- 80 -
summer of 1986. This survey indicated a range of rates from 8 to
11 percent. Mansbach also considered the capitalization rates
based on his comparable sales, all of which were fully occupied
by tenants when sold. His comparables indicated a range of
capitalization rates from 8.25 to 11.48 percent. Mansbach
concluded that the 9-percent rate was appropriate based on the
Redwood City Fox's lack of onsite parking and lack of investment
appeal, due to the fact that the retail/office space was not a
free standing building.
Mansbach estimated the value of the retail/office component
of the Redwood City Fox under the income capitalization method,
without considering the impact of the Jacobs lease, to be
$930,000 (rounded), computed as follows:
REVENUE
Market Rent: 10,806 sq.ft. @ $12.00 = $129,672
876 sq.ft. @ 6.00 = 5,256
4,701 sq.ft. @ 3.00 = 14,103
Total Potential
Gross Income 16,383 sq.ft. @ 9.10 Avg. $149,031
Less Vacancy & Collection Loss@ 5.00% (7,452)
Effective Gross Income $141,579
EXPENSES
Taxes $9,303
Utilities $1.50 per sq.ft. 17,523
Maintenance & Repairs1.75 per sq.ft. 20,444
Insurance 0.30 per sq.ft. 3,505
Management 3.00% effective gross income 4,247
Reserves 2.00% effective gross income 2,832
Total Expenses $4.95 per sq.ft. $57,853 (57,853)
Net Operating Income $83,726
Capitalized @ 9.00% $930,294
Rounded to $930,000
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