200$ 10,045,700$ 10,146,200$ 10,247,700$ 10,350,200$ 10,453,700$ 10,558,200$ 10,663,800$ 10,770,400$ 10,878,100
<br />
<br />
<br /> - Vacancy (6%)$ 602,400 $ 608,500 $ 614,500 $ 620,700 $ 626,900 $ 633,200 $ 639,500 $ 645,900 $ 652,300 $ 658,900
<br />
<br />
<br /> = Effective Gross Rent$ 9,343,800$ 9,437,200$ 9,531,700$ 9,627,000$ 9,723,300$ 9,820,500$ 9,918,700$ 10,017,900$ 10,118,100$ 10,219,200
<br />
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<br /> - Operating Exp (32%)$ 2,990,000$ 3,019,900$ 3,050,100$ 3,080,600$ 3,111,400$ 3,142,500$ 3,174,000$ 3,205,700$ 3,237,700$ 3,270,100
<br />
<br /> - Property Tax
<br />$ (846,000)$ (871,400)$ (897,500)$ (924,400)$ (952,100)$ (980,700)$ (1,010,100) $ (1,040,400) $ (1,071,600) $ (1,103,700)
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<br />(saved by MUPTE)
<br />
<br />
<br /> = NOI$ 7,199,800$ 7,288,700$ 7,379,100$ 7,470,800$ 7,564,000$ 7,658,700$ 7,754,800$ 7,852,600$ 7,952,000$ 8,052,800
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<br />
<br /> - Debt Service$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700$ 4,851,700
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<br /> = CF$ 2,348,100$ 2,437,000$ 2,527,400$ 2,619,100$ 2,712,300$ 2,807,000$ 2,903,100$ 3,000,900$ 3,100,300$ 3,201,100
<br />
<br />
<br />Cash on Cash Return 9%9%9%10%10%10%11%11%11%12%
<br />
<br />
<br />Value$ 99,308,000$ 100,534,000$ 101,781,000$ 103,046,000$ 104,331,000$ 105,637,000$ 106,963,000$ 108,312,000$ 109,683,000$ 111,073,000
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<br />
<br />DCR 1.48
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<br />
<br />The Phased Project pro-forma above shows that the project improves with the MUPTE. The Cash on Cash return reaches 9% in year 1 and 12% by
<br />year 10, consistent with long-term expectations for multi-family housing investments.
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