This First Section of the Homework deals with Proforma Statements and the Calculation of Net Operating Income (NOI) in a sample Base Year (typically called first year NOI).
Define and describe and provide an example for the following key pro-forma terms used for NOI calculations of commercial real estate properties (i.e. income producing properties):
PGI (rent based)
Vacancy/Credit Losses
EGI
Other Income
EGI with additional income
Expenses (fixed versus variable)
NOI
NOI
This Part of the HW has you pull together all the material and use it to make a real world income approach valuation estimate or currently listed (for sale) Commercial Property.
It is worth the most points in the Homework so do not skip this question.
1) Go to Loopnet and select a commercial property for sale has the most possible financial (pro-forma) data provided.
Most listing do not provide this data but some due.
2) Summarize the property with a picture of it
3) Create Table with the provide pro-forma data
4) Create a corresponding Table with Key equivalent data from the Douglas County Cap Rate Study (note that they units of analysis may differ between the two sources an when they do try and convert/standardize them. Also make sure to identify a Cap Rate for this property as suggested by the DC Study
5) Estimate the NOI for his property and its likely market value based on the Above Cap Rate
6) Compare and contrast your market value Estimate with the asking price of the property, its assessed tax value and its most recent sale price (the last two items can be found at the Douglas County Assessors website
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