ipd054

I value properties at work and I know this will be hard to believe by some but the property as it sits today is worth $6.25 million.

I did some quick math (I know I did not take in to account many variables) to see what the Sack 'N Save space would rent for today. Then I checked to see what the market is renting for to ensure that it was fair.

For a valuation of $6.25M (using a Cap rate of 5%) the space would need to rent for $20.88sf. This is in line with other retail space with I-35 frontage. There are two spaces available for lease today that I was able to find on a quick search. The first is near State School Road and is listed for $20.00sf. The other is near Teasley and is listed for $21.00sf. So on the surface the valuation is on target.

For those that may care or want to argue the value here is the math.

For this type of commercial real estate and in the interest of speed I valued the property by the Net Operating Income (Income minus operating expenses; excluding Tax, Debt Service, capital expenditures, Deprecation and Amortization). Divided by the cap rate (5%) This provides the value.

V=NOI/Cap

I used a 5% cap rate because of the location to the University, otherwise I would have had it between 6 and 6.5% Location is a major player in this case thus the lower cap. So assuming a $6.25M value and a 5% cap rate, the annualized NOI would need to be $312,500. This breaks down to $26,000/mo. Assuming a 15,000sf store (most grocery stores are between 13,000 and 18,000sf) this breaks down to $20.88sf (in line with the market)

I would guess that Sack 'N Save as a long term resident is not paying $20.00sf. I could argue that if they are paying $15ft that the property is only worth $4.5mil but since from my understanding they do not have a lease I have to use market value to do my math. I would guess that the final deal will end up around the $5.75mil range unless there is something else to the deal. Knowing that there is a threat of an eminent domain purchase the owner of the building should not balk at an offer higher than $5.5 because that is far higher than they will get if the state values the property as they will use the current NOI.

If I were look to buy this property I would use other methods to value the property to be more accurate but for just a quick look the value looks pretty close.

A LOOK AHEAD AT 2014
*Wed., Feb. 5 - National Signing Day
*February - 2014 Schedule expected to be released
*Late July - 2014 C-USA Football Media Day (date TBA - location tentatively scheduled for Dallas)
*Thu., Aug. 28 - 2014 season opens

From this site http://www.conferenceusa.com/sports/m-footbl/spec-rel/011414aab.html