You have been instructed to complete a market valuation on a single tenant commercial property located...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/664918fb91c1b_555664918fb0cbfb.jpg)
Transcribed Image Text:
You have been instructed to complete a market valuation on a single tenant commercial property located in Mt Wellington for mortgage security purposes. The bank has specifically requested that you value this property having regard to the two most common investment approaches - Direct Capitalisation and Discounted Cash Flow. Your client has advised you that the building has been leased today, to a national tenant for a nine-year term at a gross commencement income of $457,000 per annum plus GST paid yearly in advance, which in your opinion is above market rental levels. However, the tenant was given a rental incentive, equivalent to nine months' rent, as a cash payment on commencement, to go towards office fit out works. You have been provided with the following assumptions/ determinants: Valuation Date: DCF Period: Discount rate: Terminal yield: Today Five years 6.50% 8.00% Market Derived capitalisation rate: Current assessed net market rental: Building net lettable area: Unrecovered OPEX: 7.50% $361,000 per annum plus GST and OPEX 3,100 square metres $25 per square metre plus GST Rental incentives (on commencement): $284,625 plus GST Rental reviews: Ratchet clause: Market rental increase: OPEX increase: Purchase price: Capital expenditure: Two yearly to market Soft 2.00% p.a. compounding 1.50% p.a. compounding $4,900,000 plus GST $79,000 plus GST at the end of year 4 You have been instructed to complete a market valuation on a single tenant commercial property located in Mt Wellington for mortgage security purposes. The bank has specifically requested that you value this property having regard to the two most common investment approaches - Direct Capitalisation and Discounted Cash Flow. Your client has advised you that the building has been leased today, to a national tenant for a nine-year term at a gross commencement income of $457,000 per annum plus GST paid yearly in advance, which in your opinion is above market rental levels. However, the tenant was given a rental incentive, equivalent to nine months' rent, as a cash payment on commencement, to go towards office fit out works. You have been provided with the following assumptions/ determinants: Valuation Date: DCF Period: Discount rate: Terminal yield: Today Five years 6.50% 8.00% Market Derived capitalisation rate: Current assessed net market rental: Building net lettable area: Unrecovered OPEX: 7.50% $361,000 per annum plus GST and OPEX 3,100 square metres $25 per square metre plus GST Rental incentives (on commencement): $284,625 plus GST Rental reviews: Ratchet clause: Market rental increase: OPEX increase: Purchase price: Capital expenditure: Two yearly to market Soft 2.00% p.a. compounding 1.50% p.a. compounding $4,900,000 plus GST $79,000 plus GST at the end of year 4
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
On January 1, 2012, Push Company purchased an 80% interest in the capital stock of Way-Down Company for $820,000. At that time, WayDown Company had capital stock of $500,000 and retained earnings of...
-
A recent annual report for Eastman Kodak reported that the cost of property, plant, and equipment at the end of the current year was $6,805 million. At the end of the previous year, it had been...
-
The Kruskal-Wallis one-way analysis of variance is a simple extension of the _____.
-
Computing payroll earnings and taxes B. Pitt of Angel Manufacturing Company is paid at the rate of $15 an hour for an 8-hour day, with time-and-a-half for overtime and double-time for Sundays and...
-
Assume that you are the manager of a shop that assembles power tools. You have just received an order for 50 chain saws, which are to be shipped at the start of week 8. Pertinent information on the...
-
I. Give the slope of the following equations below and determine whether the given equations form a parallel lines, perpendicular lines or intersecting lines: 1. 2x+6=-y 2x-6=y 2. 15x-8y=1 8x+15=15y...
-
Jane is an employee in a tech company. She was recently provided a contract with the terms of her compensation. She was ready to sign when an attorney contacted her and told her that her compensation...
-
On January 1, 2024, Evers Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $48,000. Related expenditures also paid in cash...
-
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in...
-
Rolfe Company (a US-based company) has a subsidiary In Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in...
-
Problem 20-24 (Algorithmic) (LO. 2, 3) The Allwardt Trust is a simple trust that correctly uses the calendar year for tax purposes. Its income beneficiaries (Lucy and Ethel) are entitled to the...
-
Listed below are 10 industries. Classify each one as (a) emerging, (b) rapid-growth, (c) mature/slow-growth, (d) stagnant/declining, (e) high-velocity/turbulent, or (f) fragmented. Do research on the...
-
Explain all services offered by certified financial planner? Please explain as much as possible i want to increase my knowledge about this? Thanks in advance.
-
Ask students to outline the reasons why the various elements of culture (social structures and control systems, language and aesthetics, religion and other belief systems, educational systems, etc.)...
-
When bonds are retired or repaid at their due date, there generally will be a. a gain. b. a loss. c. accrued interest. d. no gain or loss.
-
If the market rate had been 8% at the time of issuance, a. the bonds would have been issued at a premium. b. the bonds would have been issued at a discount. c. the bonds would have been issued at...
-
When a bond is issued at a discount, the interest expense each year a. is greater than the cash payment for interest. b. is less than the cash payment for interest. c. equals the cash payment for...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App