Question 2 (30 points) Complete a sales comparison approach using the following data. In your adjustment grid, round all $/SF to the nearest dollar (no cents). Subject property 42,000 SF office/warehouse Sales A-B are all office/warehouses. Market rent is 56.50/SF with industrial gross terms, Sale B sold with market lease terms in place. Sale D sold with a lease rate of $7.15/SF with industrial gross terms. Market conditions were stable from late 2019 up until March 2020, after which conditions declined 20%. All sales that took place prior to March 2020 sold during superior market conditions. In terms of location, Lebanon is considered to be 15% inferior to Indianapolis, and Plainfield is considered to be 5% superior to Indianapolis. Buildings within 5,000 SF +/- from the subject's square footage are considered to be similar enough not to require a size adjustment . Properties with over 5,000 SF +/- difference require a 5% adjustment per 1,000 SF difference. Smaller buildings are considered superior, and larger buildings are considered inferior. An adjustment for age is 2.5% per year of difference. Older buildings are considered inferior, and newer buildings are considered superior. Remember transactional adjustments are performed in sequence. Location/physical adjustments are added up and can net each other out. Use the range of adjusted $/SF to indicate a range of values (whole dollars, rounded to the nearest $10,000) for the subject building. Your answer Interest transferred Subject Fee Simple Sale A Fee Simple Sale C Fee Simple Sale D Leased Fee @ $7.15/SF Sale B Leased Fee @market terms Financed @ market terms Arm's length Financing N/A Cash Cash Financed @ market terms Arm's length Arm's length N/A Arm's length Conditions of sale Date of sale October 2020 January 2020 June 2020 September 2020 Lebanon 36,000 SF December 2019 Plainfield 40,000 SF Location Size Indianapolis 42,000 SF Indianapolis 45,000 SF Indianapolis 49,000 SF 10 years 14 years 22 years 8 years Age Sale Price Sale Price/SF NA $3,150,000 $1,1510,000 $70 $42 Transactional Adjustments $2,740,000 $56 9 years $3,200,000 $80 Interest transferred Semi-Adjusted $/SF Financing Semi-Adjusted $/SF Conditions of sale Semi-Adjusted $/SF Date of sale Semi-Adjusted $/SF Location/Physical Adjustments Location Size Age Net physical/location adjustments Adjusted $/SF Resulting range of values for subject: Question 3 (15 points) Construct an income proforma operating statement using the following information. It should show the following on a whole dollar basis: PGI (rental income and other income itemized), vacancy & collection loss. EGI, operating expenses, OER, and NOI. 42,000 SF office/warehouse Market rent is $6.50/SF with industrial gross terms. Industrial gross in this market means the tenant pays janitorial and utilities directly and reimburses the landlord for 75% of taxes, insurance, and common area maintenance (CAM). Market vacancy in this market is 8% Market collection loss is 0.5% Operating expenses include: Insurance: $0.15/SF Real estate taxes: $0.95/SF CAM: $0 80/SF Management fee: 4% of EGI Miscellaneous: $0.45/SF Replacement reserves: Based on a sinking fund factor for $95.000 in 7 years in an interest-bearing account with a rate of 4% (annual compounding) Your answer Question 4 (15 points) Develop a range of market cap rates through market extraction using the following data. Round all cap rates to the nearest one-tenth of a percent Present a range of applicable values (whole dollar and S/SF) for the subject property using the income stream from question 3. NOI Sale price Your answer: Sale A S247,000 $3,150,000 Sale B $125,000 $1,510,000 Sale C $187.000 $2,740,000 Sale D $260,000 $3,200.000 Bonus question (10 bonus points) What does the difference between the value from your cost approach and the value range from your sales comparison approach indicate about the subject property? Your answer: Question 2 (30 points) Complete a sales comparison approach using the following data. In your adjustment grid, round all $/SF to the nearest dollar (no cents). Subject property 42,000 SF office/warehouse Sales A-B are all office/warehouses. Market rent is 56.50/SF with industrial gross terms, Sale B sold with market lease terms in place. Sale D sold with a lease rate of $7.15/SF with industrial gross terms. Market conditions were stable from late 2019 up until March 2020, after which conditions declined 20%. All sales that took place prior to March 2020 sold during superior market conditions. In terms of location, Lebanon is considered to be 15% inferior to Indianapolis, and Plainfield is considered to be 5% superior to Indianapolis. Buildings within 5,000 SF +/- from the subject's square footage are considered to be similar enough not to require a size adjustment . Properties with over 5,000 SF +/- difference require a 5% adjustment per 1,000 SF difference. Smaller buildings are considered superior, and larger buildings are considered inferior. An adjustment for age is 2.5% per year of difference. Older buildings are considered inferior, and newer buildings are considered superior. Remember transactional adjustments are performed in sequence. Location/physical adjustments are added up and can net each other out. Use the range of adjusted $/SF to indicate a range of values (whole dollars, rounded to the nearest $10,000) for the subject building. Your answer Interest transferred Subject Fee Simple Sale A Fee Simple Sale C Fee Simple Sale D Leased Fee @ $7.15/SF Sale B Leased Fee @market terms Financed @ market terms Arm's length Financing N/A Cash Cash Financed @ market terms Arm's length Arm's length N/A Arm's length Conditions of sale Date of sale October 2020 January 2020 June 2020 September 2020 Lebanon 36,000 SF December 2019 Plainfield 40,000 SF Location Size Indianapolis 42,000 SF Indianapolis 45,000 SF Indianapolis 49,000 SF 10 years 14 years 22 years 8 years Age Sale Price Sale Price/SF NA $3,150,000 $1,1510,000 $70 $42 Transactional Adjustments $2,740,000 $56 9 years $3,200,000 $80 Interest transferred Semi-Adjusted $/SF Financing Semi-Adjusted $/SF Conditions of sale Semi-Adjusted $/SF Date of sale Semi-Adjusted $/SF Location/Physical Adjustments Location Size Age Net physical/location adjustments Adjusted $/SF Resulting range of values for subject: Question 3 (15 points) Construct an income proforma operating statement using the following information. It should show the following on a whole dollar basis: PGI (rental income and other income itemized), vacancy & collection loss. EGI, operating expenses, OER, and NOI. 42,000 SF office/warehouse Market rent is $6.50/SF with industrial gross terms. Industrial gross in this market means the tenant pays janitorial and utilities directly and reimburses the landlord for 75% of taxes, insurance, and common area maintenance (CAM). Market vacancy in this market is 8% Market collection loss is 0.5% Operating expenses include: Insurance: $0.15/SF Real estate taxes: $0.95/SF CAM: $0 80/SF Management fee: 4% of EGI Miscellaneous: $0.45/SF Replacement reserves: Based on a sinking fund factor for $95.000 in 7 years in an interest-bearing account with a rate of 4% (annual compounding) Your answer Question 4 (15 points) Develop a range of market cap rates through market extraction using the following data. Round all cap rates to the nearest one-tenth of a percent Present a range of applicable values (whole dollar and S/SF) for the subject property using the income stream from question 3. NOI Sale price Your answer: Sale A S247,000 $3,150,000 Sale B $125,000 $1,510,000 Sale C $187.000 $2,740,000 Sale D $260,000 $3,200.000 Bonus question (10 bonus points) What does the difference between the value from your cost approach and the value range from your sales comparison approach indicate about the subject property? Your