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<br />DEVELOPMENT MANAGEMENT SERVICES <br />Ramsey, Minnesota <br /> <br />bbpc <br /> <br />ASSOCIATES <br /> <br />. Parking spaces (surface, structured) <br /> <br />Result ~ Clarity on the development program and site(s) <br /> <br />2. Analysis of Development and Financing Cost <br />. Forecast land and property acquisition costs <br />. Estimate site work and infrastructure costs <br />. Estimate total hard costs (materials, labor, etc) and total soft costs (design, <br />permits) <br />. Estimate construction time period <br />. Estimate financing costs based on debt/equity structure and interest rates <br /> <br />Result ~ Creation of a proforma model that will forecast all of the project's development <br />costs and will enable sensitivity analysis based on changes in cost assumptions, <br /> <br />3. Analysis of Project Income <br />. Forecast per square foot lease rates and sales for all project uses <br />. Estimate absorption for all uses (retail, office, residential, etc.) <br />. Forecast operating revenue and vacancy rates <br />. Determine likely non,reimbursable operating costs and reserves (maintenance, <br />leasing) <br />. Establish stabilized net operating income (NOI) <br />. Set annual growth rates for expenses and revenue <br />. Set assumption for holding period and sales price/terminal valuation method <br /> <br />Result ~ Creation of a proforma model for operating period <br /> <br />4. Financial Feasibility Determination <br />. Combine development and operating period proformas <br />. Determine project's operating period capital structure (e.g. size of permanent <br />loan) <br />. Determine project cash flow with and without debt financing <br />. Calculate return metrics (IRR, Yield, Return on Equity, etc.) given cost, income, <br />and exit valuation assumptions <br />. Run sensitivity analysis to determine impact of modifying key assumptions <br />. If project has a funding gap (i.e. return insufficient to attract investment) <br />. Determine dollar amount of funding gap <br /> <br />Result ~ Forecast of project return and size of funding gap (if gap exists) <br /> <br />Basile Baumann Prost Cole & Associates <br /> <br />~ <br />