MGT 374Real Estate Analysis

College of BusinessAlfaisal

UNIVERSITY

NPV and IRRNet Present ValueInternal Rate of

Return

Rates and Ratios

Report HintsCost ApproachNeighborhood

Land Rates - C21Building Rates

Office Retail

SourceIntroductionSubject PropertyPhotos and MapsProperty Description History Land Size and Shape Building Histroy Age, Year built and remodeled Gross Building Area Net Leasable AreaNeighborhood DescriptionHighest and Best UseValuation Cost Approach Land Value - Comparable Sales Support C21 Building Value - 40 year potential life. New less depreciation Altaweed Indication Sales Approach Comparables Adjustments Indication Income Approach History Rent Roll Comparable Rents C21 Potentential Gross Income Credit and Vacancy Loss Effective Gross Income Operating Expenses Net Operating Income Direct Capitalization Comparables Indication Discounted Cash Flow 5 Year forecast IndicationReconciliation and Conclusion of ValueRatiosLeverage Analysis - 20 years, 70%, 5% rate

Property Report

Source: C21 Riyadh

Construction RatesPer Square Meter

Retail - one level: 1,000 - 1,400Retail - 2+ levels: 1,200 - 1,800

Office: 1,500 - 1,800

Source: Altaweed Appraisal

Source: C21 Riyadh

NPVNet Present Value

The difference between the present value of the

cash inflows and outflows

ExcelExample

IRRInternal Rate of

ReturnThe rate of return that makes the net present

value equal to zero

ExcelExample

Rates and Ratios

Something Per…

PhysicalFinancial

Ratio Formula

PGIM Potential Gross Income Multiplier V ÷ PGIEGIM Effective Gross Income Multiplier V ÷ EGIOER Operating Expense Ratio OE ÷ EGINOI NOI Ratio NOI ÷ EGIRo Capitalization Rate NOI ÷ PriceNIM Net Income Multiplier Price ÷ NOIPPSM Price Per Square Meter Price ÷ GSMLBR Land to Building Ratio Land ÷ GSMBER Building Efficiency Ratio NLA ÷ GSMOEPSM Operating Expense Per Square

MeterOE ÷ GSM

NOPISM NOI Per Square Meter NOI ÷ GSMLTVR Loan-to-Value Ratio Loan ÷ PriceRm Mortgage Constant Rate Loan Pmt ÷ Loan

AmtRe Equity Divided Rate NOI After ÷ Equity InvestmentDCR Debt Coverage Ratio NOI ÷ Loan Pmt

DYR Debt Yield Ratio NOI ÷ Loan AmtLVR Leverage Power (Re ÷ Rm) -1

Financial

Price Per SQMEfficiency Ratio

OERCap Rate

Financial

PGIMEGIMOER

Cap Rate