Tiburon Realty Advisors, LLC, is a No. CA based commercial real estate investment firm, that on 1/1/16, acquired a 1,000,000 sq. ft. regional mall in Walnut Creek, CA for $165 million plus $5 mil- lion in needed capital improvements for a total cost of $170 million. Beginning on 1/1/16, all leases are triple net, all operating expenses are billed back to the tenants except the management fee and all lease rents increase annually at the inflation rate. The primary anchor tenant is Macys with a 150,000 sq. ft. store. Macys pays a triple net rent of $8 per sq. ft. plus 1% of sales in excess of $18.75 million. Macys sales for 2016 were $60 million and will increase by 5% each year. The cap rate on the sale is the same as the proforma cap rate and there are no sales costs. The building will be financed with 70% debt at a 5% interest rate and twenty-five-year amortization. Other 2016 data re- garding the acquisition are as follows: Gross Potential Rent (GPR) 2016 (excluding percentage rent and expense reimbursements) $20,000,000 Management Fee as % of EGI 4.5% Project Inflation Rate 3% Page 2 of 9 10 Yr. T-Note Rate 3% Discount Rate 8% Projected Holding Period 5 yrs. Vacancy Rate 7% of GPR Parking and Other Non-Lease Income 2% of GPR Operating Expenses Per Sq. Ft. (excluding management fee)

The cash-on-cash return in 2018 is? A. 20.50% B. 22.32 % C. 24.02% D. 22.81%

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