103 NE 59th St 103 NE 59th St OM - Final | Page 18
FINANCIAL OVERVIEW
Financial Overview
After analyzing the 103 NE 59th Street Apartments, the units, the location and the surrounding
submarket, we implemented the historical financial data into our regular multi-family model to derive
the maximum net operating income possible. We researched the most accurate rental / sale
comparables and market data sources to derive out inputs and assumptions.
Regular Multi-family
In this scenario, we assume that the prospective buyer will keep running the building as market rate multi-
family units. We made the following assumptions and inputs to maximize the capitalization rate and returns
for the prospective buyer.
- Increase of market rents to $1,050 per month per unit.
o This breaks down to $2.47 per SF for the 425 square foot studios
o This is supported by the renovated state of all the units
o Effective Gross Income is therefore $205,315 for Year 2
- We assume that expenses will stay in line with historical expenses
o Real estate taxes were adjusted to reflect a sale at $2.3M
o Calculated to be $42,097
o We incorporate a 3% management fee and capital reserves of $150 per unit
o Total Expenses are therefore $68,031 for Year 2
- Stabilized Pro-forma NOI for Year 2 is expected to be $137,284. At a $2.3M acquisition price the returns
are the following: *We assume the buyer will finance the deal with a 65% LTV loan at 4% interest rate and
a 5 year hold selling the asset at 5.5% Cap Rate
o FY 2 Cap Rate: +/- 6%
o Average Deal Cap Rate: 6.9%
o Average Cash-on-Cash: 6.60%
o Unlevered IRR: 9.48%
o Levered IRR: 17%
o Residual Building Value: $2.8M
Price Per Unit: $135,000
In-Place Cap Rate: 5.7%
Proforma Cap Rate: 6%
103 NE 59TH STREET | OFFERING MEMORANDUM
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