montecarlo example

7/29/2019 Montecarlo Example

1/36

Commercial Real Estate Valuation and Financial Feasi

ASSUMPTIONS

Annual Gross Rent, first year 182,400Vacancy and Collection factor 5%

Operating Expenses, first year 55,540Annual % change in rent 3.0%Annual % change in expenses 3.0%Loan to Value ratio 75.0%Stated Annual Interest rate 6.0%Loan Term (years) 25

Percent of price in improvements 85.0%CPI Annual Increase 3.0%After tax, Real Discount rate 8.0%Cap Rate assumed at date of sale 8.0%Transaction costs as % of sales price 9.0%Cap Rate at Purchase 9.1%

DEFINED VARIABLES Source Recovery period (years) 39 Omnibus BudIncome tax rate (Corporate) 15.0% IRS - VariesCapital Gains tax rate 5.0% IRS - Varies

Property Valuation: 1,299,558.50$

ECONOMIC VALUES, CALCULATED BY MODELLoan Amount 974,669Equity Required 324,890Mortgage Loan Constant 7.82%

DECISION ANALYSIS FACTORSyear 0

Real Cash Flow to Owner (324,890)Present Value of Real Cash Flow (324,890)

NPV of Real Cash Flow: 1,154,313.90$After Tax Real Internal Rate of Return: 45.71%

PROFORMA INCOME STATEMENTyear 0

Annual Gross Rental Income na

Vacancy and Collection Losses naEffective Rental naOperating Expenses naNet Operating Income naInterest Expense naDepreciation (cost recovery) naTaxable Income naIncome Tax Liability naNet Income After Tax na

Assu


2/36

PROFORMA CASH FLOW STATEMENTyear 0

Annual Gross Rental Income naVacancy and Collection Loses na

Effective Rental naOperating Expenses naNet Operating Income naDebt Service naIncome Tax Liability naEquity Dividend (cash to owner) naDown Payment/Reversion (324,890)Total Cash Flow to Owner (324,890)Purchasing Power Adjustment naReal Cash Flow to Owner (324,890)

MORTGAGE LOAN AMORTIZATION SCHEDULEyear 0

Balance Owed, beginning of yearAnnual Mortgage Payment

Interest Portion of PaymentAmortization of principalBalance Owed, end of year

ANALYSIS OF REVERSION ON SALE

Net Operating Income Projected, Year After Sale (Year 11)Cap Rate At Sale DateCapitalized Value (Sale Price)Transaction CostNet Sales PriceBook Value At Sales Date (cost-dep)Capital Gain ( Net Price - BV)Capital Gains TaxMortgage Balance OwedReversion in nominal dollars to owner at sales date


3/36


4/36

42956.2

74533.82

47966.58

0.012696


5/36


6/36

867.6558

253913

0.732727


7/36


8/36

0.01824

0.015802

0.043248

0.030238

0.092582

0.023333

0.018334

0.009235


9/36

ility

et Reconciliation Act of 1993

ased on taxable income

ased on income tax bracket

1 2 3 4 5 6 7 8

35,781 204,398 195,471 192,448 189,509 186,650 183,870 181,165

33,131 175,238 155,171 141,455 128,977 117,621 107,286 97,878

1 2 3 4 5 6 7 8

182,400 187,872 193,508 199,313 205,293 211,452 217,795 224,329

(9,120) (9,394) (9,675) (9,966) (10,265) (10,573) (10,890) (11,216)173,280 178,478 183,833 189,348 195,028 200,879 206,905 213,113

(55,540) (57,206) (58,922) (60,690) (62,511) (64,386) (66,318) (68,307)

117,740 121,272 124,910 128,658 132,517 136,493 140,588 144,805

(58,480) (57,414) (56,284) (55,087) (53,817) (52,472) (51,045) (49,533)

(28,324) (28,324) (28,324) (28,324) (28,324) (28,324) (28,324) (28,324)

30,936 35,534 40,302 45,247 50,376 55,698 61,219 66,949

(4,640) (5,330) (6,045) (6,787) (7,556) (8,355) (9,183) (10,042)

26,296 30,204 34,257 38,460 42,820 47,343 52,036 56,906

Commercial Real Estate Valuation and Financial Feasibilit

INSTRUCTIONS:

1.) Conduct comparables analysis of similar properties to estimate the cap rate at purch2.) Define all assumption distributions to reflect current and local market conditions.3.) Run simulation.4.) Analyze results.

Model developed by Questor Consulting LLC,Better Analysis. Better Decisions.For information regarding this model or for requests, please call us at (561) 417-5515.

OImptions


10/36

1 2 3 4 5 6 7 8

182,400 187,872 193,508 199,313 205,293 211,452 217,795 224,329

(9,120) (9,394) (9,675) (9,966) (10,265) (10,573) (10,890) (11,216)

173,280 178,478 183,833 189,348 195,028 200,879 206,905 213,113(55,540) (57,206) (58,922) (60,690) (62,511) (64,386) (66,318) (68,307)

117,740 127,444 124,910 128,658 132,517 136,493 140,588 144,805

(76,245) 94,732 94,732 94,732 94,732 94,732 94,732 94,732

(4,640) (5,330) (6,045) (6,787) (7,556) (8,355) (9,183) (10,042)

36,854 216,845 213,597 216,602 219,693 222,870 226,137 229,495

na na na na na na na na

36,854 216,845 213,597 216,602 219,693 222,870 226,137 229,495

103% 106% 109% 113% 116% 119% 123% 127%

35,781 204,398 195,471 192,448 189,509 186,650 183,870 181,165

1 2 3 4 5 6 7 8

974,669 956,904 938,073 918,112 896,954 874,526 850,752 825,552

76,245 76,245 76,245 76,245 76,245 76,245 76,245 76,245

(58,480) (57,414) (56,284) (55,087) (53,817) (52,472) (51,045) (49,533)

17,765 18,831 19,961 21,158 22,428 23,774 25,200 26,712

956,904 938,073 918,112 896,954 874,526 850,752 825,552 798,840

158,233

8.00%

1,977,909

(178,012)

1,799,897

(1,016,321)

783,576

39,179

740,512

1,020,206


11/36


12/36


13/36


14/36


15/36


16/36


17/36

9 10 11

178,535 935,104 0

89,312 433,134 0

9 10 11

231,059 237,991 245,130

(11,553) (11,900) (12,257)219,506 226,091 232,874

(70,356) (72,467) (74,641)

149,150 153,624 158,233

(47,930) (46,232) (44,431)

(28,324) (28,324) (28,324)

72,895 79,069 85,478

(10,934) (11,860) (12,822)

61,961 67,208 72,657

se.


18/36

9 10 11

231,059 237,991 245,130

(11,553) (11,900) (12,257)

219,506 226,091 232,874(70,356) (72,467) (74,641)

149,150 153,624 158,233

94,732 94,732 na

(10,934) (11,860) na

232,947 236,496 na

na 1,020,206 na

232,947 1,256,702 na

130% 134% na

178,535 935,104 na

9 10 11

798,840 770,525 740,512

76,245 76,245 76,245

(47,930) (46,232) (44,431)

28,315 30,014 31,814

770,525 740,512 708,697


19/36


20/36


21/36


22/36


23/36


24/36


25/36


26/36


27/36


28/36


29/36


30/36


31/36


32/36


33/36


34/36


35/36


36/36

montecarlo example

Documents