# Financial Statement Notes and Disclosures

> Illustrative teaching case. Northgate Commons is not a real property, this is not a real transaction, and the term sheet is not a real financing quote. Every figure is fabricated for instruction.

These notes accompany `04-operating-statement-t24.csv`. They are the seller's
own disclosures, reproduced as delivered. Read them before you use any line in
the statement. In a live deal these notes are where most of the normalization
work announces itself, and they are also the part of a data room that gets
skimmed.

## Basis of presentation

The statement is seller prepared and unaudited, on a modified cash basis. It
covers Trailing 24 months, January 2025 through December 2026. Amounts are in whole dollars.

## Notes

1. The property has been self-managed by the seller since acquisition in 2009. No third-party management fee appears anywhere in the trailing period.
2. August 2026 repairs and maintenance includes a full roof replacement across all four buildings, completed by the seller at a cost of $186,500. It was charged to repairs and maintenance rather than capitalized.
3. Property taxes reflect the seller assessed value of $6,900,000 (2026) at a combined rate of 1.350%. The property has been held since 2009 and the assessment has not been reset. County practice is to reassess to approximately 92% of the recorded sale price in the tax year following a transfer.
4. Insurance is recorded as a level monthly accrual of the annual policy premium.
5. December 2026 gross potential rent, loss to lease, and vacancy loss tie to the December 31, 2026 rent roll.

## Trailing summary

| | Calendar 2026 (T-12) | Calendar 2025 | Trailing 24 months |
|---|---|---|---|
| Effective gross income | $1,865,006 | $1,815,815 | $3,680,821 |
| Total operating expenses | $746,594 | $543,587 | $1,290,181 |
| Net operating income as reported | $1,118,412 | $1,272,228 | $2,390,640 |

## Selected line detail, calendar 2026

| Line | Amount | Per unit | Comment |
|---|---|---|---|
| Repairs and maintenance | $248,838 | $2,074 | See note on the August 2026 roof work. |
| Property taxes | $93,150 | $776 | Assessed value $6,900,000 at 1.350%. |
| Management fee | $0 | $0 | The property is self-managed. |
| Payroll and benefits | $140,182 | $1,168 | On-site manager and one maintenance technician. |
| Insurance | $55,800 | $465 | Level monthly accrual of the annual premium. |

## Tie between the rent roll and the statement

The rent roll is dated 2026-12-31, so it corresponds to the final month of
the statement. Three figures should agree exactly, and they are worth checking
before you trust either document:

| | Rent roll | December 2026 statement |
|---|---|---|
| Gross potential rent (market rents, all units) | $168,680 | $168,680 |
| Loss to lease (occupied units, net) | $7,445 | $7,445 |
| Vacancy loss (market rent on vacant units) | $8,505 | $8,505 |

If those three do not agree in a live deal, stop and reconcile before going
further. Here they do agree, which tells you the rent roll and the statement
describe the same property on the same date.

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*Illustrative teaching case. Northgate Commons, the market, the broker, the lender, the comparables, and every figure in this packet are fabricated for instruction. Nothing here is a real property, a real transaction, or a real financing quote.*