Item B: Core Campus Housing - Laserfiche WebLink

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Rents & Vacancy Income for the pro-forma is based on the following: Residential rents from $1.83 - $2.23 per square foot per month (based on unit type) Commercial rent $2.08 per square foot per month Parking $65 per space Miscellaneous (vending, fees, & cleaning) at 6% of residential income The pro-forma uses market assumptions for vacancy of 5%. An 1% annual income escalation rate is used. Operating Expenses For most multi-family projects, the standard assumption for operating expenses is 25% to 30%. Operating expenses assumed for the proposed Core Campus project are estimated at 32% of effective gross rental income. Slightly higher operating cost are expected from enhanced on- site management personnel costs and the operation and maintenance costs associated with higher than standard amenities such as open space, structured parking, hot tub, and furnished units. Information from a local appraiser indicates an acceptable range up to 35%. An 1% annual operating expense escalation rate is assumed. Debt & Interest Rate Debt service is based on a 30-year fixed loan at 5.75%. Return & Value Without the MUPTE savings, the year 1 return on equity is forecasted to be 4.7% (Cash on Cash). The projected market value for the completed project is $42.9 million, as determined by the Net Operating Income (NOI) divided by the capitalization rate. The estimated capitalization rate is 7% based on information from a local appraiser who indicated an acceptable range up to and including 7.25%. ANALYSIS The without MUPTE pro-forma appears to fall short of qualifying for the needed debt (with debt coverage ratio of 1.21 and loan-to-value of 77%). Additionally, the project lacks the ability to attract the needed equity. The proposed project will require the investor to assume some risk from the major redevelopment costs associated with the site and from the rate of absorption of the large number of proposed units brought into the local student housing market. Core Campus has indicated that their primary investor will require a minimum first year return of 8.96%. Without the MUPTE savings, the project generates a 4.7% first year return, which is insufficient to attract the required $11 million equity investment. The Cash on Cash only reaches 7.2% by year 10 in the absence of the MUPTE.