pro forma development - amazon s3...pro forma development roger staiger, frics stage capital, llc...

Pro Forma Development

Roger Staiger, FRICS

Stage Capital, LLC

(202) 640-8912

[email protected]

Disclaimer

All slides in this presentation are the

intellectual property of Stage Capital, LLC

and Roger Staiger, FRICS. Use of these

slides is only permitted when presented by

Roger Staiger, FRICS or a designee of

Stage Capital, LLC. Further distribution is

strictly prohibited.

Roger Staiger III

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3 of 33

Structure

4-Part Sessions: 2-hours each

Summary Page (1st half) [Complete]

Pro Forma Page [Complete]

Amortization Schedule (page) [Complete]

Pulling it all together

Bottom half of Summary Page

Roger Staiger III

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4 of 33

Pro Forma Model

4-unit apartment building

Based on Harvard Business Case Study:

Revere Street

MS Excel 2007

Focused on BASIC Modeling skills

Result: completed scalable pro forma

model Roger Staiger III

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Model Summary

4-Apartment units (Pretax analysis)

Vacancy Rate

Rental Escalation

Equity Sourcing

Debt Sourcing

Debt Expense, term, rate, Type (Amortizing,

Interest Only)

Closing Expenses

Roger Staiger III


6 of 33

Structure/Logic Flow

Roger Staiger III

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Summary Page

Pro Forma Page

(s2)

Amortization

Page (s3) Inputs Section

(s1)

Analysis (s4)

Complete (S1)

Complete (S2)

Complete (S3)

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Inputs Page

Roger Staiger III

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Sources 549,000 Operations Units I/P Finance I/P

Equity 99,000 Unit 1 - One Bedroom per mont 1,500 Tranche 1

Investor 1 80,000 Unit 2 - Two Bedroom per mont 2,000 Principal 400,000

Investor 2 19,000 Unit 3 - Two Bedroom per mont 2,000 Term (years) 20

Debt 450,000 Unit 4 - Two Bedroom per mont 2,000 Interest Rate 8%

Tranche 1 400,000 Interest Only

Tranche 2 50,000 Vacancy 1 5.00% Origination Fee 1%

Vacancy 2 5.00%

Uses 549,000 Vacancy 3 5.00% Tranche 2

Purchase Price 350,000 Vacancy 4 5.00% Principal 50,000

Renovation 165,000 Term (years) 20

Legal 3,500 Rental Escl 2% Interest Rate 15%

Bank 2,000 Interest Only

Personal 1,500 Management per Net Rev 5% Origination Fee 1%

IDC 24,700 Repairs per Net Rev 5%

Tax Escrow 1,300 Janitor per year 2600 Valuation I/P

Finance Cost 4,500 Heat per year 2130 Cap Rate 10.9%

Electricity per year 1000 Sales Expense 6%

Surplus/(Deficit) - Water per year 1200 Discount Rate 10%

Property Tax per year 7800

Insurance per year 2600 Sales Period Year 10

Expense Escl 2%

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Pro Forma Page

Roger Staiger III

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Periods 1 2 3 4 5 6 7 8 9 10 11 12

Revenue Year 1 1 1 1 1 1 1 1 1 1 1 1

Unit1 Rent 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Unit2 Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Unit3 Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Unit4 Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Total Rent 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500

Vacancy 1 75 75 75 75 75 75 75 75 75 75 75 75

Vacancy 2 100 100 100 100 100 100 100 100 100 100 100 100

Vacancy 3 100 100 100 100 100 100 100 100 100 100 100 100

Vanancy 4 100 100 100 100 100 100 100 100 100 100 100 100

Total Vacancy 375 375 375 375 375 375 375 375 375 375 375 375

Total Revenue 7,125 7,125 7,125 7,125 7,125 7,125 7,125 7,125 7,125 7,125 7,125 7,125

Expenses

Management 356 356 356 356 356 356 356 356 356 356 356 356

Repairs 356 356 356 356 356 356 356 356 356 356 356 356

Janitor 217 217 217 218 218 218 219 219 220 220 220 221

Heat 178 178 178 178 179 179 179 180 180 180 180 181

Electricity 83 83 84 84 84 84 84 84 84 85 85 85

Water 100 100 100 101 101 101 101 101 101 102 102 102

Property Tax 650 651 652 653 654 655 657 658 659 660 661 662

Insurance 217 217 217 218 218 218 219 219 220 220 220 221

Total Expenses 2,157 2,159 2,161 2,164 2,166 2,169 2,171 2,174 2,176 2,178 2,181 2,183

Net Operating Income 4,968 4,966 4,964 4,961 4,959 4,956 4,954 4,951 4,949 4,947 4,944 4,942

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Amortization Page

Roger Staiger III

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Tranche 1 Tranche 2

Principal 400,000 Principal 50,000

Interest 8.00% Interest 15.00%

Term 20 Term 20

I/O I/O

# BoP Principal Interest Payment EoP Annual # BoP Principal Interest Payment EoP Annual

1 400,000 679 2,667 3,346 399,321 1 50,000 33 625 658 49,967

2 399,321 684 2,662 3,346 398,637 2 49,967 34 625 658 49,933

3 398,637 688 2,658 3,346 397,949 3 49,933 34 624 658 49,899

4 397,949 693 2,653 3,346 397,256 4 49,899 35 624 658 49,864

5 397,256 697 2,648 3,346 396,559 5 49,864 35 623 658 49,829

6 396,559 702 2,644 3,346 395,857 6 49,829 36 623 658 49,793

7 395,857 707 2,639 3,346 395,150 7 49,793 36 622 658 49,757

8 395,150 711 2,634 3,346 394,439 8 49,757 36 622 658 49,721

9 394,439 716 2,630 3,346 393,723 9 49,721 37 622 658 49,684

10 393,723 721 2,625 3,346 393,002 10 49,684 37 621 658 49,647

11 393,002 726 2,620 3,346 392,276 11 49,647 38 621 658 49,609

12 392,276 731 2,615 3,346 391,545 40,149 12 49,609 38 620 658 49,571 7,901

Pro Forma Page Completed (Bottom Section)

Roger Staiger III


Debt

Tranch 1 3,346 3,346 3,346 3,346 3,346 3,346 3,346 3,346 3,346 3,346 3,346 3,346

Tranch 2 658 658 658 658 658 658 658 658 658 658 658 658

Tranche 1 4,004 4,004 4,004 4,004 4,004 4,004 4,004 4,004 4,004 4,004 4,004 4,004

Sales Proceeds

Sales Price - - - - - - - - - - - -

Sales Expense - - - - - - - - - - - -

Principal Repay - Tranche 1 - - - - - - - - - - - -

Principal Repay -

Tranche 2 - - - - - - - - - - - -

Net Sales Proceeds - - - - - - - - - - - -

Reversion FCF - - - - - - - - - - - -

Operating FCF 964 962 959 957 955 952 950 947 945 942 940 937

Total FCF (99,000) 964 962 959 957 955 952 950 947 945 942 940 937

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Analysis/Valuation

Roger Staiger III

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Valuation:

Year 1 2 3 4 5 6 7 8 9 10

Revenue

Rental 90,000 91,800 93,636 95,509 97,419 99,367 101,355 103,382 105,449 107,558

Vacancy 4,500 4,590 4,682 4,775 4,871 4,968 5,068 5,169 5,272 5,378

Total Revenue 85,500 87,210 88,954 90,733 92,548 94,399 96,287 98,213 100,177 102,180

Expense

Management 4,275 4,361 4,448 4,537 4,627 4,720 4,814 4,911 5,009 5,109

Repairs 4,275 4,361 4,448 4,537 4,627 4,720 4,814 4,911 5,009 5,109

Janitor 2,624 2,677 2,731 2,786 2,842 2,900 2,958 3,018 3,079 3,141

Heat 2,150 2,193 2,237 2,282 2,329 2,376 2,423 2,472 2,522 2,573

Electricity 1,009 1,030 1,050 1,072 1,093 1,115 1,138 1,161 1,184 1,208

Water 1,211 1,236 1,260 1,286 1,312 1,338 1,365 1,393 1,421 1,450

Property Tax 7,872 8,031 8,193 8,358 8,527 8,699 8,875 9,054 9,237 9,423

Insurance 2,624 2,677 2,731 2,786 2,842 2,900 2,958 3,018 3,079 3,141

Total Expenses 26,040 26,564 27,098 27,644 28,200 28,767 29,346 29,937 30,539 31,154

Net Operating Income 59,460 60,646 61,856 63,090 64,348 65,631 66,941 68,276 69,638 71,026

Debt

Tranche 1 40,149 40,149 40,149 40,149 40,149 40,149 40,149 40,149 40,149 40,149

Tranche 2 7,901 7,901 7,901 7,901 7,901 7,901 7,901 7,901 7,901 7,901

Total Debt 48,050 48,050 48,050 48,050 48,050 48,050 48,050 48,050 48,050 48,050

Net Sales Proceeds - - - - - - - - - 308,167

Reversion FCF - - - - - - - - - 308,167

Operating FCF 11,410 12,596 13,806 15,040 16,298 17,582 18,891 20,226 21,588 22,977

Total FCF (99,000) 11,410 12,596 13,806 15,040 16,298 17,582 18,891 20,226 21,588 331,144

DSCR 1.24 1.26 1.29 1.31 1.34 1.37 1.39 1.42 1.45 1.48

Minimum 1.24

Cash-on-Cash 11.53% 12.72% 13.95% 15.19% 16.46% 17.76% 19.08% 20.43% 21.81% 23.21%

Minimum 11.53%

PV Reversion 118,812 54.64%

PV Operating 98,616 45.36%

Total 217,428

CF0 99,000

NPV 118,428

IRR 22.42%

Inputs

Sources

Equity

Investor 1

Investor 2

Debt

Tranche 1 (source)

Tranche 2 (source)

Roger Staiger III


Inputs (cont’d)

Uses

Purchase Price

Renovation Cost

Legal Expense

Bank

Personal

Interest During Construction (IDC)

Tax Escrow

Finance Cost

Roger Staiger III


Inputs - Operations

Units 1 – 4

Vacancy 1 – 4

Rental Escalation

Expenses

Management, Repairs, Janitor, Heat, Electricity,

Water, Property Tax, Insurance

Expense Escalation

Roger Staiger III


Inputs - Finance

Tranche 1

Principal

Term(years)

Interest Rate

Interest Only

Origination Fee

Tranche 2

Principal

Term(years)

Interest Rate

Interest Only

Origination Fee

Roger Staiger III


Inputs - Valuation

Capitalization Rate

Sales Expense

Discount Rate

Sale Period (timing)

Roger Staiger III


Scalability & Modularity

The benefit(s) of successful

pro forma modeling

Scalability (Incorporating the Waterfall)

Roger Staiger III


Separation of cash flows according to

owners’ agreement

Separation of cash flows by yield, NOT by

order

Order: Bank vanilla example

“Pref” Rate: Preference Rate

Generally provided to Investor

Acts as a coupon rate, e.g. Preferred Equity

Waterfall Diagram

Roger Staiger III


Pari Passu

“Pref” Rate

15% good proxy for “Pref”1st Tier

Non Pari Passu split

2nd Tier 2nd Tier rate

N # Tiers

Nth Tier rate

Final Tier

Nth Tier

Example – Final DistributionX % to Promote to Sponsor(1-X%) distribution Pari Passu

Waterfall Logic

Roger Staiger III


15%

IRR

20%

IRR

20% +

IRR

Sponsor

10%

Sponsor

20%

Promote

Sponsor

40%

Investor

90%

Investor

80% Investor

90%

Sponsor

10%

Waterfall Addition (100% Scalable)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization


(s1)

Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)

Stochastic – Monte Carlo (100% Scalable)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization


(s1)

Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)

Stochastic Page (s6)

Assumptions Section

Forecast Section

Forecast – Distribution (Stochastic)

Roger Staiger III


Construction Draw Page (100% Scalable)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization


(s1)

Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)


Assumptions Section

Forecast Section

Construction

Draw Page

(s7)

1. Construction costs (Renovation) in “Uses”

2. IDC (Interest During Construction) in “Uses”

Construction Draw Page (100% Scalable) (cont’d)

Draw Page

Purchase

Hard Costs

Soft Costs

Interest During Construction (IDC)

Circular Reference?

Cash In/Cash out Section

Roger Staiger III


Construction Draw Page (100% Scalable) (cont’d)

Tranche 1

Construction Loan

Loan-to-Value

Loan-to-Cost

Tranche 2

Permanent Loan

Value

Loan-to-Value

Date

Roger Staiger III


Unit Characteristics (“n” Units) (100% Scalable)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization

Page (s3) Inputs Section (s1)

Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)


Assumptions Section

Forecast Section

Construction

Draw Page

(s7)

Unit

Characteristics

page (s8)

1. List of “n” units, e.g. one-, two-bedroom

2. Rent Roll

3. Summarized on (S1)

Unit Characteristics (“n” Units) (100% Scalable)

Rent Roll

Individual Unit information

Input Page (main pro forma)

Summary by unit

Studio: 10; Avg SF 800; Avg Rent/SF 2.00

One-Bedroom: 20; Avg SF 950; Avg Rent/SF 2.05

Roger Staiger III


Visual Data Display(s) (Graphing) (100% Scalable and Modular)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization


Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)


Assumptions Section

Forecast Section

Construction

Draw Page

(s7)

Unit

Characteristics

page (s8)

Visuals: Graphs

Pro Forma ENGINE

Portfolio Analysis (100% Applicable!!!)

Roger Staiger III


Summary Page

Pro Forma Page

(s2)

Amortization


Analysis

(Project)

(s4)

Waterfall Page

(Investor)

(s5)


Assumptions Section

Forecast Section

Construction

Draw Page

(s7)

Unit

Characteristics

page (s8) Pro Forma 1

(File 1)

Portfolio Input

Page (s9)

Portfolio Analysis (100% Applicable!!!)

Roger Staiger III



Assumptions Section

Forecast Section

Pro Forma 1 Portfolio Input

Page

Pro Forma 2

Pro Forma 3

Pro Forma

“n”

Consolidated

Output for

Portfolio

Final Deliverables

Completed Pro Forma (Participant) Modular

Scalable

Completed Pro Forma (Instructor)

Completed Pro Forma (Bonus) Interest Only Component

Continued access to recorded sessions

Staiger List-Serve

([email protected]) Roger Staiger III


ULI – Staiger (Upcoming Seminars)

1) Four part 2-hour series: How to build a pro

forma model (Current Pro Forma Webinar)

2) Two part 2-hour series: How to develop a

waterfall

3) Four part 2-hour series: Advanced Pro Forma

Development (Part Deux)

4) Four part 2-hour series: Hotel Pro Forma

Design and Development

Roger Staiger III


Questions?

Let’s Begin Finish

(see memorandum for detailed steps of

process at conclusion)

pro forma development - amazon s3...pro forma development roger staiger, frics stage capital, llc...

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