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Commercial & Rental Property John Cao, LLC

537 North 35th Street Philadelphia, PA 19104


Content Page

•  Site Analysis •  Market Analysis •  Project Team •  Financial Options •  Pro-Forma


The building

Site >


The Area

Site >


Neighborhood Analysis

Site >Source: City-data.com


Competition in the Area

Proposed Area Competitors

Site >


Market Analysis

Market >

Source: Neighborhoodscout.com

Real estate activity blooming

Mantua Growth


Drexel Master Plan (40 years)

Market >New building

Old Building

35th Street


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 >


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


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


Financial Options

•  Construction loan – Nationwide

•  Permanent loan – New America

Finance

Finance >


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


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


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


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


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


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


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


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%

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