Estimate the propertys rate of return if investors demand a

Reference no: EM13616415

Construction Period: Nov 2012 to Aug 2013
Total Square Feet: 15,781 Site: 2 acres.
Number of Buildings: One
Building Size: Warehouse, 6,354; first floor, 9,427; total, 15,781 square feet.
Building Height: Warehouse, 28'; Offices, 16'.
Basic Construction Type: Renovation/tenant build out.
Foundation: Concrete. Exterior Walls: Wood. Roof: Single ply roof on metal deck. Interior Walls: Wood stud drywall, glass.

Questions:

1. Use the months' supply measure (MS) to evaluate whether the market conditions favor the profitability of AnyTech's office building.

2. Estimate the net operating income (NOI) of the building, assuming $1.50sf/mo operating expenses (OE) which cannot be passed on to tenants.

3. Estimate the value (V=I/R) of the building upon completion.

4. Determine the maximum supportable site acquisition cost (AC), assuming construction cost of $84sf, a DCR of 1.2, a mortgage constant (MC) of .12, and a (LTV) of .70.

5. Estimate the property's rate of return if investors demand a levered equity return of 18%, and lenders maximum LTV is 65% and the debt return is 6.5%.

6. In 300 words or less, based on your answers to questions 1-5, discuss your recommendation to Mr. Prener about his idea to build this office. Include any constraints and risks, and give him your "bottom line" recommendation.

Reference no: EM13616415

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