72nd Cornhusker Real Estate Investment Analysis

IRR After Return Of Equity Before Taxes 11.82%

After Tax Return Assuming 45% Tax Bracket 44.59%
Five Year leveraged Cash on Cash 11.90%

Reversion Net Operating Income:

NOI $ 213,666
Terminal Cap Rate 9.00%
Gross Sales Price $ 2,374,069
Selling Costs 3%
Selling Costs $ 71,222
Net Sales Price $ 2,302,847
Original First Mortgage Balance $ 2,742,532
Remaining First Mortgage Balance $ (1,593,404)
Return Of Equity $ (579,003)
Net Cash Flow Before Taxes Less Equity $ 1,418,886
Cash on Cash Return During Period 11.90%

Five Year Leveraged IRR Analysis

Annual Cash Flow After Debt Service-Yr. 5 $ 59,630
Net Sales Price $ 2,302,847
Remaining Mortgage $ (1,593,404)
Return of Equity $ (579,003)
Five Year Leveraged IRR Less Equity 11.82%
After Tax + Capital Gains 44.59%

James R. Pearson, CRE

2/3/2010 Due Diligence Consultant
Papio Pointe 2/3/2010
Project Proforma

Capital Expenses
Land 113,940
Square Feet of Impv. 23,655

Development Costs Total Costs SF Costs % to Cost

Land Acquisition Costs $ 797,580 $ 33.72 24%
Hard Costs $ 2,157,014 $ 91.19 65% ## $ 12.00
Soft Costs $ 222,330 $ 9.40 7%
Contingency (3% of Hard Costs) $ 64,710 $ 2.74 2% # $ 2.08
Financing $ 79,900 $ 3.38 2%
Misc $ - $ - 0%
Total DevelopmentCosts $ 3,321,535 $ 140.42 100%

Total Capital/Construction Costs $ 3,321,535 $ 140.42

Revenue
Tenants Revenue Sq.Ft. Rent NNN
Ice Cream $ 18,500 1,850 $ 10.00 $ 3.75
Scooters $ 16,700 1,670 $ 10.00 $ 3.75
Remainder of building $ 201,350 20,135 $ 10.00 $ 3.75
Total Revenue $ 236,550 23,655 $ 10.00 $ 3.75
Financing
Gross Rental Revenue $ 236,550 $ 10.00
Cam & Nets Recovery $ 88,706 $ 3.75
Gross Potential Income $ 325,256 $ 13.75
7% Vacancy $ 22,768 $ 0.96
Effective Gross Income $ 302,488 $ 12.79
Operating Expenses
CAM $ 26,021 $ 1.10
Taxes $ 49,202 $ 2.08
Insurance $ 6,387 $ 0.27
Management Fee $ 7,097 $ 0.30
Total Operating Expenses $ 88,706 $ 3.75
Net Operating Income $ 213,782 $ 9.04

Value @ 7.5% CAP 10 year NPV $ 2,316,014

Max Loan @ 75% of Value $ 1,737,010
Loan Requested (at Cost) $ 1,737,010
Loan to Value at Cost 75%
Actual Loan to Market Value 75%
Annual Debt Service 25 yrs @ 7% $ 154,036
Annual Cash Flow $ 59,746
Debt Coverage Ratio 1.4
Breakeven 75%

Terms of Financing
Term of Loan Years 10
Interest Rate 7.5%
Amortization 25

Cost $ 3,321,535
Debt Service $ 154,036
Equity $ 1,584,525

Max Loan @ 80% of Cost $ 1,737,010

Equity requirement $ 579,003
Net Cash Flow (10 year average) $ 89,502
Debt Coverage Ratio (10 year average) 1.57
Break-even Occupancy (10 year average) 67%
Cash on Cash Return (before depr) 15%

IRR After Return Of Equity Before Taxes 11.82%

After Tax Return Assuming 45% Tax Bracket 44.59%
Five Year leveraged Cash on Cash 11.90%
Cost Breakdown

Project Development Budget - Site Plan # 3 2/3/2010

Project Location: 72nd Cornhusker
Project Name:
Acres: 2.62 113,940
GLA: 23,655
Out Lots: 1

HARD COSTS: Identify Lot Acreage Square Feet Cost/SF Land Cost/sf Bldg Cost

Land Lot 1 2.615702479 113,940 $ 7.00 $ 33.72 $ 797,580 $797,580 $797,580

Site Work
Earthwork:
Fine Grading and Landscaping (Out Lots) $ 0.04 $5,000
Utilities: Water and Sewer - shops and lots $ 0.04 $5,000
Storm Sewer Improvements $ 0.04 $5,000
Lot Paving & Lighting 76,742 $ 2.50 $ 1.68 $191,856
Sidewalks and Planters $ 0.09 $10,000
Landscaping $ 0.26 $30,000
Irrigation $ 0.09 $10,000
Sight Furnishings and Signage $ 0.02 $2,500
Geotechnical $ 0.01 $1,000
Civil Engineering 8% On/Off Site Work $ 0.11 $ 11.51 $12,000 $ 272,356

Building Costs
Building A 23,655 $ 65.00 $1,537,575
T. I. Allowance: 23,655 $ 12.00 $283,860
Architectural Fees:
Preliminary GMP 23,655 $ 0.42 $10,000
Design & C.A. 23,655 $ 2.00 $47,310
Tenant Finish 23,655 $ 0.25 $ 79.67 $5,914 $ 1,884,659 $ 2,157,014
Subtotal Hard Costs

FINANCING
Loan Fee $ 1,700,000 1/2 Point $ 0.36 $8,500
Constuction Interest Rate x use x schedule 8%*70%*9/12 $ 3.02 $71,400

Subtotal $79,900
SOFT COSTS:
23,655 $ 4.00 $94,620
Project Management/Owners representation $0 3% $64,710
Legal Fees $5,000
Consulting Fees $2,500
Taxes and Insurance During Construction $10,000
Appraisal Fee $4,500
Enviromental $2,500
Survey and Platting Costs $5,000
Testing $5,000
Travel Expenses $500
Marketing and Promotion $8,000
Misc. (Title Ins.,Closing, Etc.) $20,000
Subtotal $ 9.40 $222,330
Contingency @ 3% of Hard Costs 3% $ 2.74 $64,710 $64,710
Subtotal - financing, Soft costs & Contingency $ 15.51 $366,941

Total Project Development Costs $ 140.42 $3,321,535

Loan Request $2,657,228

Pro Forma Schedule of Net Operating Income

Frontage Square feet Rent/Sq Ft Annualized Projected Sales @ 8%
Tenant - 1,850 $ 10.00 $ 18,500 $ 231,250
Tenant - 1,670 $ 10.00 $ 16,700 $ 208,750
Tenant - 20,135 $ 10.00 $ 201,350 $ 2,516,875
Tenant - $ - $ - $ -
Tenant - $ - $ - $ -
Tenant - $ - $ - $ -
Tenant - $ - $ - $ -
TOTAL Frontage -
Subtotal 23,655 $ 10.00 $ 236,550
Cam Tax, Ins. & CAM Reimb. 23,655 $ 3.15 $ 74,513
Shop Vacancy 95% $ (11,828)
Effective Gross Rental Income 23,655 $ 13.15 $ 299,236
Expenses:
Management Fee @ 3% x EGRI %@ $ (0.38) ($8,977)
Roof and Structural Reserve 23,655 SF @ $ (0.06) $1,500
Taxes 23,655 SF @ $ 1.25 ($29,569)
Insurance 23,655 SF @ $ 0.15 ($3,548)
CAM 23,655 SF @ $ 1.15 ($27,203)
Subtotal $ 2.11 ($67,797)
NET OPERATING INCOME $ (2.87) $231,438

Construction loan 80% $2,657,228

Equity @ 20% $1,584,525
NOI $231,438
Debt Service (186,006)
Cash Flow $45,432
DSCR 1.24

Loan To Value Analysis

Cap Rates 7.00% 7.25% 8.00% 8.25% 8.50% 9%

NOI Average $ 245,161 $ 245,161 $ 245,161 $ 245,161 $ 245,161 $245,161

Value from different Cap Rates $ 3,502,296 $ 3,381,527 $ 3,064,509 $ 2,971,645 $ 2,884,244 $2,724,008
 Sensitivity Analysis

Occupancy Rate Analysis 23,655 $ 10.00

Percent Leased Occupied SpaceGross IncomeCAM Recovery Total Expenses NOI Debt Service Cash Flow DSC Brk Even
100.0% 23,655 $ 236,550 $ 88,706 $ 88,706 $ 236,550 $ (154,036) $ 82,514 1.54 75%
97.0% 22,945 $ 229,454 $ 86,045 $ 86,045 $ 229,454 $ (154,036) $ 75,417 1.49 76%
95.0% 21,798 $ 224,723 $ 84,271 $ 84,271 $ 224,723 $ (154,036) $ 70,686 1.46 77%
92.0% 21,763 $ 217,626 $ 81,610 $ 81,610 $ 217,626 $ (154,036) $ 63,590 1.41 79%
90.0% 21,290 $ 212,895 $ 79,836 $ 79,836 $ 212,895 $ (154,036) $ 58,859 1.38 80%
88.0% 20,816 $ 208,164 $ 78,062 $ 78,062 $ 208,164 $ (154,036) $ 54,128 1.35 81%
85.0% 20,107 $ 201,068 $ 75,400 $ 75,400 $ 201,068 $ (154,036) $ 47,031 1.31 83%
83.0% 19,634 $ 196,337 $ 73,626 $ 73,626 $ 196,337 $ (154,036) $ 42,300 1.27 84%
80.0% 18,924 $ 189,240 $ 70,965 $ 70,965 $ 189,240 $ (154,036) $ 35,204 1.23 86%
78.0% 18,451 $ 184,509 $ 69,191 $ 69,191 $ 184,509 $ (154,036) $ 30,473 1.20 88%
76.0% 17,978 $ 179,778 $ 67,417 $ 67,417 $ 179,778 $ (154,036) $ 25,742 1.17 90%
73.0% 17,268 $ 172,682 $ 64,756 $ 64,756 $ 172,682 $ (154,036) $ 18,645 1.12 92%

Rental Rate Sensitivity Analysis 23,655

Rental Rate Gross Income Cam Recovery Total Income Vacancy Operating Exp NOI Debt Service Cash Flow DSC
$ 20.00 $ 473,100 88,706 561,806 (28,090) (88,706) 445,010 (154,036) 290,973 2.89
$ 18.00 $ 425,790 88,706 514,496 (25,725) (88,706) 400,065 (154,036) 246,029 2.60
$ 17.00 $ 402,135 88,706 490,841 (24,542) (88,706) 377,593 (154,036) 223,557 2.45
$ 16.00 $ 378,480 88,706 467,186 (23,359) (88,706) 355,121 (154,036) 201,084 2.31
$ 15.00 $ 354,825 88,706 443,531 (22,177) (88,706) 332,648 (154,036) 178,612 2.16
$ 14.00 $ 331,170 88,706 419,876 (20,994) (88,706) 310,176 (154,036) 156,140 2.01
$ 13.00 $ 307,515 88,706 396,221 (19,811) (88,706) 287,704 (154,036) 133,668 1.87
$ 12.00 $ 283,860 88,706 372,566 (18,628) (88,706) 265,232 (154,036) 111,195 1.72
$ 11.00 $ 260,205 88,706 348,911 (17,446) (88,706) 242,759 (154,036) 88,723 1.58
$ 10.75 $ 254,291 88,706 342,998 (17,150) (88,706) 237,141 (154,036) 83,105 1.54
$ 10.40 $ 246,012 88,706 334,718 (16,736) (88,706) 229,276 (154,036) 75,240 1.49
$ 10.25 $ 242,464 88,706 331,170 (16,559) (88,706) 225,905 (154,036) 71,869 1.47
$ 10.00 $ 236,550 88,706 325,256 (16,263) (88,706) 220,287 (154,036) 66,251 1.43
$ 9.75 $ 230,636 88,706 319,343 (15,967) (88,706) 214,669 (154,036) 60,633 1.39
$ 9.50 $ 224,723 88,706 313,429 (15,671) (88,706) 209,051 (154,036) 55,015 1.36
$ 9.25 $ 218,809 88,706 307,515 (15,376) (88,706) 203,433 (154,036) 49,397 1.32
$ 9.00 $ 212,895 88,706 $ 301,601 -15080.0625 (88,706) $ 197,815 (154,036) $ 43,779 1.28

Interest Rate Sensitivity Analysis

Interest Rate NOI Debt Service Cash Flow DSC
6.00% $ 236,550 ($104,221) $ 132,329 2.27
7.00% $ 236,550 $ (121,591) $ 114,959 1.95
7.50% $ 236,550 $ (130,276) $ 106,274 1.82
7.75% $ 236,550 $ (134,618) $ 101,932 1.76
8.00% $ 236,550 $ (138,961) $ 97,589 1.70
8.50% $ 236,550 $ (147,646) $ 88,904 1.60
9.00% $ 236,550 $ (156,331) $ 80,219 1.51
9.50% $ 236,550 $ (165,016) $ 71,534 1.43
10.00% $ 236,550 $ (173,701) $ 62,849 1.36

Maximum Loan Formulas

Mortgage Equity Method (Ellwood) Estimated Values
Loan Amortization 300 Constant to Term 8.8679% Elwood Method $ 2,892,295
Loan Interest Rate 7.50% Percent Loan Pd Off 21.1159% DSC Method $ 3,383,080
Loan to Value Percent 75% Sinking Fund Fctr 5.6984% Max Loan Formula $ 2,822,502
Equity Yield Rate 12.0% Basic Cap Rate 8.1786% Akerson Format $ 2,997,578
Projection Term (mths) 10
Annual Appreciation 2.50% Average Value $3,023,864
Annual Depreciation 0%
Projected Holding (yrs) 5
NOI $ 236,550
Change in Property Value (Yrly) 2.5%
Change in Income (yrly) 2%
Estimated Value $ 2,892,295 Cap rate 8.1786%

Debt Service Coverage Method Maximum Loan Amount

7.5% @ 30 years
Annual NOI $ 236,550 Annual NOI $ 236,550.00
Loan Amort (mnths) 360 Loan Constant 0.069922
Loan to Value 75% Debt Coverage 1.25 1.20 1.15
Debt Coverage 1.25
Loan Constant 0.006992 0.06992150 Max Loan $ 2,706,464 $ 2,819,233 $ 2,941,808 2,822,501.67
Indicated Value 3,383,080

INPUTS
E (Equity Ratio) 25.0%
Ye (Equity Yield Rate) 12.0%
Projection Term (Yrs.) 10 0.1424421
Loan Terms
Interest Rate 7.50%
Amortization (Yrs.) 25
Gain/(Loss) 10.0%
NOI (Net Operating Income)$245,161
OUTPUTS
M (Mortgage Ratio) 75.0%
Rm (Annual Constant) 8.87%
P (% of Loan Paid thru Term)21.12%
1/Sn (Sinking Fund Factor) 5.70%
Indicated Value $2,997,578

AKERSON FORMAT
M Rm
0.75 x 0.0887 = 0.06651
E Ye
+ 0.25 x 0.1200 = 0.03000
M P 1/Sn
- 0.75 x 0.2112 x 0.0570 = (0.0090)
Basic Rate ( r ) 0.08748
(Gain)/Loss 1/Sn
+/- -0.10 x 0.0570 = (0.0057)
Indicated Capitalization Rate (Ro) 0.0818
or 8.18%
REAL ESTATE INVESTMENT ANALYSIS 2/3/2010
Purchase/Cost 100% $ 3,321,535 Value
Down Payment: 20% $ 579,003 Market Cost Capit. of NOILand to Bldg Impr.
Requested Loan Amount 80% $ 2,742,532 $ 3,383,080 $ 3,321,535 $ 2,316,014
Interest Rate on Loan: 7.50% 24% 24% 34% % to Land
Term of Loan: Years 25 76% 76% 66% % to Impv
Improvement Ratio: % of bldg to total Property Value 76% 100% 100% 100% Total
Vacancy/Collection losses: 5% 7%
No. Yrs. of Depreciation: (Residential 27.5) (39.5 for Commercial)) 39.5
Scheduled
Approx. Annual
Buying Gross
Costs: as Income:
% of total $
3% 236,550

RESULTS 5 year sale

Price (based on Cost) $ 3,321,535 Interest % 7.50% Land 24% $ 783,071
Equity (Loan to Value) $ 579,003 No. Yrs. 25 Improvement 76% $ 2,538,465
Loan Amount $ 1,737,010 Mo. P&I $ 12,836 No. Yrs. 39.5
Buy Costs $ - Annual P&I $ 154,036 Deprec/Year $ 64,265
Cap Improvements $ -

ANNUAL OPERATING INCOME Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Increase in income 0.00% 0.00% 0.00% 0.00% 0.00%
Gross Rental Income $ 236,550 $ 236,550 $ 236,550 $ 236,550 $ 236,550
Cam & Nets Recovery $ 88,706 $ 89,150 $ 89,465 $ 89,912 $ 90,362
Gross Potential Income $ 325,256 $ 325,700 $ 326,015 $ 326,462 $ 326,912
Vacancy/Bad Debt 7.00% $ 22,768 $ 22,799 $ 22,821 $ 22,852 $ 22,884
EFFECTIVE GROSS INCOME $ 302,488 $ 302,901 $ 303,194 $ 303,610 $ 304,028

ANNUAL OPERATING EXPENSES Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

(Increase in expenses) 0.50% 0.50% 0.50% 0.50% 0.50%
Cam $ 26,021 $ 26,151 $ 26,151 $ 26,281 $ 26,413
Taxes $ 49,202 $ 49,448 $ 49,696 $ 49,944 $ 50,194
Insurance $ 6,387 $ 6,419 $ 6,451 $ 6,483 $ 6,516
Management Fee 4% 4.00% $ 7,097 $ 7,132 $ 7,168 $ 7,203 $ 7,239
TOTAL OPERATING EXPENSES $ 88,706 $ 89,150 $ 89,465 $ 89,912 $ 90,362
Op. Expenses as % of EGI -29% -29% -30% -30% -30%
NET OPERATING Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666

CASH FLOW (BEFORE TAXES) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666
-Yrly. P & I $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036
Reserve For Replacements 1.50% $ 3,207 $ 3,206 $ 3,206 $ 3,205 $ 3,205
CASH FLOW (BEFORE TAXES & Reserve For Replacement) $ 59,746 $ 56,509 $ 56,487 $ 56,456 $ 56,425

7
TAX BENEFIT Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666
-Annual Interest $ 129,442 $ 127,532 $ 125,475 $ 123,258 $ 120,868
-Annual Depreciation $ 64,265 $ 64,265 $ 64,265 $ 64,265 $ 64,265
Taxable Income $ 20,075 $ 21,954 $ 23,989 $ 26,175 $ 28,533
Investor's Tax Bracket 43% 43% 43% 43% 43% 43%
TAX BENEFIT $ (8,632) $ (9,440) $ (10,315) $ (11,255) $ (12,269)
Reserve For Replacement $ 3,207 $ 3,206 $ 3,206 $ 3,205 $ 3,205
Tax Flow After Tax Benefit $ 8,236 $ 9,307 $ 10,468 $ 11,714 $ 13,059

MORTGAGE PRINCIPAL REDUCTION Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Start of Yr. Balance $ 1,737,010 $ 1,712,416 $ 1,685,912 $ 1,657,350 $ 1,626,572
-End of Yr. Balance $ 1,712,416 $ 1,685,912 $ 1,657,350 $ 1,626,572 $ 1,593,404
TOTAL PRINCIPAL REDUCTION $ 24,594 $ 26,504 $ 28,561 $ 30,779 $ 33,168

PROPERTY APPRECIATION (Cost) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

(Increase nAnnually) 3% 3% 3% 3% 3% 3%
Start of Year Value $ 3,321,535 $ 3,421,181 $ 3,523,817 $ 3,629,531 $ 3,738,417
End of Year Value $ 3,421,181 $ 3,523,817 $ 3,629,531 $ 3,738,417 $ 3,850,570
TOTAL ANNUAL APPRECIATION $ 99,646 $ 102,635 $ 105,715 $ 108,886 $ 112,153

FINANCIAL ANALYSIS
RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Cash Flow (Before Taxes) $ 59,746 $ 56,509 $ 56,487 $ 56,456 $ 56,425
Tax Benefit $ (8,632) $ (9,440) $ (10,315) $ (11,255) $ (12,269)
Debt Reduction $ 24,594 $ 26,504 $ 28,561 $ 30,779 $ 33,168
Appreciation $ 99,646 $ 102,635 $ 105,715 $ 108,886 $ 112,153
RETURN ON INITIAL EQUITY $ $ 175,354 $ 176,208 $ 180,447 $ 184,865 $ 189,476

INITIAL EQUITY: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Down Payment $ 579,003 $ 579,003 $ 579,003 $ 579,003 $ 579,003
Capital Improvement $ - $ - $ - $ - $ -
TOTAL INITIAL EQUITY $ 579,003 $ 579,003 $ 579,003 $ 579,003 $ 579,003
% RETURN ON INITIAL EQUITY 30% 30% 31% 32% 33%

RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Cash Flow (Before Taxes) $ 59,746 $ 56,509 $ 56,487 $ 56,456 $ 56,425
Tax Benefit $ (8,632) $ (9,440) $ (10,315) $ (11,255) $ (12,269)
Debt Reduction $ 24,594 $ 26,504 $ 28,561 $ 30,779 $ 33,168
Appreciation $ 99,646 $ 102,635 $ 105,715 $ 108,886 $ 112,153
$ RETURN ON TOTAL EQUITY $ 175,354 $ 176,208 $ 180,447 $ 184,865 $ 189,476

8
TOTAL EQUITY: (Appreciation to Year end Debt Balance) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Beginning of Year Value inc. Cap. Imp. (3%) $ 3,321,535 $ 3,421,181 $ 3,523,817 $ 3,629,531 $ 3,738,417
Begining of Year Balance $ 1,737,010 $ 1,712,416 $ 1,685,912 $ 1,657,350 $ 1,626,572
TOTAL EQUITY $ 1,584,525 $ 1,708,766 $ 1,837,905 $ 1,972,181 $ 2,111,845
% RETURN ON TOTAL EQUITY 11% 10% 10% 9% 9%

ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)

ADJUSTED COST BASIS Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Original Basis $ 3,321,535 $ 3,321,535 $ 3,321,535 $ 3,321,535 $ 3,321,535
+ Capital Improvements` $ - $ - $ - $ - $ -
+ Sales Costs 3% $ 102,635 $ 105,715 $ 108,886 $ 112,153 $ 115,517
- Accum. Depreciation $ 64,265 $ 128,530 $ 192,795 $ 257,060 $ 321,325
= ADJUSTED COST BASIS $ 3,359,906 $ 3,298,720 $ 3,237,626 $ 3,176,628 $ 3,115,728

True CAPITAL GAIN Less Depreciation Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Sales Price $ 2,672,276 $ 2,671,888 $ 2,671,612 $ 2,671,221 $ 2,316,014
Non adjusted cost $ 3,424,171 $ 3,427,250 $ 3,430,421 $ 3,433,688 $ 3,437,052
True Gain or loss $ (751,895) $ (755,362) $ (758,809) $ (762,467) $ (1,121,039)

CAPITAL GAIN for tax purposes Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Sales Price $ 3,421,181 $ 3,523,817 $ 3,629,531 $ 3,738,417 $ 2,316,014
- Adjusted Cost Basis $ 3,359,906 $ 3,298,720 $ 3,237,626 $ 3,176,628 $ 3,115,728
CAPITAL GAIN (tax purposes) $ 61,276 $ 225,097 $ 391,905 $ 561,789 $ (799,714)

CAPITAL GAIN TAX Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5

Capital Gain for tax purposes $ 61,276 $ 225,097 $ 391,905 $ 561,789 $ (799,714)
= Tax on Capital Gain $ (134,313) $ (118,940) $ (103,563) $ (88,228) $ (143,877)

EST. NET SALE PROCEEDS (after tax) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5
Sales Price $ 3,421,181 $ 3,523,817 $ 3,629,531 $ 3,738,417 $ 2,316,014
- Sales Costs $ 102,635 $ 105,715 $ 108,886 $ 112,153 $ 115,517
- Ending Loan Balance $ 1,712,416 $ 1,685,912 $ 1,657,350 $ 1,626,572 $ 1,593,404
= Proceeds Before Taxes $ 1,606,130 $ 1,732,190 $ 1,863,295 $ 1,999,693 $ 607,093
Capital Gain Tax $ (134,313) $ (118,940) $ (103,563) $ (88,228) $ (143,877)
EST NET SALE PROCEEDS (afterTax) $ 1,740,443 $ 1,851,130 $ 1,966,858 $ 2,087,921 $ 750,969

Yearly Cash Flow Summary

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Total
Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666
First Mortgage Annual Payment $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036
Cash Flow after Debt Service $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630 $ 298,445
Debt Service Coverage Ratio 1.39 1.39 1.39 1.39 1.39

9
Break even analysis for investment property
Rentable area 23,655
Average income per sq.ft. $ 10.00 Breakeven chart
Potential income $ 325,256 Income Expenses
1,500,000
Annual operating expenses $ 88,706 1,000,000

Dollars
Annual debt service $ 154,036 500,000
0
Breakeven 75%
1 11 21 31 41 51 61 71 81 91
Occupancy %
Present Values at 9.0% Discount Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10
Tenth Year NOI $ 247,418 $ 252,366
Terminal Cap Rate 9.00%
Estimated Sales Price $ 2,804,071
Less: 3% Sales Costs $ (84,122)
Estimate of Reversion #########
Gross Cash Flows & Reversion $ 213,782 $ 213,751 $ 213,729 $ 224,415 $ 224,415 $ 224,415 $ 235,636 $ 235,636 $ 235,636 #########
Present Values at 8.5.% Discount $ 2,588,826 $ 2,588,826
Reversion Net Operating Income $ 213,666
Terminal Cap Rate 9.00%
Gross Sales Price $ 2,374,069
Selling Costs 3%
Net Sales Price $ 2,302,847
Remaining First Mortgage Balance $ 1,593,404
Capital Loan Balance $ -
Return Of Equity $ 579,003
Capital Gain $ 130,440
After Tax Impact Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Total Tax Bracket 30% 35% 40% 45% 50%
Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666 Benefit $ 36,217 $ 42,253 $ 48,290 $ 54,326 $ 60,362
-Annual Interest $ 129,442 $ 127,532 $ 125,475 $ 123,258 $ 120,868
-Annual Depreciation $ 64,265 $ 64,265 $ 64,265 $ 64,265 $ 64,265
Taxable Income $20,075 $21,954 $23,989 $26,175 $28,533 $120,727

10
Five Year Leveraged IRR Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Equity
Cash Flow after Debt Service $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630
Net Sales Price $ 2,302,847
Remaining Mortgage $ (1,593,404)
Equity $ 709,443

Net Cash Flow Less Equity $ (579,003) $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630 $ 709,443 11.82%
After Tax + Captial Gains $ (173,665) $ 8,236 $ 9,307 $ 10,468 $ 11,714 $ 13,059 ######## 44.59%

Cash on Cash Return 11.82%

Five Year Leveraged IRR (Project) 44.59%
Cash On Cash Return 11.90%
This report is based on certain assumptions.The projections are estimates only
Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.

Investment Performance

$250,000
$200,000 NOI
Dollars

$150,000 Interest paid

$100,000 Return on Equity
$50,000
$-
1 2 3 4 5 6 7 8 9 10
Years

11
Financials - Five-Year Leveraged IRR Analysis
Tenant Profile
Size Rent / Ft NNN / Ft
Tenant 1,850 $ 10.00 $ 3.75
Tenant 1,670 $ 10.00 $ 3.75
Tenant 20,135 $ 10.00 $ 3.75

Assumptions: NNN Detail

Total Leased 23,655 CAM
% Leased 100% Taxes
Loan % 7.50% Insurance
Loan to Value 7.50% Mgmt.
Term - Years 25 Total Expenses
Foot Print Sq/Ft 23,655
Lease Term(s) 5
Renewals 3
CAP rate 0.08

Management Fee 0.04

Vacancy & Bad debt 0.05
Reserve for Replacement 0

Sources and Uses of Funds

Building Construction Costs Loan To Cost
Hard Costs $2,157,014 First Mortgage 75.00% $ 1,737,010
Soft Costs $222,330 Equity 25.00% $ 579,003
Contingency $64,710 Total Source of Funds 100.00% $ 2,316,014
Financing $79,900
Land $797,580
Total
Tenant Improvement $ 3,321,535
Continguency $0

First Mortgage
Mortgage Amount $ 1,737,010 Monthly Payment $ 12,836 Interest 7.50%
Interest Rate 7.50% Annual Payment $ 154,036 Principal 1.37%
Amortization Period 25 Constant 8.87%

Year 1 Year 2 Year 3 Year 4 Year 5

Beginning Balance $ 1,737,010 $ 1,712,416 $ 1,685,912 $ 1,656,177 $ 1,624,134
Annual Payments $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036
Portion to Interest $ 128,431 $ 126,443 $ 124,301 $ 121,993 $ 119,505
Portion to Principal $ 25,605 $ 27,593 $ 29,735 $ 32,043 $ 34,531
Ending Balance $ 1,712,416 $ 1,685,912 $ 1,656,177 $ 1,624,134 $ 1,589,603

Revenue Annual Rent Year 1 Year 2 Year 3 Year 4 Year 5

Tenant $ 18,500 $ 18,500 $ 18,500 $ 18,500 $ 18,500
Tenant $ 16,700 $ 16,700 $ 16,700 $ 16,700 $ 16,700
Tenant $ 201,350 $ 201,350 $ 201,350 $ 201,350 $ 201,350
Gross Annual Rent $ 236,550 $ 236,550 $ 236,550 $ 236,550 $ 236,550
Cam Recovery $ 88,706 $ 89,150 $ 89,465 $ 89,912 $ 90,362
Gross Potential Income $ 325,256 $ 325,700 $ 326,015 $ 326,462 $ 326,912
Less Vacancy 7.00% $ (22,768) $ (22,799) $ (22,821) $ (22,852) $ (22,884)
Effective Gross Income $ 302,488 $ 302,901 $ 303,194 $ 303,610 $ 304,028
Expenses $ (88,706) $ (89,150) $ (89,465) $ (89,912) $ (90,362)
Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666
Yearly Cash Flow Summary Year 1 Year 2 Year 3 Year 4 Year 5
Net Operating Income $ 213,782 $ 213,751 $ 213,729 $ 213,698 $ 213,666
First Mortgage Annual Payment $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036
Cash Flow $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630

Reversion Net Operating Income $ 213,666.18

Terminal Cap Rate 9.0%
Gross Sales Price $ 2,374,068.71
Selling Costs 3%
Net Sales Price $ 2,302,846.65
Remaining First Mortgage Balance $ 1,589,602.63
Capital Loan Balance $ -
Return Of Equity $ 579,003.38
Capital Gain $ 134,240.63

Five Year Leveraged IRR Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Equity $ (579,003)
Cash Flow after Debt Service $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630 $ 298,445
Net Sales Price $ 2,302,847
Remaining Mortgage $ (1,589,603)
Net Cash Flow $ (579,003) $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 59,630 $ 713,244
Net after return of Equity

Cash on Cash Return (5 yr cumulative with initial equity, based on sale after 5 years) 81.18%

100% Partner $ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 713,244

0% $ - $ - $ - $ - $ -
$ 59,746 $ 59,715 $ 59,693 $ 59,661 $ 713,244

Five Year Leveraged IRR (Project) 11.90%

 DISCOUNTED CASH FLOW ANALYSIS
Model As If Completed
INCOME: Current Rent # S.F. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

POTENTIAL GROSS INCOME $ 10.00 23,655 $ 236,550 $ 236,550 $ 248,378 $ 248,378 $ 260,796 $ 260,796 $ 273,836 $ 273,836 $ 287,528 $ 287,528
CAM Reimbursements 100% $ 3.75 $ 88,706 $ 89,593 $ 90,271 $ 92,299 $ 93,969 $ 96,119 $ 97,857 $ 100,099 $ 101,907 $ 104,244
Total Gross Income $ 325,256 $ 326,143 $ 338,649 $ 340,677 $ 354,765 $ 356,915 $ 371,693 $ 373,935 $ 389,435 $ 391,772
Less: Vacancy & Collection Loss 7% -93% $ 22,768 $ 22,830 $ 23,705 $ 23,847 $ 24,834 $ 24,984 $ 26,019 $ 26,175 $ 27,260 $ 27,424
EFFECTIVE GROSS INCOME (EGI) $ 302,488 $ 303,313 $ 314,943 $ 316,829 $ 329,932 $ 331,931 $ 345,675 $ 347,759 $ 362,175 $ 364,348

EXPENSES
Management (4% of EGI) $ 0.51 $ 12,100 $ 12,133 $ 12,598 $ 12,673 $ 13,197 $ 13,277 $ 13,827 $ 13,910 $ 14,487 $ 14,574
Real Estate Taxes $ 1.50 $ 35,483 $ 36,192 $ 36,916 $ 37,654 $ 38,407 $ 39,176 $ 39,959 $ 40,758 $ 41,573 $ 42,405
Property Insurance $ 0.27 $ 6,387 $ 6,515 $ 6,645 $ 6,778 $ 6,913 $ 7,052 $ 7,193 $ 7,336 $ 7,483 $ 7,633
Utilities (water,sewer,common area) $ 0.15 $ 3,548 $ 3,619 $ 3,692 $ 3,765 $ 3,841 $ 3,918 $ 3,996 $ 4,076 $ 4,157 $ 4,240
Repairs & Maintenance/Turnover $ 0.25 $ 5,914 $ 6,032 $ 6,153 $ 6,276 $ 6,401 $ 6,529 $ 6,660 $ 6,793 $ 6,929 $ 7,067
Reserves for Replacements $ 0.25 $ 5,914 $ 6,032 $ 6,153 $ 6,276 $ 6,401 $ 6,529 $ 6,660 $ 6,793 $ 6,929 $ 7,067
Miscellaneous $ 0.26 $ 6,203 $ 6,327 $ 6,454 $ 6,583 $ 6,715 $ 6,849 $ 6,986 $ 7,126 $ 7,268 $ 7,413
TOTAL EXPENSES $ 3.19 $ 75,548 $ 76,850 $ 78,609 $ 80,005 $ 81,876 $ 83,329 $ 85,280 $ 86,793 $ 88,827 $ 90,401
Adjustment from Input Sheet $ 0.56 $ 13,158 $ 13,422 $ 13,690 $ 13,964 $ 14,243 $ 14,528 $ 14,818 $ 15,115 $ 15,417 $ 15,725
$ 88,706 $ 90,271 $ 92,299 $ 93,969 $ 96,119 $ 97,857 $ 100,099 $ 101,907 $ 104,244 $ 106,126
Expense /Square Foot $ 3.75 $ 3.82 $ 3.90 $ 3.97 $ 4.06 $ 4.14 $ 4.23 $ 4.31 $ 4.41 $ 4.49

NET OPERATING INCOME (NOI) Avg.$ 245,161 $ 213,782 $ 213,042 $ 222,644 $ 236,824 $ 248,056 $ 248,602 $ 260,395 $ 260,967 $ 273,348 $ 273,947
Tenth Year NOI $ 279,426
Terminal Cap Rate 0.09
Estimated Sales Price $ 3,104,737
Less: 3% Sales Costs $ (93,142)
Estimate of Reversion $ 3,011,595
Gross Cash Flows & Reversion $ 213,782 $ 213,042 $ 222,644 $ 236,824 $ 248,056 $ 248,602 $ 260,395 $ 260,967 $ 273,348 $ 3,285,542
Present Values at Discount 12.0% $ 2,316,014

Max Loan @ 75% $ 1,737,010

Annual Interest @ 7.% $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036 $ 154,036
Equity requirement $ 579,003
Net Cash Flow (average) $ 89,502 $ 59,746 $ 59,006 $ 82,788 $ 82,788 $ 94,020 $ 94,566 $ 106,359 $ 106,931 $ 119,312
Debt Coverage Ratio (average) 1.57 1.39 1.38 1.45 1.54 1.61 1.61 1.69 1.69 1.77
Break-even Occupancy (average) 67% 71% 71% 69% 69% 66% 67% 64% 64% 62%

Cash on Cash Return (before depr) 15% 10%

Rent per square foot net (Average) $ 10.93 $ 10.00 $ 10.00 $ 10.50 $ 10.50 $ 11.03 $ 11.03 $ 11.58 $ 11.58 $ 12.16
Gross Rents (Average) $ 14.99 $ 13.75 $ 13.82 $ 14.40 $ 14.47 $ 15.09 $ 15.16 $ 15.81 $ 15.88 $ 16.56
Rate 7.50%
Years 25
Payments/year 12
Total payments 300
Loan Amount$1,737,010
Payments Per Month Per Year Effective Rate
Interest $ 10,856 $ 130,276 7.50%
Principal $ 1,980 $ 23,760 1.37%
Total $ 12,836 ####### 8.87%
Principal Interest Total
EOY 1 $ 1,712,416 $ 25,605 $ 128,431 $ 154,036
EOY 2 $ 1,685,912 $ 27,593 $ 126,443 $ 154,036
EOY 3 $ 1,657,350 $ 29,735 $ 124,301 $ 154,036
EOY 4 $ 1,626,572 $ 32,043 $ 121,993 $ 154,036
EOY 5 $ 1,593,404 $ 34,531 $ 119,505 $ 154,036
EOY 6 $ 1,557,661 $ 37,212 $ 116,825 $ 154,036
EOY 7 $ 1,519,143 $ 40,101 $ 113,936 $ 154,036
EOY 8 $ 1,477,635 $ 43,214 $ 110,823 $ 154,036
EOY 9 $ 1,432,904 $ 46,568 $ 107,468 $ 154,036
EOY 10 ######## $ 50,184 $ 103,853 $ 154,036 21%
EOY 11 $ 1,332,756 $ 54,080 $ 99,957 $ 154,036
EOY 12 $ 1,276,778 $ 58,278 $ 95,758 $ 154,036
EOY 13 $ 1,216,455 $ 62,802 $ 91,234 $ 154,036
EOY 14 $ 1,151,448 $ 67,678 $ 86,359 $ 154,036
EOY 15 $ 1,081,395 $ 72,932 $ 81,105 $ 154,036
EOY 16 $ 1,005,904 $ 78,593 $ 75,443 $ 154,036
EOY 17 $ 924,551 $ 84,695 $ 69,341 $ 154,036
EOY 18 $ 836,884 $ 91,270 $ 62,766 $ 154,036
EOY 19 $ 742,410 $ 98,355 $ 55,681 $ 154,036
EOY 20 $ 640,602 $ 105,991 $ 48,045 $ 154,036
EOY 21 $ 530,891 $ 114,219 $ 39,817 $ 154,036
EOY 22 $ 412,662 $ 123,087 $ 30,950 $ 154,036
EOY 23 $ 285,255 $ 132,642 $ 21,394 $ 154,036
EOY 24 $ 147,957 $ 142,939 $ 11,097 $ 154,036
EOY 25 $ 0 $ 154,036 $ 0 $ 154,036