real estate site finding
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Site Market Due Diligence Finance Pro-Forma > > > >
Commercial & Rental Property John Cao, LLC
537 North 35th Street Philadelphia, PA 19104
Site Market Due Diligence Finance Pro-Forma > > > >
Content Page
• Site Analysis • Market Analysis • Project Team • Financial Options • Pro-Forma
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Neighborhood Analysis
Site >Source: City-data.com
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Competition in the Area
Proposed Area Competitors
Site >
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Market Analysis
Market >
Source: Neighborhoodscout.com
Real estate activity blooming
Mantua Growth
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Drexel Master Plan (40 years)
Market >New building
Old Building
35th Street
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Zoning • CMX-2 – Neighborhood Commercial Mixed-Use 2
• Primarily intended to accommodate neighborhood-serving retail and service uses. The range of allowed uses is broader than the CMX-1 district.
• CMX-1, – Neighborhood Commercial Mixed-Use
• Primarily intended to accommodate low-impact, small-scale, neighborhood-serving retail and service uses in storefront buildings, as well as the types of residential uses allowed in surrounding zoning districts.
Due Diligence >
Site Market Due Diligence Finance Pro-Forma > > > >
Permits & Licenses
Due Diligence >
Permit Permit Number Permit Type Status Date issued Work Descrip7on 200946 ELE-‐EZ ELECTRICAL ACTIVE 2/12/09 REPLACE ROMEX WIRING TO FIXTURES IN BASEMENT, REMOVE
HANGING WIRES, CLOSE OPEN JUNCTION BOXES, REPLACE 4 LIGHT FIXTURES, 2 EXIT SIGNS, ADD 2 EMERGENCY LIGHTS, 4 REMOTE HEADS IN BACK BATHROOM AND POINT OF EGRESS AS PER 2005 NEC (WEST DISTRICT)
Business Licenses License Number License Type Status Date issued Expira7on Date 206214 FOOD PREP(<50 SEATS) ACTIVE 12/7/04 4/30/14 R 7026 RESTAURANT LIQUOR -‐R ACTIVE 11/2/01 N/A
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Violations
Due Diligence >
Building Viola4ons VIOLATION CODE VIOLATION TYPE VIOLATION DATE STATUS LOCATION A-‐301.1/2 PERMB-‐ CONST ADDITION 10/4/12 Complied One Story A_ached Shed A-‐504.1/3 SWO-‐ CONSTR W/O BLDG PERMIT 10/4/12 Complied One Story A_ached Shed A-‐901.13/1 PENALTY-‐ NO BLDG PERM INFO N/A Complied N/A Liquor License Viola4ons Case Number Avertment Ini7a7on Date Closing Date Penalty
2005-‐0593 44001-‐NOT A BONA FIDE RESTAURANT, INSUFFICIENT FOOD, UTENSILS, SEATING. 3/17/05 7/8/05 $200
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Financial Options
• Construction loan – Nationwide
• Permanent loan – New America
Finance
Finance >
Site Market Due Diligence Finance Pro-Forma > > > >
Pro-forma
Pro-Forma
Real 470 Retail Pro-‐forma Revised 6/4/13
Number or Retail Units 3 Total # of units 3
Rental Revenue Summary
Apartment Unit Types # of Units Rent/g. area /g. Total sq. g. Rent / Month/
Unit Total annual revenue
Retail Unit 1 (Bar) 1 3.75 800 800 3,000 $36,000 Retail Unit 2 (2nd Floor Office) 1 0.88 800 800 700 $8,400 Retail Unit 3 (3rd Floor Office) 1 0.89 784 784 700 $8,400 Total Retail Rental revenue 3 2,384 4,400 $52,800 Other Rental revenue $0 Other Misc. revenue $0 Gross Poten4al Revenue $52,800
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Pro-forma
Pro-Forma
Proforma Net Opera7ng Income
Gross Poten7al Revenue $52,800 -‐Vacancy 5.00% ($2,640) -‐ Bad Debt 0.50% ($264) Effec7ve Gross Income $52,800 Property Management Income 3.00% of effec7ve gross revenue 1,584 -‐ Controllable Expenses $300 per unit $900 -‐ Real Estate Taxes 1.36% of es7mated total project costs $7,920 -‐ Insurance $400 per unit $1,200 -‐ Common Area U7li7es $100 per unit $300 -‐ Replacement Reserves $150 per unit $450 = Total Expenses $10,770 $10,770
Net Opera7ng Income $43,614
Site Market Due Diligence Finance Pro-Forma > > > >
Pro-forma
Pro-Forma
Maximum Debt Calcula7on Proforma NOI $43,614 Capitaliza7on Rate 9.69% Value of Income Property $450,000
Loan Terms Interest Rate 3.38% Amor7za7on Rate (yrs.) 30
Debt based on Loan To Value ra7o (LTV) Maximum LTV ra7o 80.00% Maximum Loan based on LTV for Income Property $360,000
Using Debt Coverage Ra7o (DCR) Monthly NOI $3,635 Maximum Debt Coverage Ra7o (DCR) 4.05 $898 Maximum Loan Based on DCR $203,010
Maximum loan (lesser of LTV or DCR results) $360,000 Annual Debt Service $10,770
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Pro-forma
Pro-Forma
Ini7al Purchase Cost Number of Units 3
0.34 0.34 0.33 1 1.00
Hard & Sog Costs Measurement Unit 1 Unit 2 Unit 3 Per Unit Total Land S.F. 151,006.71 151,006.71 147,986.58 450000 $450,000 Appraisal & 7tle S.F. 458.05 458.05 448.89 1365 $1,365 Marke7ng Per Unit 600.00 600.00 600.00 67238 $1,800 Total Purchase Costs before Interest & Opera7ng Reserve $453,165
Development Costs Number of units 3
0.34 0.34 0.33 1 1.00 Hard & Sog Costs Measurement Unit 1 Unit 2 Unit 3 Per Unit Total
Approval & License Fees S.F. 1,237.92 1,237.92 1,213.16 3689 $3,689 Environmental remedia7on Per Unit 5,800.00 4,960.00 4,860.80 15972.8 $15,621 Construc4on hard costs Per Unit 1,672.00 80.00 78.40 6839745 $1,830 Professional services (plumbing, HVAC, fire protec4on, electrical) Per Unit 4,184.00 616.00 607.68 345796 $5,408 Legal & other fees Per Unit 8,389.26 8,389.26 8,221.48 25000 $25,000 Real estate tax abatement S.F. ($7,920) ($7,920) ($7,920) 45740 -‐$23,760 Insurances S.F. 2,000.00 2,000.00 2,000.00 870 $6,000 Con7ngency S.F. 566.91 566.91 555.57 192864 $1,689 Total Development Costs before Interest & Opera7ng Reserve $35,477
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Pro-forma
Pro-Forma
Hard Costs Unit 1 Unit 2 Unit 3 Total Exterior walls 80 80 78 238 Exterior windows 200 -‐ -‐ 200 Exterior doors 1,000 -‐ -‐ 1,000 Interior doors -‐ -‐ -‐ -‐ Wall finishes -‐ -‐ -‐ -‐ Floor finishes -‐ -‐ -‐ -‐ Ceiling finishes 392 -‐ -‐ 392 Total 1,672 80 78 1,830
Professional services cost Unit 1 Unit 2 Unit 3 Total Plumbing 200 200 200 600 Rain water drainage 408 -‐ -‐ 408 Electrical service & distribu7on 2,000 -‐ -‐ 2,000 Cement ramp 1,000 -‐ -‐ 1,000 Alarm & security 376 376 368 1,120 Other Electrical systems 200 40 39 279 Total 4,184 616 608 5,408
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Pro-forma
Pro-Forma
Insurances Cost Landlord insurance (All State Insurance) 600 General liability insurance (Hiscox) 270 Total insurance cost 870
Approval fees Cost License Cost Demoli4on fee Cost Total fees Cost Altera7ons permit 1,050 Commercial ac7vity license 300 Exterior wall covering 50 total approval cost 3,419 building permits 100 Dumpster license -‐ private 120 replacement of windows and doors 50 total license cost 420 cer7ficate of occupancy -‐ total license cost 420 Relocate HVAC difuser 50 Grand total 3,839 cooking ex7nguishing systems permit 100 For warm air hea7ng apparatus 100 Fire suppression permit -‐ total cost 250 Lawful occupany sign 100 mechancial permit -‐ Electrical permit 100 Air permit -‐ Plumbing permit 100 Cer7ficate of rental suitability -‐ real estate or seller cer7ficate 100 Demoli7on fee 250
Commercial cooking exhaust systems 100 ramp 100 Preliminary review (3 fl > $300, ea. + = $50) 350 electrical code fee ($20k of electrical work) 800 Opera7onal permit (3 opera7ons) 75 House inspec7on license 90 Uniform Construc7on Code Surcharge 4
total approval cost 3,419
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Pro-forma
Pro-Forma
Es7mate Of Lease Up Opera7ng Short Fall Gross Poten7al Rent (monthly) $4,400
Lease up period (months un7l stabiliza7on) 6 Average occupancy during lease up -‐ Es7mated rent during lease up $0 -‐ Es7mated Opera7ng Expense during lease up $5,385 = NOI during Lease Up -‐$5,385 -‐ Construc7on Interest during lease up $0 = Opera7ng Short Fall during lease up ($5,385) $5,385 Total Project costs $494,027
Site Market Due Diligence Finance Pro-Forma > > > >
Pro-forma
Pro-Forma
Financial Summary
Total Project Costs $494,027 -‐ Permanent Loan $360,000 = Equity Required $134,027
NOI at stabiliza7on $43,614 -‐ Annual Debt Service $10,770 NOI ager Debt Service, but before taxes $32,844
Leverage Annual Return on Invested Equity 24.51%