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Suppose it is early 2022, and a potential CRE borrower has maturing debt that they...

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Suppose it is early 2022, and a potential CRE borrower has maturing debt that they want to refinance. 2021 2020 2019 Gross Scheduled Rent 520 475 467 Vacancy/Bad Debt Rate 0% 20% 10% Rental Income Net of Bad Debts 520 380 420 Repairs and Maintenance 50 45 40 Utilities Paid by Owner 18 15 15 Utilities Paid by Tenant 12 10 10 Real Estate Taxes 30 25 25 Management Fees 20 15 15 Depreciation 40 40 50 Capital Expenditures in 2021 dollars 50 70 30 40 Interest Expense Aa 10 Depreciation 40 40 50 Capital Expenditures in 2021 dollars 30 50 70 Interest Expense 40 40 10 Income Taxes 100 70 90 Net Income 222 130 175 All of the Capex in the past 3 years was for maintenance, not expansion. Using the approach from the similar example in class, a good estimate of NOI going forward is 272 310 340 322 250

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