Purchase at $115 psf, (111,663 square feet)|| 1. Estimated closing costs of 4% of the purchase price 2. Hard Costs (Capex) required for interior renovations - $75 psf 3. Landscaping/Parking renovations - $1,500,000 4. Soft cost estimate for interior renovations - $15 psf 5. Construction period (including permitting) - 12 months 6. Lease up period - 6 months 7. Estimated Operating Expenses - $4 psf during construction and lease up, $7 psf after lease up. This includes real estate taxes and property management. 8. Rental Rate psf - $34 PSF 9. Estimated pro forma vacancy rate - 7.5% 10. Annual increases (beginning after lease-up); 3.0% for rents, and 2.5% for OPEX 11. Leasing commissions are paid once at the beginning of the lease and are 25% of the gross Yr. 1 annual rent. 12. You will take out a loan at purchase at 60% LTC (Loan to Cost) with an interest rate of 5.25% with 30 years amortization. 13. You sell the Property at the end of five years based on an exit cap of 6.25%. Your closing costs are 4% of the purchase price. Questions 1. What is your gross sales price in year 5? 2. If we want to achieve a deal level IRR of 18%, how much can we offer to buy the property for? 3. ASP decides to raise 90% of the equity required for the project from various high net worth investors. We decide to give these investors a 7% preferred return on their equity and anything beyond that we will take 35% of their profits (our 'promote'). If we want to give them a 15% IRR (net of the 'promote') how much can we offer to buy the property for? 4. Create a sensitivity table showing how the HNW investor level IRR changes if office rents are $30/$327$34/$36/$38 and hard costs are $50 psf/$75 psf $100 psf Purchase at $115 psf, (111,663 square feet)|| 1. Estimated closing costs of 4% of the purchase price 2. Hard Costs (Capex) required for interior renovations - $75 psf 3. Landscaping/Parking renovations - $1,500,000 4. Soft cost estimate for interior renovations - $15 psf 5. Construction period (including permitting) - 12 months 6. Lease up period - 6 months 7. Estimated Operating Expenses - $4 psf during construction and lease up, $7 psf after lease up. This includes real estate taxes and property management. 8. Rental Rate psf - $34 PSF 9. Estimated pro forma vacancy rate - 7.5% 10. Annual increases (beginning after lease-up); 3.0% for rents, and 2.5% for OPEX 11. Leasing commissions are paid once at the beginning of the lease and are 25% of the gross Yr. 1 annual rent. 12. You will take out a loan at purchase at 60% LTC (Loan to Cost) with an interest rate of 5.25% with 30 years amortization. 13. You sell the Property at the end of five years based on an exit cap of 6.25%. Your closing costs are 4% of the purchase price. Questions 1. What is your gross sales price in year 5? 2. If we want to achieve a deal level IRR of 18%, how much can we offer to buy the property for? 3. ASP decides to raise 90% of the equity required for the project from various high net worth investors. We decide to give these investors a 7% preferred return on their equity and anything beyond that we will take 35% of their profits (our 'promote'). If we want to give them a 15% IRR (net of the 'promote') how much can we offer to buy the property for? 4. Create a sensitivity table showing how the HNW investor level IRR changes if office rents are $30/$327$34/$36/$38 and hard costs are $50 psf/$75 psf $100 psf