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You are considering the purchase of a 1,824SF industrial building in Bellflower. Below, you are given the information you need to analyze the investment and decide how to proceed. In the first year, you plan to charge $12/SF, but the building is currently vacant.You expect that it will take you six months to find a tenant and fill the unit. Then, you will get them to sign a contract for three years, after which you expect another six-month vacancy before you fill it again.Variable operating expenses will cost you 20% of EGI, and fixed operating expenses will cost5%of PGI. But you can require your tenants to pay all of the variable expenses.You plan to set aside$100,000 per year for future renovations. 1.What is the estimated net operating income (NOI) and property-before-tax cash flow (PBTCF) for the first year of operations? Please show these calculations in the form of a pro forma. 2.If you pay $155/SF for the building, what is the going- in cap rate? You assume that PGI will grow by 5% per year for the next six years. You plan to sell the property after year 5, and you expect your selling expenses to be 6% of the resale price. Assume that the going-out cap rate is 100 basis points higher than the going-in cap rate. 3.What is the resale price? 4.What is the reversion cash flow? 5.Please fill out the pro forma to calculate the PBTCFS for the remaining years of the investment. You assume this property will be quite safe, closer to bonds than stocks. To make it worthwhile, you'd have to earn a 4.5% return. 6.What is the value of this property? 7. Based on the value and the price, is it a good deal for you to buy the property? Please use Excel and Show formulas used to do it

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