You have been asked to develop a pro forma statement of cash flow for the coming year for Autumn Seasons, a 200-unit suburban garden apartment community. This community has a mix of 40 studio, 80 one- and 80 two-bedroom apartments with current rents of $550, $600, and $800, respectively. Leases with tenants are usually made for 12-month periods. Current rents are expected to remain fixed for the next six months. After that time, rents for each apartment type should increase by $10 per unit and remain at those levels for the remainder of the year. Ten studios were leased 3 months ago for $500, 20 one-bedroom units were leased 2 months ago for $580, and 10 two-bedroom units were leased last month for $805.

All other units have been leased recently at current rents. All of the previously leased units also are on 12-month leases. When those leases roll over, all are expected to be renewed at market rents upon rollover for an additional 12 months. Presently, 4 studios, 6 one- and 6 two-bedroom units are vacant.

This vacancy pattern should remain the same for the remainder of the year. Autumn Seasons anticipates that during the coming year, it will earn other income from laundry facilities, the awarding of an exclusive cable TV contract, parking, plus fees from net deposits, late fees, etc. of $200,000. Autumn Seasons expects to pay total turnover and operating expenses of $400 per month, per occupied unit during the next year.

However, it expects to recover some of these expenses for heating and central cooling that it provide to tenants in an amount totaling $100 per month, per occupied unit. During the next year, it is also anticipated that $100,000 will be required for recurring, make ready expenses (carpet, paint, drywall repair, etc.) and another $250,000 will be required for non-recurring items including countertops, parking lot repairs, etc.

A total of $10,000 in fees will be paid to Apartment Locator Services, a company that provides marketing services and new tenants for Autumn.

a. Prepare a statement of operating cash flow (NOI) for the coming year.

b. Add to (a) anticipated outlays for recurring and non-recurring items and commissions. What will be net cash flow for the coming year?