Venture Capital Limited has formed a private real estate syndication to acquire and operate the Tower Office Building. Venture will act as the general partner and will have 35 individual limited partners. The venture to be undertaken and relevant cost and financial data are summarized as follows: Cost breakdown Land Improvements Points Subtotal Organization fee Syndication expenses Total funding required $ 1,000,000 9,000,000 (capitalized) 100,000 (amortized over loan term) $10,100,000 100,000 (amortized over 5 years) 100,000 (capitalized) $10,300,000 Financing Loan amount Interest rate Term Points $ 8,000,000 4.75% 25 years (monthly payments) $100,000 Partnership facts and equity requirements Organization: December, year 1 Number of partners: 1 general partner and 35 limited partners Equity capital contribution: General partner, 10%; limited partners, 90% Cash assessments: None Cash distributions from operations: General partner, 10%; limited partners, 90% Taxable income and losses from operations: General partner, 10%; limited partners, 90% Allocation of gain or loss from sale: General partner, 15%; limited partners, 85% Cash distribution at sale: Based on capital account balances Cash distribution at sale: Based on capital account balances Operating and tax projections Potential gross income (year 2) Vacancy and collection loss Operating expenses (year 2) Depreciation method Projected growth in income Projected resale price after 5 years Limited partners' tax rate General partner's tax rate Selling expenses $1,300,000 10% of potential gross income 35% of effective gross income Straight-line, 39 years 2% per year $12,750,000 24% 24% 5% Required: a. Determine an estimated return (ATIRR) for a limited partner. (Hint Consider all 35 limited partners as a single investor.) b. Determine an estimated return (ATIRR) for the general partner. Complete this question by entering your answers in the tabs below. Required A Required B Determine an estimated return (ATIRR) for a limited partner. (Hint: Consider all 35 limited partners as a single investor.) (Round your answer to 2 decimal places.) ATIRR for a limited partner % Complete this question by entering your answers in the tabs below. Required A Required B Determine an estimated return (ATIRR) for the general partner. (Round your answer to 2 decimal places.) ATIRRe for the general partner % (Required A Required B Venture Capital Limited has formed a private real estate syndication to acquire and operate the Tower Office Building. Venture will act as the general partner and will have 35 individual limited partners. The venture to be undertaken and relevant cost and financial data are summarized as follows: Cost breakdown Land Improvements Points Subtotal Organization fee Syndication expenses Total funding required $ 1,000,000 9,000,000 (capitalized) 100,000 (amortized over loan term) $10,100,000 100,000 (amortized over 5 years) 100,000 (capitalized) $10,300,000 Financing Loan amount Interest rate Term Points $ 8,000,000 4.75% 25 years (monthly payments) $100,000 Partnership facts and equity requirements Organization: December, year 1 Number of partners: 1 general partner and 35 limited partners Equity capital contribution: General partner, 10%; limited partners, 90% Cash assessments: None Cash distributions from operations: General partner, 10%; limited partners, 90% Taxable income and losses from operations: General partner, 10%; limited partners, 90% Allocation of gain or loss from sale: General partner, 15%; limited partners, 85% Cash distribution at sale: Based on capital account balances Cash distribution at sale: Based on capital account balances Operating and tax projections Potential gross income (year 2) Vacancy and collection loss Operating expenses (year 2) Depreciation method Projected growth in income Projected resale price after 5 years Limited partners' tax rate General partner's tax rate Selling expenses $1,300,000 10% of potential gross income 35% of effective gross income Straight-line, 39 years 2% per year $12,750,000 24% 24% 5% Required: a. Determine an estimated return (ATIRR) for a limited partner. (Hint Consider all 35 limited partners as a single investor.) b. Determine an estimated return (ATIRR) for the general partner. Complete this question by entering your answers in the tabs below. Required A Required B Determine an estimated return (ATIRR) for a limited partner. (Hint: Consider all 35 limited partners as a single investor.) (Round your answer to 2 decimal places.) ATIRR for a limited partner % Complete this question by entering your answers in the tabs below. Required A Required B Determine an estimated return (ATIRR) for the general partner. (Round your answer to 2 decimal places.) ATIRRe for the general partner % (Required A Required B
