handout “real estate loan underwriting worksheet” commercial real estate ...€¦ · ·...
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HANDOUT “Real Estate Loan Underwriting Worksheet”
COMMERCIAL REAL ESTATE: APPRAISALS & CASH FLOW ANALYSIS
Richard A. Hamm President & Owner
Advantage Consulting & Training Huntsville, Alabama
[email protected] 256-536-0357
August 5, 2016
REAL ESTATE LOAN UNDERWRITING WORKSHEET
Date of Analysis: May 2015___ << oldest most recent >>
Year 2013 2014 2015
Source tax return tax return tax return
(customer prepared, tax return, etc.)
NET OPERATING INCOME (NOI) and CASH FLOW AVAILABLE FOR DEBT SERVICE (CFADS)
Gross Potential Income $166,800 $166,800 $166,800 100% $166,800 100%
Vacancy 300 2,700 2,200 1.3% 11,700 7.0%
GROSS EFFECTIVE INCOME 166,500 164,100 164,600 155,100
Management Fees 0 0 0 0.0% 7,700 5.0%
Maint.Exp.& Repairs//Reserve 7,300 9,200 14,200 8.5%
Capitalized Expenditures* 0 5,000 5,000 3.0%
Insurance Expense 2,900 3,100 4,000 4,000
Utilities Expense 2,400 3,000 2,800 3,000
Property Tax Expense 9,100 9,700 9,800 9,800
Other Expenses or Reserves** 5,500 5,400 5,100 5,200
TOTAL EXPENSES 27,200 35,400 40,900 24.5% 43,700 26.2%
NET OPERATING INCOME $139,300 $128,700 $123,700 74.2% $111,400 66.8%
Distributions, Other*** 10,000 10,000 15,000 5,300
CASH FLOW AVAIL FOR DS $129,300 $118,700 $108,700 $106,100
DEBT SERVICE COVERAGE ANALYSIS
Cash Flow Avail. For Debt Serv. $129,300 $118,700 $108,700 $106,100
Total Annual Debt Service**** $91,700 $91,700 $91,700 $86,600
DSC (x) 1.41 1.29 1.19 1.23
CFADS x 90% $116,370 $106,830 $97,830 $95,490
Total Debt Serv.@ Int.Rate+2% $103,400 $103,400 $103,400 $94,600
Stress Test DSC (x) 1.13 1.03 0.95 1.01
LOAN-TO-VALUE ANALYSIS
Most Recent Appraisal Date 03/22/2009 Value $1,064,000 LTV 61%
Pro-Forma NOI (from above) $111,400
Est. Current Cap Rate 10%
Pro-Forma NOI x 90% $100,260
Est. Current Cap Rate + 1% 11%
Notes:
*Calculated using [(incr.) decr. in net bldgs. & depreciable assets, from Sched. L] - depreciation expense
** Excluding interest exp. & depreciation; can include release or rollover reserve, etc.
***Distributions net of any contributions; other cash items from Schedule K, M-1 or M-2 if not used within NOI
**** Usually test historical CFADS against historical debt service; can test against proposed debt service
Distrib. 13,000
Mgt. Fee (7,700)
(Rev. 12/2013)
LOAN AMOUNT: $650,000
71%
$1,114,000Current
Est. LTV58%
$911,455
Stress-
Test
Est. LTV
CUSTOMER or PROPERTY: Smith Apts. LLC/Oak Trace__
Pro-Forma
14,000 8.4%
Stress-Test
Est. Value
Current
Est. Value