Professional Documents
Culture Documents
REAP 062206
Overview
Building a Development Proforma
Cost and Operating Assumptions Proforma
Grocery Center
Grocery Center
Major Assumptions Development Program Lot Size Retail Space Parking (Surface) Number 6.0 54,982 250 Unit Acres Sq. Ft. Spaces
Development Cost Assumptions Land Costs Hard Costs Site Development Costs Hard Construction Costs Parking Costs (Surface) Soft Costs
Unit Land Sq. Ft. Land Sq. Ft. Bldg. Sq. Ft. Per Space of Hard Costs
Developer Profit Assumption (NOI/ Total Cost) Developer Profit Threshold Lease Revenues Anchor Retail Space (NNN) In Line Retail Space (NNN) Expenses Retail Space Occupancy Rates 8% of Total Costs
$10.00 $20.00
$6.75 90%
Notes Soft Costs include architecture, engineering, permits, impact fees, financing, legal, interim property taxes, and developer overhead Assumes developer provides a bare retail shell and tenants would pay for buildout of retail space or negotiate an improvement package as part of an increase in their rental rate.
Grocery Center
Grocery Center
Pro- Forma Analysis Development Costs Land Hard Costs Site Development Hard Construction Costs Parking Costs (Surface) Subtotal Soft Costs Total Development Costs Development Feasibility Rent Revenue Grocery Store In Line Space Reimbursements Total Gross Revenue Less Vacancy (1) Effective Gross Income Less Operating Expenses Net Operating Income (NOI) Return On Costs Notes (1) Vacancy is 10% of In Line Space rent and 10% of allocated Reimbursements on a prorata basis for In Line Space Sq. Ft. 51,674 3,308 $261,360 $522,720 $4,398,560 $375,000 $5,296,280 $1,588,884 $7,146,524 Total $516,740 $66,160 $371,131 $954,031 $8,849 $945,182 $371,131 $574,051 8.03%
54,982
Operating Assumptions
Rental Income
Rental Income
Base Rent
Supermarket Anchor: 51,674 square feet $9.68 per square foot per year $500,204 $500,204 12 = $41,684 per month
Subway: 1,500 square feet $20 per square foot per year $30,000 $30,000 12 = $2,500 per month (Beginning May 2004)
Dry Cleaners: 1,808 square feet $15 per square foot per year $27,120 $27,120 12 = $2,260 per month
Percentage Rent
Percentage Rent
Grocery Store Anchor: (Sales Breakpoint = $14,000,000) Sales = Breakpoint = $20,000,000 $15,000,000 $5,000,000 1.25% $62,500 Annual Percentage Rent $62,500 12 = $5,208 per month
Subway: (No Breakpoint; % Rent on Gross Sales) Sales = $750,000 1.00% $7,500 Annual Percentage Rent $7,500 12 = $625 per month (Beginning May 2004)
Dry Cleaners: (Natural Breakpoint using Base Rent) Sales = Natural Breakpoint = $723,200 $ 400 per sq ft $542,400 $27,120 base $180,800 5.00% $9,040 $6,587 1808 sq ft $9,040 5% per cent 12 = $753 per month
Expenses
Expenses
Common Area Maintenance (CAM):
54,982 square feet $5.75 ( includes utilities, security, maintenance and on-site management) $316,147 $316,147 12 = $26,346 Monthly CAM Expenses
Insurance:
54,982 $0.40 per square foot $21,993 Annual Insurance Costs $21,993 12 = $1,833 Monthly Insurance Costs
Summary: (monthly)
CAM Real Estate Taxes Insurance Total $26,346 $2,749 $1,833 $30,927
Recoveries (monthly)
Recoveries - (monthly)
Pro Rata Calculations: Square Feet Pro Rata % Recoveries - (monthly) CAM Taxes Insurance Expenses: $26,346 $2,749 $1,833 Total Monthly $30,928 (Annual) Total $371,131
93.98%
$24,760
$2,584
$1,723
$29,067
$348,801
Total Recoveries
100.00%
$25,627
$2,674
$1,783
$30,084
$361,005
IRV
Income = Rate x Value Rate = Income Value
Example:
NOI = $626,839 Capitalization rate =8% Estimated property value = $626,839 / 8% = $7,835,488
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