SOLUTION: A retail shopping centre is in the market for $ 30 000 000. the following information is applicable:
1. the shopping centre consists of 10 000 m2 lettable space. ( 2000m2 is allo
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-> SOLUTION: A retail shopping centre is in the market for $ 30 000 000. the following information is applicable:
1. the shopping centre consists of 10 000 m2 lettable space. ( 2000m2 is allo
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Question 1086210: A retail shopping centre is in the market for $ 30 000 000. the following information is applicable:
1. the shopping centre consists of 10 000 m2 lettable space. ( 2000m2 is allocated for anchor tenants and 8000m2 for line shops
2. you gather from the current rental market that you may ask R 50 per square meter for anchor tenants and R 150 per square meter for line shops, excluding operating expenses. current operating expenses amounts to R 30 per square meter
3. your market analysis indicates that by spending another $ 10 000 000 in converting the building into a green building, it is possible to receive rent of R 70 per square meter from anchor tenants and R 200 per square meter for line shops, it is also noted that your operating expenses will reduce from R 30 per square meter to R 20 per square meter.
4. at the end of the year you apply for a further advance on your bond in order to pay the contractor the $ 10 000 000 for the upgrade.
5. the building 10 000m2 is fully let during the construction period.
6. the expected growth in the value of the property is at 15% per annum
7. the lease period is 10 years, while the bond is 20 years.
8. escalation on the lease amount as well as the operational expense is at 6% per annum.
9. You plan to sell the property at the end of the investment period which is after 10 years.
10 the discount rate where applicable is 11%, compounded monthly
11 use 11% monthly compounded as your amortization.
Q1 Calculate the net monthly cash flow for the first year, after taking account bond, operating expenses as well as the lease payments
Q2
Calculate the net yearly cash flow for the investment period after taking into account the development cost, bond, operating expense as well as the lease payments. Answer by ikleyn(52767) (Show Source):
