HW #3 Valuation Using Income Capitalization and Sales Comparison (Due April 22) 25 points

Address Year Built Renovated Size (SQFT) Sale Date Sale Price Cap Rate % Leased 1285 Avenue of the Americas 1960 1,800,000 May-18 $1,650,000,000 4.70% 100% 245 Park Ave 1966 2000 1,787,000 May-19 $2,210,000,000 4.66% 91.60% 60 Wall St 1987 1,625,000 Jan-19 $1,040,000,000 100% 85 Broad St 1983 1,118,509 May-19 $652,000,000 3.90% 88%

1) Use this information about the comparables and the cash flow forecast you have already created to value the subject property in the following ways: Assume a holding period of 5 years. Take your cash flow forecast out one additional year to 2025 and estimate the sales price of the property in 2024 using data about the market cap rate from the comparables. Use discounted cash flow analysis to find the value estimate of the subject property today. Show how the valuation is dependent upon the required rate of return by using a range of discount rates from 8-15%.

2) One Astor Plaza was built in 1972 and renovated in 2010. The building received Energy Star certification in 2017 and LEED Gold Status in 2018. All of these buildings are steel constructions. Buildings older than 40 years sell for a 15% discount. Buildings older than 10 years sell at a 5% discount unless they have been renovated since the year 2000. Find the market adjusted price per square foot and use it to compute the subject value estimate using the sales comparison approach.