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ANALYSIS – Updated Phased Project
<br />The Updated Phased Project lacks the ability to attract the needed equity. Capstone has indicated that their primary investor will require a minimum
<br />return of 9%. Without the MUPTE savings, the Updated Phased project generates a 6% return, which is insufficient to attract the required $29 million
<br />equity investment. The Cash on Cash only reaches 8% by year 10 in the absence of the MUPTE.
<br />
<br />WITH MUPTE
<br />Pro-Forma – Updated Phased Project
<br />
<br />
<br />With MUPTEYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
<br />
<br />
<br />Income$ 10,777,000$ 10,884,800$ 10,993,600$ 11,103,500$ 11,214,500$ 11,326,600$ 11,439,900$ 11,554,300$ 11,669,800$ 11,786,500
<br />
<br />
<br /> - Vacancy (6%)$ 653,000 $ 659,000 $ 666,000 $ 673,000 $ 679,000 $ 686,000 $ 693,000 $ 700,000 $ 707,000 $ 714,000
<br />
<br />
<br /> = Effective Gross Rent$ 10,124,000$ 10,225,800$ 10,327,600$ 10,430,500$ 10,535,500$ 10,640,600$ 10,746,900$ 10,854,300$ 10,962,800$ 11,072,500
<br />
<br /> - Operating Exp (32%)$ 3,240,000$ 3,272,000$ 3,305,000$ 3,338,000$ 3,371,000$ 3,405,000$ 3,439,000$ 3,473,000$ 3,508,000$ 3,543,000
<br />
<br /> - Property Tax
<br />
<br />$ (925,000)$ (871,400)$ (871,400)$ (897,500)$ (924,400)$ (952,100)$ (980,700)$ (1,010,100) $ (1,040,400) $ (1,103,700)
<br />
<br />(saved by MUPTE)
<br />
<br /> = NOI$ 7,809,000$ 7,825,200$ 7,894,000$ 7,990,000$ 8,088,900$ 8,187,700$ 8,288,600$ 8,391,400$ 8,495,200$ 8,633,200
<br />
<br />
<br /> - Debt Service$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400$ 5,194,400
<br />
<br />
<br /> = CF$ 2,614,600$ 2,630,800$ 2,699,600$ 2,795,600$ 2,894,500$ 2,993,300$ 3,094,200$ 3,197,000$ 3,300,800$ 3,438,800
<br />
<br />
<br />Cash on Cash Return 9%9%9%10%10%10%11%11%11%12%
<br />
<br />Value$ 107,710,000$ 107,934,000$ 108,883,000$ 110,207,000$ 111,571,000$ 112,934,000$ 114,326,000$ 115,743,000$ 117,175,000$ 119,079,000
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<br />
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<br />DCR 1.50
<br />
<br />The Updated Phased Project pro-forma above shows that the project improves with the MUPTE. The Cash on Cash return is 9% in year 1 and reaches
<br />12% by year 10. [The tax savings from MUPTE increased by $79,000 is due to the income valuation increase of $7.3 million. The method for
<br />calculating the tax savings is the same as described in the financial analysis provided as Attachment F to the Agenda Item Summary for April 23 item
<br />number 4.]
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