Lease vs. Own Analysis - TheAnalyst® PROLease vs. Own Analysis Medical Center Way, Austin TX NPV Of...
Transcript of Lease vs. Own Analysis - TheAnalyst® PROLease vs. Own Analysis Medical Center Way, Austin TX NPV Of...
End of Ye ar 1 2 3 4 5
Annual Rent $120 ,000 $123,600 $127,308 $131,127 $135,061
Occupancy Expenses $24,000 $24,720 $25,462 $26 ,225 $27,012
Tax Savings ($50 ,400) ($51,912) ($53,470) ($55,073) ($56 ,726 )
T OT AL LEASE CASH FLOW $ 9 3,6 0 0 $ 9 6 ,4 0 8 $ 9 9 ,30 0 $ 10 2 ,2 7 9 $ 10 5,34 7
End of Ye ar 1 2 3 4 5
Occupancy Expense $36 ,000 $37,080 $38 ,192 $39 ,338 $40 ,518
Annual Debt Services $109 ,620 $109 ,620 $109 ,620 $109 ,620 $109 ,620
Tax Savings ($52,274) ($52,579 ) ($52,374) ($52,146 ) ($51,405)
CASH FLOW AFT ER T AXES $ 9 3,34 6 $ 9 4 ,12 1 $ 9 5,4 38 $ 9 6 ,8 12 $ 9 8 ,7 33
End of Ye ar Owne rs hip CF af t e r T ax Minus Le as e CF Af t e r T ax Equals Dif f e re nt ial
0
($262,500) -
- -
= ($262,500)
1
($93,346 ) - ($93,600) = $254
2
($94,121) - ($96 ,408) = $2,287
3
($95,438) - ($99 ,300) = $3,862
4
($96 ,812) - ($102,279 ) = $5,467
5
($98 ,733) + $531,667 - ($105,347) = $538 ,281
Int ernal Rat e o f Ret urn o f t he Dif f erent ia l = 16.11%
Lease vs. Own AnalysisMedical Center Way, Austin TX
NPV Of Purchas e ($ 2 6 7 ,6 32 )
NPV of Le as e ($ 4 17 ,2 15)
Dif f e re nce $ 14 9 ,58 3
IRR of Dif f e re nt ial 16 .11%
SUMMARYPROJECT ED SALES PRICE (EOY 5) $ 2 ,0 2 9 ,0 0 0
- Cost o f Sale $101,450
- Mortgage Balance(s) $1,327,883
- Tax Liab ility (Savings) $68 ,000
SALES PROCEEDS AFT ER T AX $ 531,6 6 7
SALE SUMMARY for OWNERSHIP
Purchas e Pr ice
$1,750 ,000
Loan Amount
$1,487,500
Int e re s t Rat e
5.500%
Loan Amort iz at ion
25 Years
Prope rt y T ype
COMMERCIAL
Improve me nt Pe rce nt
75.00%
Cos t of Sale
5.00%
Le as e Es calat ion %
3.00% per year
Af t e r T ax Dis count Rat e
6 .00%
Marginal T ax Rat e
35.00%
Capit al Gains T ax Rat e
15.00%
Cos t Re cove ry Re capt ure Rat e
25.00%
Annual Prope rt y Appre ciat ion
3.00%
Annual Expe ns e Es calat ion
3.00%
T odd Kuhlmann, CCIMT he Analyst® Re al Estate , Inc.
701 Brazos, Austin TX 78701
Phone: (877) 855-2246 | Email: [email protected]
http://TheAnalystPRO.com
© Co pyri g h t 20 11-20 15 CR E Tech , I n c. Al l R i g h ts R es erved .
CASH FLOW SUMMARYLEASE
PURCHASE
IRR of DIFFERENTIAL
ASSUMPTION / INPUTSPURCHASE
D I S CLAI MER : Yea r 5 s a l es p ri ce b a s ed o n es t i ma ted NO I i n yea r 6 . Al l i n fo rma t i o n i s b a s ed o n es t i ma ted fo reca s t a nd a re i n tend ed fo r th e pu rpo s e o f exa mp l e
p ro j ect i o n s a nd a na l ys i s . T he i n fo rma t i o n p res en ted h erei n i s p ro vi d ed a s i s , wi th o u t wa rra n ty o f a n y ki n d . Nei th er T heAna l ys t® R ea l Es ta te, I n c. n o r CR E Tech , I n c.
a s s ume a n y l i a b l i t y fo r erro rs o r o mm i s s i o n s . T h i s i n fo rma t i o n i s n o t i n tend ed to rep l a ce o r s erve a s s ub s t i tu te fo r a n y l eg a l , i n ves tmen t , rea l es ta te o r o th er
p ro fes s i o n a l a d vi ce, co n s u l ta t i o n o r s ervi ce.
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End of Ye ar 1 2 3 4 5
NET OPERAT ING INCOME ($ 36 ,0 0 0 ) ($ 37 ,0 8 0 ) ($ 38 ,19 2 ) ($ 39 ,338 ) ($ 4 0 ,518 )
- Interest First Mortgage $81,101 $79 ,492 $77,793 $75,997 $74,101
- Cost Recovery Improvements $32,252 $33,654 $33,654 $33,654 $32,252
REAL EST AT E T AXABLE INCOME ($ 14 9 ,353) ($ 150 ,2 2 6 ) ($ 14 9 ,6 39 ) ($ 14 8 ,9 8 9 ) ($ 14 6 ,8 7 1)
Tax Liab ility (Savings) ($52,274) ($52,579 ) ($52,374) ($52,146 ) ($51,405)
NET OPERAT ING INCOME ($ 36 ,0 0 0 ) ($ 37 ,0 8 0 ) ($ 38 ,19 2 ) ($ 39 ,338 ) ($ 4 0 ,518 )
- Annual Debt Service $109 ,620 $109 ,620 $109 ,620 $109 ,620 $109 ,620
CASH FLOW BEFORE T AXES ($ 14 5,6 2 0 ) ($ 14 6 ,7 0 0 ) ($ 14 7 ,8 12 ) ($ 14 8 ,9 58 ) ($ 150 ,138 )
- Tax Liab ility (Savings) ($52,274) ($52,579 ) ($52,374) ($52,146 ) ($51,405)
CASH FLOW AFT ER T AXES ($ 9 3,34 6 ) ($ 9 4 ,12 1) ($ 9 5,4 38 ) ($ 9 6 ,8 12 ) ($ 9 8 ,7 33)
Purchase AnalysisMedical Center Way, Austin TX
Purchas e Pr ice $ 1,7 50 ,0 0 0
- Mort gage s $ 1,4 8 7 ,50 0
Init ial Inve s t me nt $ 2 6 2 ,50 0
Improve me nt Value $ 1,312 ,50 0
Us e f ul Lif e 39 Ye ars
Init ial Investment
Cost Recovery Data
Loan Amount $ 1,4 8 7 ,50 0
Interest Rate 5.500% US
Amortiz ation Period 25 Years
Period ic Payment $9 ,135
Annual De bt Se rvice $ 10 9 ,6 2 0
Mortgage DataBasis at Acquis ition $1,750 ,000
- Cost Recovery (Deprec.) Taken $165,466
= Ad justed Basis $1,584,534
Sale s Pr ice $ 2 ,0 2 9 ,0 0 0
- Cost o f Sales $101,450
- Ad justed Basis $1,584,534
= Gain (Loss) $343,016
- Cost Recovery (Deprec.) Taken $165,466
= Cap ital Gain from Appreciation $177,550
Capital Gain
Sale Pr ice $ 2 ,0 2 9 ,0 0 0
- Cost o f Sale $101,450
- Mortgage Balance $1,327,883
= SALES PROCEEDS BEFORE T AXES $ 59 9 ,6 6 7
- Tax on Cost Recover Recapture $41,367
- Tax on Cap ital Gain $26 ,633
= SALES PROCEEDS AFT ER T AXES $ 531,6 6 7
S ale s Proce e ds
T odd Kuhlmann, CCIMT he Analyst® Re al Estate , Inc.
701 Brazos, Austin TX 78701
Phone: (877) 855-2246 | Email: [email protected]
http://TheAnalystPRO.com
© Co pyri g h t 20 11-20 15 CR E Tech , I n c. Al l R i g h ts R es erved .
CASH FLOW ANALYSISTaxable Income
Cash Flow
SALES PROCEEDSAdjuste d Basis
D I S CLAI MER : Yea r 5 s a l es p ri ce b a s ed o n es t i ma ted NO I i n yea r 6 . Al l i n fo rma t i o n i s b a s ed o n es t i ma ted fo reca s t a nd a re i n tend ed fo r th e pu rpo s e o f exa mp l e
p ro j ect i o n s a nd a na l ys i s . T he i n fo rma t i o n p res en ted h erei n i s p ro vi d ed a s i s , wi th o u t wa rra n ty o f a n y ki n d . Nei th er T heAna l ys t® R ea l Es ta te, I n c. n o r CR E Tech , I n c.
a s s ume a n y l i a b l i t y fo r erro rs o r o mm i s s i o n s . T h i s i n fo rma t i o n i s n o t i n tend ed to rep l a ce o r s erve a s s ub s t i tu te fo r a n y l eg a l , i n ves tmen t , rea l es ta te o r o th er
p ro fes s i o n a l a d vi ce, co n s u l ta t i o n o r s ervi ce.
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End of Ye ar CF Be f ore T ax Minus T ax S avings Equals CF Af t e r T axe s
0
-- --
- -
-- --
1
($144,000) - ($50 ,400) = ($93,600) 2($148 ,320) - ($51,912) = ($96 ,408)
3
($152,770) - ($53,470) = ($99 ,300)
4
($157,352) - ($55,073) = ($102,279 )
5
($162,073) - ($56 ,726 ) = ($105,347)
Lease NPV Af t er T ax at 6 .00% Disco unt Rat e = ($417,215)
End of Ye ar Init ial Inve s t me nt CF Af t e r T ax Plus Sale s Proce e ds Af t e r T ax
0
($262,500)
1
($93,346)
2
($94,121)
3
($95,438)
4
($96,812)
5
($98,733) + $531,667
Purchase NPV Af t er T ax at 6 .00% Disco unt Rat e = ($267,632)
NPV ComparisionMedical Center Way, Austin TX
T odd Kuhlmann, CCIMT he Analyst® Re al Estate , Inc.
701 Brazos, Austin TX 78701
Phone: (877) 855-2246 | Email: [email protected]
http://TheAnalystPRO.com
© Co pyri g h t 20 11-20 15 CR E Tech , I n c. Al l R i g h ts R es erved .
Lease Alternative NPV (After Tax)
Purchase Alternative NPV (After Tax)
D I S CLAI MER : Yea r 5 s a l es p ri ce b a s ed o n es t i ma ted NO I i n yea r 6 . Al l i n fo rma t i o n i s b a s ed o n es t i ma ted fo reca s t a nd a re i n tend ed fo r th e pu rpo s e o f exa mp l e
p ro j ect i o n s a nd a na l ys i s . T he i n fo rma t i o n p res en ted h erei n i s p ro vi d ed a s i s , wi th o u t wa rra n ty o f a n y ki n d . Nei th er T heAna l ys t® R ea l Es ta te, I n c. n o r CR E Tech , I n c.
a s s ume a n y l i a b l i t y fo r erro rs o r o mm i s s i o n s . T h i s i n fo rma t i o n i s n o t i n tend ed to rep l a ce o r s erve a s s ub s t i tu te fo r a n y l eg a l , i n ves tmen t , rea l es ta te o r o th er
p ro fes s i o n a l a d vi ce, co n s u l ta t i o n o r s ervi ce.
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