Office Product Test 1

Office Product Test 1

 


Whitney

Office

Center is located in your market area.  Analyze it, derive a suggested list price, and complete the investment analysis worksheet on the next page.  Assume the following:  

·         Your analysis begins as of “today,” which is January 2, 2006·         Capitalization rate:   7.5%·         Market vacancy factor:  10%·         Loan terms:  6.75% interest rate; 25-year amortization, loan rounded to nearest $1,000·         Debt Coverage Ratio:  1.30·         Parking income:   35 spaces leased at $30 per month. 

Operating Expenses·         RE taxes:             $50,000·         Insurance:            $9,000·        

CAM:                  $22,000·         Management:       5% of Effective Gross Income·         Reserves:             $0.25 per square foot 

Rent Roll

 

The client will put the building on the market within the next 60 days. According to recent comparable sales, the property should sell at a 7.5% Cap.  He has received three lease offers for the 2,700 SF vacancy.  Which offer should he accept?  (Circle your answer below.)1.               A five-year lease at $16.00/SF per year with a $4.50/SF base expense stop.  Allowances of $5.00/SF in tenant improvement and $2.00/SF in leasing commissions.2.               A four-year lease at $15.50/SF with a $4.50/SF base expense stop,  No T.I.’s or leasing commissions.3.               A three-year lease at $12.00/SF per year, NNN, with allowances of $8.00/SF in tenant improvement and $2.00/SF in leasing commissions.
Name: ______________________________________ 

                 Answer Sheet

INVESTMENT SUMMARY
Price: $
Down Payment: $
Leveraged Cash-On-Cash Rate Of Return %
Current Cap: 7.5%
Rentable Sq.Ft. / GLA 18,000 SF
Base Rent:  
    Occupied Space $
    Vacant Space at Market Rents $
Gross Potential Rental Income (GPRI) $
Expense Reimbursements:  
     Occupied Space $
     Vacant Space at Market Rents $
Total Expense Reimbursement $
Other Income $
Gross Potential Income (GPI) $
Vacancy/Collection Allowance $
Effective Gross Income (EGI) $
Total Operating Expenses $
Net Operating Income (NOI) $
Debt Service $
Net Cash Flow After Debt Service $
Principal Reduction $
Net Cash Flow After D/S + Principal Reduction $
Real Estate Taxes  (Reimbursable) $
Insurance  (Reimbursable) $

CAM  (Reimbursable)		 $
Management Fee  (Non-reimbursable) $
Reserves  (Non-reimbursable) $
Total Operating Expenses: $
Total Operating Expenses per Sq. Ft. (GLA) $

 

 

           Worksheet (for your convenience)

Tenant EOY 1 GSI Expense Reimb.

 


 

INVESTMENT SUMMARY
Price: $     1,881,000
Down Payment: $        572,000
Leveraged Cash-On-Cash Rate Of Return 5.69%
Current Cap: 7.5%
Rentable Sq.Ft. / GLA 18,000 SF
Base Rent:  
    Occupied Space $       173,371
    Vacant Space at Market Rents $         32,400
Gross Potential Rental Income (GPRI) $       205,771
Expense Reimbursements:  
     Occupied Space $         33,450
     Vacant Space at Market Rents $         12,150
Total Expense Reimbursement $         45,600
Other Income $         12,600
Gross Potential Income (GPI) $       263,971
Vacancy/Collection Allowance $       <26,397>
Effective Gross Income (EGI) $       237,574
Total Operating Expenses $       <96,479>
Net Operating Income (NOI) $       141,095
Debt Service $     <108,528>
Net Cash Flow After Debt Service $         32,567
Principal Reduction $         20,807
Net Cash Flow After D/S + Principal Reduction $         53,374
Real Estate Taxes  (Reimbursable) $         50,000
Insurance  (Reimbursable) $           9,000

CAM  (Reimbursable)		 $         22,000
Management Fee  (Non-reimbursable) $         11,879
Reserves  (Non-reimbursable) $            3600
Total Operating Expenses: $         96,479
Total Operating Expenses per Sq.Ft. (GLA)        $5.36

 

 

 

           Worksheet (for your convenience)

Tenant EOY 1 GSI Expense Reimb.