PLEASE ANSWER IN EXCEL FILE. MUST BE SUBMITTED AS FILE

You are appraising an office property that consists of a total of 38,000 sqft of rentable space, split equally accross two floors.Assume a holding period of 5 years, and that the property will sell at a cap rate of 9% at the end of year 5, with selling expenses of 4% of the gross price.

You find 5 rent comparables, top floors renting for $1.83, $1.77, $1.43, $1.60, and $1.66/sqft/month, and bottom floors for $2.01, $1.98, $2.20, $2.01, and $1.96/sqft/month. Based on the lease adjustments you had to make to arive at these values, you decide to weight these by 35%, 25%, 20%, 15%, and 5%, respectively, for both top and bottom floors. For subsequent years 2, 3,..., you expect market rents to rise by inflation, 3% per year.

Typical comprable office space in your market runs at a vacancy and collection loss rate of 15% of PGI. You are renting cell tower space on the roof for $6,000/yr, with a one-time jump of 15% in year 3, and growing at inflation each year thereafter (4, 5, ...).

Fixed expenses and reserves will grow 4% per year. For year 1, these expenses are: RE taxes: $70,000; insurance: $20,000; CapEx: $15,000.

Variable expenses are a fraction of effective gross income: 4% for maintenance, 1.2% for janitorial, 4% for utilities, 9% for management, 1.5% for leasing commissions, and 2% for TI.

Comprarable properties sell at a 13% discount rate.