This residential development includes $40$ one$-$bedroom and $60$ two$-$bedroom apartments of $750$ and $925$

square feet $(SgEt),$ respectively. Rent will be $$1\mathrm{.}75$perSgE$\frac{t}{m}$onth for the first year and is expected to

grow by $1\%$ for the next year and then by an additional $0\mathrm{.}5\%$ every year before stabilizing at $3\%.$

Vacancy and rent loss will be $10\%$ in the first year of operation but will decrease by $1\mathrm{.}5\%$ annually before

stabilizing at $5\%.$ In addition to the rent and vacancy assumptions, the second table below shows the

applicable variable and fixed operating expenses, and CAPEX allowance in the first year. The

development is expected to cost $$210$ per rentable square foot.

Questions

Develop the property's $10-$year DCF after lease$-$up and compute net sales proceeds at the end of

year $10$ using the cap rate and sales commissions above. $(30$ points$)$

Should the developer sell the property at she is offered a cap rate of $6\mathrm{.}125\%$ on NCF at the

beginning of year $1?$ If cap rates remain unchanged at $6\mathrm{.}125\%,$ when would be the best time for the

developer to sell the property if she is willing to operate it for a few years until she recovers her

investment? points$)($NPV calculation$)$This residential development project consists of $20$ one$-$bedroom units, $40$ two$-$bedroom units, and $100$ parking spaces. The table below shows market rents, vacancy rate, rent loss rate, operating expenses, capital expenditure allowance for the first year of operation, and expected annual growth rates for the next $7$ years. The bottom part of the table lists the applicable income capitalization rates and development costs. On Excel with figures please