Use the following property data:
Property consists of 6 Office suites
Contract rents: 2 @ $1,850 per month, 2 @ $2,900 per month, and 2 @ $2,800 per month
Annual market rent increase: 3.5%
Vacancy and collection losses: 10.5% per year (of PGI)
Operating expenses: 35% of EGI
Capital expenditures: 20% of EGI
Expected holding period: 5 years
Going-out Cap. Rate: 8.4%
Selling expenses: 4% of sale price
Market discount rate: 9%
Comparable First-year NOI Sale Price
A $75,000 $960,000
B $105,000 $1,560,000
C $130,000 $1,150,000
D $76,000 $900,000
E $88,000 $1,190,000
1. Calculate NOI. Show all work.
2. Calculate Overall Capitalization Rate. Show all work.
3. Calculate Estimated Market Value. Show all work.
4. Calculate Five Year Pro Forma NOI. Show all work.
5. Estimate Future Sale Proceeds. Show all work.
6. Calculate Net Sale Proceeds. Show all work.
7. Calculate Present Value of Future Cash Flows. Show all work.