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I posted this question on 4/08/2018. It has still yet to be answered. Please help so I understand how to solve it in the future.
I posted this question on 4/08/2018. It has still yet to be answered. Please help so I understand how to solve it in the future. Thank you!
You own a property which is in an excellent location. Several developers have approached you to purchase it. Unfortunately, you can't afford to develop it. Given the information below, what is the land value for each project? Which project will yield the "highest and best use land value"? How much should you be able to sell the land for? What are the risks to this analysis?
Project | NOI | Exp. Return | Growth | Building Cost per SQFT | Building Sqft |
Office: | 1,950,000 | 11.60% | 3.25% | 250 | 50,000 |
Retail: | 1,435,000 | 10.30% | 2.50% | 280 | 30,000 |
Apartment: | 1,350,000 | 12.00% | 3.50% | 225 | 22,000 |
Warehouse: | 1,275,000 | 9.80% | 2.00% | 175 | 32,000 |
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