Ridge Business Center is a warehouseloffice property in Charlotte. The property includes a well-maintained building totalling...

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Ridge Business Center is a warehouseloffice property in Charlotte. The property includes a well-maintained building totalling 50,000 sq ft in leasable area. The property has been offered for sale by the current owner at asking price of $5 Million. As a Financial Analyst of XYZ Investors, you are expected to identify if the property will be a good acquisition for the company. An investment must generate a minimum of 15% IRR for XYZ Investors. Please build a financial model using the assumptions below to provide an answer to the Management. Required sheets have been provided. Investment Assumptions Acquisition Date 01-Jan-21 Holding Period 5 years time for which the property is owned Sale Date last day of 60th month Terminal Cap Rate Cost of Sale 7.5% *This rate is used to determine Sale Price by the following formula: Sale Price= 5th Year NOI/Terminal Cap Rate 2% 2% of Sale Earnings go to broker/lawyer Loan Assumptions Loan Start Date Term of Loan LTV Interest Rate Loan Fees Amortization Period Rent Assumptions 01-Jan-21 5 years 75% of Price 4.0% 1% 25 years *Calculate monthly loan payments, you will need an amortization schedule 1) Assume rents increase every year on first day of the calendar year 2) Rents shown are Annual rents on a per square feet basis. Convert them to monthly rents and actual $ as and when required. 3) NNN leases are triple net leases, tenant has to pay their proportionate share of CAM, taxes and insurance over and above the rent 4) Consider Suite 1006 as vacant for the entire duration of 5 years Rent Roll (As of 31 July, 2020) Suite Leased Area Status (sq. ft) 1001 10,000 Occupied Lease Start Lease End [ (mm/dd/yy) (mm/dd/yy) 03-01-18 03-31-28 Annual Rent PSF (as of 31 July, 20) $12.15 Rent Increase Date Rent Increase Lease Type (mm/dd/yy) Annual (%) 01-01-21 1002 10,000 Occupied 06-01-19 06-30-29 $11.50 01-01-21 1003 15,000 Occupied 01-01-20 01-31-30 $10.75 01-01-21 1004 5,000 Occupied 03-01-18 03-31-28 1005 10,000 Occupied 06-01-19 06-30-29 $12 $12 01-01-21 01-01-21 NNN NNN NNN NNN NNN 1006 6,000 Vacant Total 56,000 $10.32 Expense Assumptions 1) All expenses are paid by landlord 2) All expenses grow 2% annually Expense Assumptions Annual Expense ($) Expense Type CAM Taxes Insurance Utilities Repairs Total Capital Expenditure Year Annual Amount ($ psf) $25,000 2021 $2.00 $75,000 2022 $1.25 $25,000 2023 $1.00 $20,000 2024 $1.00 $45,000 2025 $1.00 $1,90,000 Ridge Business Center is a warehouseloffice property in Charlotte. The property includes a well-maintained building totalling 50,000 sq ft in leasable area. The property has been offered for sale by the current owner at asking price of $5 Million. As a Financial Analyst of XYZ Investors, you are expected to identify if the property will be a good acquisition for the company. An investment must generate a minimum of 15% IRR for XYZ Investors. Please build a financial model using the assumptions below to provide an answer to the Management. Required sheets have been provided. Investment Assumptions Acquisition Date 01-Jan-21 Holding Period 5 years time for which the property is owned Sale Date last day of 60th month Terminal Cap Rate Cost of Sale 7.5% *This rate is used to determine Sale Price by the following formula: Sale Price= 5th Year NOI/Terminal Cap Rate 2% 2% of Sale Earnings go to broker/lawyer Loan Assumptions Loan Start Date Term of Loan LTV Interest Rate Loan Fees Amortization Period Rent Assumptions 01-Jan-21 5 years 75% of Price 4.0% 1% 25 years *Calculate monthly loan payments, you will need an amortization schedule 1) Assume rents increase every year on first day of the calendar year 2) Rents shown are Annual rents on a per square feet basis. Convert them to monthly rents and actual $ as and when required. 3) NNN leases are triple net leases, tenant has to pay their proportionate share of CAM, taxes and insurance over and above the rent 4) Consider Suite 1006 as vacant for the entire duration of 5 years Rent Roll (As of 31 July, 2020) Suite Leased Area Status (sq. ft) 1001 10,000 Occupied Lease Start Lease End [ (mm/dd/yy) (mm/dd/yy) 03-01-18 03-31-28 Annual Rent PSF (as of 31 July, 20) $12.15 Rent Increase Date Rent Increase Lease Type (mm/dd/yy) Annual (%) 01-01-21 1002 10,000 Occupied 06-01-19 06-30-29 $11.50 01-01-21 1003 15,000 Occupied 01-01-20 01-31-30 $10.75 01-01-21 1004 5,000 Occupied 03-01-18 03-31-28 1005 10,000 Occupied 06-01-19 06-30-29 $12 $12 01-01-21 01-01-21 NNN NNN NNN NNN NNN 1006 6,000 Vacant Total 56,000 $10.32 Expense Assumptions 1) All expenses are paid by landlord 2) All expenses grow 2% annually Expense Assumptions Annual Expense ($) Expense Type CAM Taxes Insurance Utilities Repairs Total Capital Expenditure Year Annual Amount ($ psf) $25,000 2021 $2.00 $75,000 2022 $1.25 $25,000 2023 $1.00 $20,000 2024 $1.00 $45,000 2025 $1.00 $1,90,000