- You are the owner of a retail center who has offered a desirable tenant an allowance to renovate (I.e., Tenant Allowance or Tenant Improvement Allowance) and sign a ten-year lease for a 2,500 square foot, high visibility end cap location in the center. You offered an allowance of $10 per square foot. If your investors require a three-year payback on tenant improvement allowances, then how much extra rent per square foot on a monthly basis would you charge the tenant?
- The regional franchise development professional for Hilton Corporation approaches you to convert your independent boutique hotel to a Tapestry Collection by Hilton. This professional is offering you $2.0 million in Key Money to make the conversion. Hilton Corporation employs a cost of capital of 8% and expects to recover the entire Key Money investment within 10-years on a 20-year contract. What is the minimum annual total franchise fee income that Hilton Corporation would expect from this deal
- You own an apartment complex in a Savannah, GA. The apartment complex has achieved a vacancy rate of 8% in the last year. The value of the complex is estimated to be $50 million. Your total capital invested in the project is $35 million. If you could borrow 70% of value and your equity investors had $10 million in equity invested originally, how much equity would you return to your investors if you re-financed the project at the maximum loan value? Would you proceed with this re-financing? Why?
- You leased land to build a hotel 35-years ago. The remaining term on the lease is 65-years. The lease deal you structured was a very simple percentage rent deal whereby you pay the landlord 6% of total hotel revenues. The hotel generated total revenues of $15.0 million last year. Calculate the lease payment from last year. If the landlord was willing to sell land to you at a price of five times rent, what would the purchase price be? Would you pursue the purchase of the land? Why?
