Provide a spreadsheet which displays the costs, revenues, NOI, after tax NOI, and the NPV and IRR of this project. Do you invest?

Suggestion: Create one spreadsheet to calculate the revenue for each tenant for each and add them up to get a total rent revenue for each year. Enter the total revenue onto another spreadsheet to calculate the bottom lines.

The Merageville Shopping Plaza was built in 1998. It has 100,000 square feet and is fully occupied at year 0 with the following tenants: Each tenant has a lease which specifies a fixed rent through the end of the lease, at which time they can choose to renew for a base rent which is $1 higher than their current rent. You anticipate that they will all renew except one. Given the uncertainty in that sector you expect the mobile phone to not renew its lease. It will take a year to find a new tenant and will require $17000 in TI and agency fees to fill the space. There is a cell phone tower in the back which leases space for $4000/ month. Each tenant is responsible for their prorated share of CAM, property taxes and insurance costs for the complex. You can hire a property manager who will charge 3% of all gross rents. The building is for sale for $8,000,000, of which 60% is land value and the remainder is structure value. You are in the highest tax bracket. You can obtain a zero-amortization loan at 7% at a 50% LTV. Your equity partners and you have an opportunity cost of capital of 9%. You are in the highest marginal tax bracket. You anticipate a six year hold with a going out cap of 7\%. Provide a spreadsheet which displays the costs, revenues, NOI, after tax NOI, and the NPV and IRR of this project. Do you invest? (Suggestion: Create one spreadsheet to calculate the revenue for each tenant for each and add them up to get a total rent revenue for each year. Enter the total revenue onto another spreadsheet to calculate the bottom lines.)