Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Project Timing Analysis Start: 12/31/22 Predevelopment: 12 months Construction: 24 months Lease 1: Commencing 12 months after delivery Lease 2: Commencing 24 months after delivery
Project Timing
- Analysis Start: 12/31/22
- Predevelopment: 12 months
- Construction: 24 months
- Lease 1: Commencing 12 months after delivery
- Lease 2: Commencing 24 months after delivery
- Sale Date: Month 72 or 12/31/28
Project Size:
- Project GSF: To be determined by applying efficiency below to NRSF
- Project NRSF: 190,000 SF
- Project Efficiency: 95%
Development Assumptions
- Land Purchase Price: $80 / GSF to be spent at time zero.
- Soft Costs: $50 / GSF to be spent 100% during the predevelopment period.
- Hard Costs: $300 / GSF
- 1/3 to be spent during the first year of construction.
- 2/3 to be spent during the second year of construction.
- Leasing Assumptions
- Tenant 1
- Premises: 125,000 NRSF
- Rent: $48 / SF NNN
- Free Rent: 12 months
- Escalations: 2.5%
- Term: 7 years
- Tenant Improvement Allowance: $150 / NRSF
- Paid 100% in lease commencement year.
- Leasing Commissions 6%
- Paid 100% in lease commencement year.
- Tenant 2
- Premises: 65,000 NRSF
- Rent: $60 / SF NNN
- Free Rent: 12 months
- Escalations: 2.5%
- Term: 10 years
- Tenant Improvement Allowance: $180 / NRSF
- Paid 100% in lease commencement year.
- Leasing Commissions 6%
- Paid 100% in lease commencement year.
- Tenant 1
Operating Assumptions: The numbers below should be reflected at delivery and escalate thereafter.
- Opex: $12 / SF
- Real Estate Taxes: $15 / SF
- Escalation: 2.5%
Sale Assumptions
- Residual Cap Rate: 5.25% to be applied to year 7 NOI.
- Sales Costs: 2.00%
- Please display the following on a gross dollar and $ / GSF basis:
- Gross Sales Proceeds
- Selling Costs
- Net Sale Proceeds
- Gross Sales Proceeds de-escalated to the commencement date at 2.75% growth rate.
Financing Assumptions: Please assume a traditional bank construction loan for this project. That means equity up-front.
- Loan to Cost: 65%
- Interest Rate: 6.00%
- Recordation Tax: 2.50%
- Financing Fees: 1.50%
Please include the following as part of your model:
- Sources and Uses Table
- Returns
- Unlevered IRR
- Levered IRR
- Equity Multiple
- Stabilized Yield
- Stabilized Cash on Cash
- Data Tables Measuring IRR at the following:
- Tenant 1 rents ($1/SF increments) vs cap rates
- Land purchase price ($5 / SF increments) vs debt interest rate (0.25% increments)
- Tenant 2 rents ($2 / SF increments) vs TIs ($10 / SF increments)
- Please build a waterfall reflecting the following:
- 5% GP Investment / 95% LP Investment
- Pari Passu until a 8% return
- 20% to the GP and 80% to the LP until a 12% return
- 30% to the GP and 70% to the LP until a 15% return
- 40% to the GP and 60% to the LP thereafter
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started