Calculating Internal Rate of Return - NN Lease

[Joseph Stapleton]

Purchase Price - $4,098,720
Projection Based On - 51,234 SF
Income	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Gross Rent (3% Escalation)	$1,160,962	$1,195,791	$1,231,665	$1,268,615	$1,306,673	$1,345,873	$1,386,249	$1,427,836	$1,470,671	$1,514,791
Less: Vacancy @ 5%	$58,048	$59,790	$61,583	$63,431	$65,334	$67,294	$69,312	$71,392	$73,534	$75,740
Less: Improvements	$307,404	$307,404	$307,404	$307,404	$307,404	$102,468	$102,468	$102,468	$102,468	$102,468
Total Operating Income	$795,510	$828,597	$862,678	$897,780	$933,935	$1,176,111	$1,214,469	$1,253,976	$1,294,669	$1,336,583
Expenses	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Less: Rent Abatement	$61,481	$61,481	$61,481	$61,481	$61,481	$30,740	$0	$0	$0	$0
Less: Broker Fees	$69,658	$0.00	$0.00	$0.00	$0.00	$52,267	$0.00	$0.00	$0.00	$0.00
Total Operating Exp.	$131,139	$61,481	$61,481	$61,481	$61,481	$83,007	$0.00	$0.00	$0.00	$0.00
Income Analysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10	Mortgage Assumptions
NOI	$664,371	$767,116	$801,197	$836,299	$872,454	$1,093,104	$1,214,469	$1,253,976	$1,294,669	$1,336,583	Purchase Price PSF:	$80/PSF	$4,098,720
Less: Mortgage Pmt.	$237,672	$237,672	$237,672	$237,672	$237,672	$237,672	$237,672	$237,672	$237,672	$237,672	Loan to Value (LTV):	75%	$3,074,040
Cash Flow	$426,699	$529,444	$563,525	$598,627	$634,782	$855,432	$976,797	$1,016,304	$1,056,997	$1,098,911		Interest Rate:	6%	$237,672
Purchase Price Cap Rate	16%	18.7%	19.5%	20%	21%	26.6%	29.6%	30.5%	31.5%	32.6%	Amortization (years):	25
COCR	33%	41%	43.8%	46.5%	49%	66.5%	75.9%	79%	82%	85%	Total Cost of Mortgage:	$5,941,825
Return On Equity	33.8%	31%	26%	22.8%	20.5%	23.8%	23.9%	22.1%	20.6%	19.4%	Down Payment:	25%	$1,024,680
	Loan Commitment Fee:	1%	$30,740
Loan Anlysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10		Loan Closing Costs:	4.5%	138,332
Market Value (5% Appreciation)	$4,098,720	$4,303,656	$4,518,839	$4,744,781	$4,982,020	$5,231,121	$5,492,677	$5,767,311	$6,055,677	$6,358,461		Acquisition Fees:	3.00%	$92,221
Less: Loan Balance	$2,836,368	$2,598,696	$2,361,024	$2,123,352	$1,885,680	$1,648,008	$1,410,336	$1,172,664	$934,992	$697,320		Initial Cash Invested:	$1,285,973
Equals: Equity	$1,262,352	$1,704,960	$2,157,815	$2,621,429	$3,096,340	$3,583,113	$4,082,341	$4,594,647	$5,120,685	$5,661,141
Sale Analysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10		Financial Metrics
Equity	$1,262,352	$1,704,960	$2,157,815	$2,621,429	$3,096,340	$3,583,113	$4,082,341	$4,594,647	$5,120,685	$5,661,141		Cap Rate (Purchase Price):	16%
Less: Selling Costs @ 4.5%	$56,806	$76,723	$97,102	$117,964	$139,335	$161,240	$183,705	$206,759	$230,430	$254,751		Cash On Cash Return (Year 1):	33%
Equals: Proceeds After Sale	$1,205,546	$1,628,237	$2,060,713	$2,482,094	$2,957,005	$3,421,873	$3,898,636	$4,387,888	$4,890,255	$5,406,390		Internal Rate Of Return (Year 10):	-83.42%
Plus: Cum. Cash Flow	$426,699	$956,143	$1,519,668	$2,118,295	$2,753,077	$3,608,509	$4,585,306	$5,601,610	$6,658,607	$7,757,518		Sale Price (Year 10):	16,707,288
Less: Initial Cash Inv.	-$1,285,973	-$1,285,973	-$1,285,973	-$1,285,973	-$1,285,073	-$1,285,973	-$1,285,973	-$1,285,973	-$1,285,973	-$1,285,973
Equals: Net Profit	$346,272	$1,298,407	$2,294,408	$3,314,416	$4,424,109	$5,744,409	$7,197,969	$8,703,525	$10,262,889	$11,877,935
Internal Rate of Return	201.38%	34%	-15%	-39.29%	-53.32%	-64.36%	-71.95%	-77.04%	-80.69%	-83.42%