Your incredibly wealthy maiden aunt has asked for your advise. She has approximately $3,000,000 of cash that she wants to invest in real estate. She is looking for tax sheltered income and has bee told to invest in real estate. She is aware of three opportunities that fall within her price range. She intends to use leverage to enhance her return. The opportunities are as follows:

Property 1. A 200 unit multifamily property that is about 15 years old and in an excellent neighborhood. The property has been fairly well maintained. It is struggling with occupancy issues and is only 85% leased. Market occupancy is approximately 95%. Rental rates are consistent with the submarket. The selling broker has confided that the occupancy issues may be the result of a horrific gangland style murder on the property about five years ago. Comparable sales in the area in the last 12 months have been at an average cap rate of 7.6%.

Property 2. A 100,000 square foot well-located neighborhood shopping center anchored by a prominent grocery store. All leases are triple net. The grocery store occupies 60,000 square feet and has 4.5 years left on their lease. Several of the small shops have clauses in their lease that allow them to terminate the lease if the anchor tenant closes. Other than the anchor tenant no tenant occupies more than 5% of the property. The property is currently 100% occupied. The asking price is at a cap rate of 8.75%.

Property 3. A 75,000 square foot office building occupied by three tenants. Each tenant occupies approximately 1/3 of the building. Remaining lease terms are from one to four years. The tenant with only one year remaining has an option to extend their lease for five years on the same terms and conditions. The tenant with four years remaining on their lease is experiencing high profile financial difficulties and is about three months behind in rent. The third tenant is a stable business that has been in the building since it was built. All leases are triple net. The property is in a high profile location. The seller believes they have taken the relatively short term nature of the leases into account and is offering the property based on a 10% cap rate.

Write an approximately 750 word paper discussing the strengths and weaknesses of each property and making an investment recommendation to your aunt.