The unlevered cash flows represent the cash flows available to both the debt and the equity stakeholders. We will calculate a return based off of this metric. We first need to begin with the initial investment which was made by both the equity and debt investors. And that is reflected in the acquisition price. The acquisition price we can find on our deal terms page and this is going to be the purchase price of the building. We will anchor that and we will multiply by negative one to show that it was an investment. The closing costs will be the same.

Because we're gonna be copying this over and looking at this on a yearly basis, we don't want the acquisition price or the closing costs to be showing up in the subsequent months.

So we're going to put in a true false which will act as a multiplier to zero out these amounts when we are not in the appropriate month. So since they only apply to month zero what we wanna say is, if the month that we are in is equal to zero, then show me that amount. If not, show me a zero. And I'll use the same thing for the closing costs. This way if I copy it into the next year, we should get a zero. Same thing for sales proceeds. We wanna look at the sales proceeds in the month that we expect to sell the building which according to the deal terms is month 60. We don't wanna see any sale proceeds or transaction costs based on the sale in any of the other months. So what we want to do is we want to basically say if we are in the month of the proposed sale, then show me the selling amount. If not, show me a zero. And we can do that again by using the multiplier. We can say equals, if this month that we are in is equal to sale month assumption, and we'll anchor that, then show me the selling price of the building. And the way we're going to calculate the sales price of the building is using the exit cap rate. So to do this calculation, we will then need the sum of the next 12 months net operating income divided by the exit cap rate. We have that in our model and that's one of the reasons why it's important to always calculate for 12 months beyond your expected exit date or else you can't do a cap rate evaluation. So I'm gonna take these next 12 cash flows and they're going to roll forward as we copy to the right. So we want those to not be anchored and divide that by the exit cap rate. And I've already named that cell, so we can just go ahead and type exit cap rate, then tab and select. And we should get a formula that works and we can test it simply by, well what we should do here is we should copy it over and then test in by just typing over the month that we're in here and making this 60. And what that does is it shows us sales proceeds in this year. So I'll go ahead and undo that. And then what I can do is also for my selling costs, I'll just link them to the sales proceeds so I don't have to do another true false. It'll just be simply the sales transaction costs anchored times the sales proceeds. And then this should work as well. If I, again, go ahead and change this to the exit month, we do see them showing up but the selling costs are actually going to go outside of the stakeholders group. They're gonna be paid to third parties. So we want to make this negative. And now we are in good shape. So I just have to change this back so that we have zeros here. And the calculation of the total unlevered cash flow in year zero, it's gonna be a little bit odd because we don't really actually have any other cash flows except for the purchase of the building. But to be consistent with the formula, we're going to go ahead and put the correct sale references in anyway. The total unlevered cash flow is going to be equal to the sum of the cash flow available before debt service. 'Cause again, we're looking at cash flows to both debt and equity holders as well as the purchase and/or sale proceeds.

And when we copy that into the first month we see that we're picking up the cash flow available for debt service but we're not picking up any other cash flows cause, we're not selling or buying the building in this year. Now, if we go ahead and copy this over to month 60 we should see the sale transaction taking place.

And in fact, we do, we see the sale of the building based on the forward 12 months of NOI. And we also see the selling costs being netted out. Now if we go one year beyond, what happens is we're still picking up cash flow available before debt service and we don't want to because if we sell the building, then for these stakeholders that are represented in this model there is no more cash flow. What we wanna do is put a formula in here that says that if we are in the month leading up to or including the sale of the building we want to include the cash flow. If we're beyond the sale of the building, then we don't want to include the cash flow. So as a multiplier what we'll do is if what we'll say is if this is less than or equal to the sale month anchored then that will be a one, show the cash flow.

If not, then show me nothing. And what happens is, is that we see that the cashflow now goes away after we sell the building and that just makes the model look clean and well thought out. So what we can do now is copy this across to the remaining period and we see that this works.

And the last thing we can do just to check, is we can go into our assumptions and just change the exit month from 60 let's say to year three, 36. And this should pick up in year three, month 36. And it does and it also zeros out beyond. So we feel pretty good about this at this point. I will undo that assumption and we can move on to the levered cash flows.