Cash-Flow-commercial-real-estate-assignment-help-

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Consider the following information for XYZ Commercial Office building:

Please show all work, and provide any assumptions. Using Excel for the Cash flow

Square footage: 150,500 square feet

Tenancy:

A Tenant- 62,000 sf paying $24.00psf; remaining lease term 2 years

B Tenant- 54,000 sf paying $26.50psf; remaining lease term 5 years

C Tenant- 34,500 sf paying $25.75psf; remaining lease term 3 years

Market rents: The market rents are currently $32.25 psf. The market rents are expected to increase 2.75% in year one and 3% thereafter and all tenants will renew their leases at the prevailing market rates. Lease terms (new or renewal) will be 5 years with two 5 year options.

A 5% credit loss should be taken on income.

EXPENSES:

Operating expenses are $2.40 psf and will escalate at 3% annually.

Management fees are 4.75% of Effective Gross Income

Real Estate Taxes are currently $4 psf and are expected to decrease 15% in year one due to an expected refund on appeal, however will escalate 3% annually thereafter.

CAP EX:

Roof repair of $50,000 in year one.

Lobby renovation of $125,000 in year three.

1. Prepare a cash flow statement (Excel) for FOUR years for the property.

2. Assuming a discount rate of 9%, what is the present value of the cash flows?

3. Assuming you sold the building based on year 4’s NOI and a terminal cap rate of 10%, what price did you sell ?

 
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