Use an annual proforma for an appraisal valution of the property below. Submit one file (excel is by far the quickest way to do this, though can use a word file), showing all work (use formulae in excel cells and show formulae explicitly if you use a word document). You must show work or risk losing points. Quote your answer to the nearest $1,000.

You are appraising an office property that consists of a total of 15,000 sqft of rentable space. Assume a holding period of 5 years, and that the property will sell at a cap rate of 8% at the end of year 5, with selling expenses of 6% of the gross price.

Rent comparables indicate that an appropriate price per sqft is $1.83. For subsequent years 2, 3,..., you expect market rents to rise by inflation, 2.5% per year.

Typical comprable office space in your market runs at a vacancy and collection loss rate of 17% of PGI. You are renting cell tower space on the roof for $4,000/yr, with a one-time jump of 20% in year 3, and growing at inflation each year thereafter (4, 5, ...).

Fixed expenses and reserves will grow 5% per year. For year 1, these expenses are: RE taxes: $40,000; insurance: $8,000; CapEx: $9,000.

Variable expenses are a fraction of effective gross income: 5% for maintenance, 1% for janitorial, 3% for utilities, 10% for management, 1.5% for leasing commissions, and 1% for TI.

Comprarable properties sell at a 11% discount rate.