The property under study is a block of apartments in Limassol that is rented short – term but on a monthly basis. The building started operating two years ago on a 20 - year FRI (Full Repairing and Insuring) lease with 4-year rent reviews. The Passing Rent of the property is €115,000 and the market rent is estimated today at €120,000 per year. You should estimate the ARY and support your opinion by making some logical assumptions. Assume 0% rental growth the next 4 years, 3% for the subsequent 4 years and 1% renta growth for the remaining period. Estimate the value of the freehold using excel: 1) Traditional Term & Reversion Method 2) Traditional Hardcore/Layer Method 3) Discounted Cash Elow

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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The property under study is a block of apartments in Limassol that is rented short – term
but on a monthly basis. The building started operating two years ago on a 20 - year FRI
(Full Repairing and Insuring) lease with 4-year rent reviews.
The Passing Rent of the property is €115,000 and the market rent is estimated today at
€120,000 per year. You should estimate the ARY and support your opinion by making
some logical assumptions.
Assume 0% rental growth the next 4 years, 3% for the subsequent 4 years and 1% rental
growth for the remaining period.
Estimate the value of the freehold using excel:
1) Traditional Term & Reversion Method
2) Traditional Hardcore/Layer Method
3) Discounted Cash Elow
4) Shortcut DCF (3)
5) Critically assess the approaches used and explain analytically the calculations
Transcribed Image Text:The property under study is a block of apartments in Limassol that is rented short – term but on a monthly basis. The building started operating two years ago on a 20 - year FRI (Full Repairing and Insuring) lease with 4-year rent reviews. The Passing Rent of the property is €115,000 and the market rent is estimated today at €120,000 per year. You should estimate the ARY and support your opinion by making some logical assumptions. Assume 0% rental growth the next 4 years, 3% for the subsequent 4 years and 1% rental growth for the remaining period. Estimate the value of the freehold using excel: 1) Traditional Term & Reversion Method 2) Traditional Hardcore/Layer Method 3) Discounted Cash Elow 4) Shortcut DCF (3) 5) Critically assess the approaches used and explain analytically the calculations
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