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: todd@cre-training.com

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.

Page 1 of 3

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: todd@cre-training.com

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.

Page 2 of 3

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: todd@cre-training.com

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.

Page 3 of 3