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Investment Property Analysis and Recommendations

Evaluate apartment, Class-A office, and retail building properties. Opt for Class-A office due to lower rent requirements and high NPV. Apartment building may not be feasible due to high rent requirements and lower NPV. Retail building is also attractive with lower rent requirements and positive NPV.

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Investment Property Analysis and Recommendations

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  1. Description of Properties • Apartment Building • Requires land + construction • Class A Office Building • Requires purchase of existing building • Retail Building • Requires purchase of existing building

  2. Apartment Building Property

  3. Class-A Office Building Property

  4. Retail Building Property

  5. Conclusions • The Class-A office building property would be the preferred investment project since: • The rent required to meet financial obligations with the loan is approx. 17% lower than the current market rate making this project a feasible investment. • In addition, the NPV is the highest of the three projects evaluated at approx. $221,000. • According to the SFFA analysis the only property that would not be a feasible investment project is the apartment building • The required rent to meet the financial obligations, according to the current loan terms, is higher than the current market rate, therefore, making this project • The NPV is showing positive assuming the rent at market rate. However, we know that at this rate we would not be able to meet loan obligations. • The retail building was also an attractive and feasible investment project because: • The required rent to meet loan obligations is lower than the market rate by close to 14%; and • The NPV is $176,000.

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