Givner Apartments were acquired five years ago by an investor for $10MM. The investor decided not...

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Givner Apartments were acquired five years ago by an investorfor $10MM. The investor decided not to lever the investment (usedebt), and annual adjusted NOI is stable at $1MM. If the investorsells the property at an 8% cap rate, what would be the investor’snet sales proceeds? Assume the following: • accumulateddepreciation on the property is $1MM • the Tenant Improvements andCapital Improvements over 5 years have been $300,000 • 25% tax rateon accumulated depreciation • 15% tax rate on capital gains • 2%selling costs.

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Calculating Net sales price Annual NOI 1 million 1000000 Cap rate 8 Gross sales price Annual NOI Cap rate 1000000 8 12500000 Selling costs 2 of Gross sales price 12500000 x 2 250000 Net sales price Gross sales price Selling costs 12500000 250000 12250000 See Answer

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Givner Apartments were acquired five years ago by an investorfor $10MM. The investor decided not to lever the investment (usedebt), and annual adjusted NOI is stable at $1MM. If the investorsells the property at an 8% cap rate, what would be the investor’snet sales proceeds? Assume the following: • accumulateddepreciation on the property is $1MM • the Tenant Improvements andCapital Improvements over 5 years have been $300,000 • 25% tax rateon accumulated depreciation • 15% tax rate on capital gains • 2%selling costs.