Brookfield Asset Management learning

You have graduated Schack and spent three years working at Brookfield Asset Management learning the trade, but now you want to strike out on your own, and become the next Stephen Ross. You have a couple of potential partners and access to about $2 million in equity funds and about $8 million in potential debt financing, but overall limited resources. You need to decide whether to buy the property below and what to offer through a rigorous analysis that will convince you, your potential partners and your bank. This purchase has to be a good one for you to move on to bigger and better deals. This time you need to consider both the Sales Comparison and Income Approaches and then reconcile them for the best answer. Please don't forget both conclusions and explain as much as you can.

You are strongly considering buying 8602 57th Avenue a/k/a 5725 Van Horne Street, Elmhurst, Queens, NY

and attached below along with one comparable setup (for now more will almost definitely follow)

Contrary to the setups please assume that units with rents $1,125 or less (7) are rent stabilized and all others (13) are free market; and that units with rents $1,250 or above are 1 bedrooms (4) and all others (16) are studios. Assume that the restaurant lease was signed long ago and is well below market but is running through 2025 at $6,500 per month.

Your report is basically to be in the form of spreadsheets with a summary paragraph or two for each section and at the end as well as some comments on adjustments and comps with:

A. Property, Land and Total Assessments and Taxes, Zoning. Look at pics and Google Street View and Google. Please do it for each building and add them together
B. Area, Demographic and Real Estate information (Only links or cutting and pasting) with short one paragraph writeups, more if you wish
C. Sales Approach
D. Income Approach
E. Reconcile Indications from C and D and provide a paragraph summarizing the Analysis including key factors in reaching conclusions.

PROPERTY

The Property (please verify the setup with public information and include links and place setup info next to city info in separate columns on your Data Entry or Assumptions sheet)

1. Address
2. Block and Lot
3. Land Area
4. Frontage with street(s)
5. Existing Uses
6. Stories/Floors
7. Building Area
8. Commercial Units
9. Residential Units
10. Elevatored or Not
11. Land/Building ratio
12. Year Built and renovated
    Assessment and Taxes (should be current, up to the minute, setup probably isn’t and include market and transitional)
13. Tax Map cut and pasted onto spreadsheet
14. Assessed Value Land (market and transitional)
15. Assessed Value Total (market and transitional)
16. Assessors Opinion of Market Value
17. Real Estate Taxes
    Zoning
18. Zoning
19. Maximum Floor Area Ratio
20. Maximum building Area (approximate)
21. Permitted uses
22. Potential Development Rights if any can be through a calculation

Other

21. Last Sale Price if any with
22. Document Number,
23. Sale date,
24. Buyer
25. Seller
26. Same for other sales within past 10 years

B. AREA/NEIGHBORHOOD INFORMATION

Provide links and a paragraph

1. Neighborhood, Zip Code, or Community District Population, Age, and Income Levels
2. Borough/County-wide or neighborhood real estate trends and stats from a brokerage firm for retail and/or residential
3. Borough/County-wide employment, unemployment and industry information

Note: The broker probably stretched the truth by saying it is in Flushing rather than Corona.

C. SALES APPROACH

Pull at least 5 comparable sales within 2.5 miles of the subject (in the same county) within 35% of the building square footage plus or minus, sold within two years of the valuation date and with similar uses and elevator presence. Unadjusted Sale prices per square foot should be in a reasonable range no less than 50% of the asking price. If you can't get enough comps with these parameters slowly expand each of the ranges. Please do not leave Queens. Please do not use Comparable sales with less than 7 units, but they can be up to 60 units and 50,000 SF

On the adjustment grid, report Address, Neighborhood, Block and Lot, land area, building area, commercial units, residential units, land/building ratio, Total Assessment, RE Taxes, Zoning, Maximum Floor Area Ratio, Sale Price, date of sale, Buyer, Seller, Source, Document Number, and any other relevant information (please see above requests for subject). Extra credit for information like transit scores, walk scores, educational attainments, income levels, comparable income expenses, incomes and NOIs)

Create an adjustment grid comparing the subject to the comparables with respect to time building size, date of sale, location, land/building ratio, condition and anything else you think that might be important including optionally income characteristics (rent stabilization effects,…) in an adjustment grid on a spreadsheet on a percentage basis. Judge condition by pictures from Googling or in other ways (Don’t worry too much about this it is a matter of opinion and you will not be penalized). Explain your adjustments in a sentence or two next to the adjustments. Try to justify location adjustment by rents, income levels,walk scores, commuting times,.. or talking to a knowledgeable source (in writing in a separate sentence for extra credit).

Pull information from Compstak, New York City Planning and New York City Department of Finance, Property Shark (NYU Database at Library) or NYC Rolling Sales data (NYC Department of Finance), Crexi, StreetEasy or another database you have access to. People seem to do best with the NYC Rolling Sales Data, a little clunky but good

D. INCOME APPROACH

Include:

1. Rent Roll (see samples)
2. Comparable Residential Rents from at least 2 pro formas and at least 4 from Streeteasy Comparable Retail Rents can also be from pro formas with others from Compstak or another source. Any comps in Queens are ok even though you would want to have most nearby in the real world. Please try to get comps in Corona, Jackson Heights, Elmhurst or Flushing or nearby neighborhoods. Streeteasy should give you good nearby comps. Closer comps will help your cause. 5 for each bedroom type (assume that the owner rental information is correct for the market) and 5 for retail are adequate, more would be better. Extra credit for close comps. Only comp studios and 1 bedrooms
3. Comparable Expenses from pro formas - 5 comps with 5 expense categories are adequate, more would be better but no more than 7.
4. 5 Cap Rates from at least 2 Proformas and 2 Compstak Sales
5. Copy Ellwood table from Spreadsheets in Resources (extra credit for good modifications
6. Cap rates from PWC, RERC, CBRE or alternative source obtained by Googling within the past 1.5 years see previous announcement for cap rate sources. You can

Sample Solution