A landlord considers selling his retail shopping center. In place NOI is currently $560,000 and is assumed to grow at only 2% for the foreseeable future. Cap rates have really shrunk in the market and the landlord is concerned with how to redeploy any sales proceeds. He feels like a redevelopment may be a better option. His leasing team has indicated that a $2,000,000 renovation of the center would increase market rents approximately 10%, increasing NOI to $615,000. In addition, growth would increase to 3%. His broker has indicated that the renovation would have a 100-basis point positive impact on exit capitalization rates, which is currently 6.0%.

1. If the landlord choses the renovation, the Incremental Sale Proceeds are closest to
   1. $4 million.
   2. $3 million.
   3. $6 million.
   4. $5 million.
2. The increase in the growth rate and the contraction of the exit cap contributed to the Incremental Sale Proceeds.
   1. True
   2. False
3. For a sale of the property to be justified, an alternative investment would have to have an IRR exceeding
   1. 15.65%.
   2. 9.52%.
   3. 12.81%.
   4. 10.11%.

Please Answer ASAP