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_.., CONSULTATION (continued) stream over the 26-year period. The alternative to using the lower discount rate would be to build in a growth rate of 3 to 4 percent, which would indicate an appropriate discount rate at the mid-point of 10.5 to 11.5 percent. Either technique results in the same present value conclusion. This discount range is generally supported by local and national information regarding discount rates appropriate for office buildings. The mid point of the discount range or 7.5 percent (market oriented) and 6.34 percent (project oriented) will be presented. The actual calculation of the present value of the income stream versus the build analysis is summarized on the following chart. TECH1vIQUE ONE - LEASE VS. BUII.DING COST ANALY SIS ' ' ....,{:• ••.~•• iv ...~ .. .. :. ~ - v v....... . . . . • ..p.~.y.. ... . ... .. .. ...: .. . . :.~.'~`. .'Yiw•t:S~~i`((Y.,.,. ~~ ' '•}5}~ • . • . -. . •... , •.S~n ~. . . ~~ . h¢ . :. . 8:. ~... • .r. n ..r ' r .:.•:. ~ . .:i?i.rii~ :?%4::i[iih},v,{{v'f.~ini}}r: i`}. fi' Il1~mPi Jt~m (LGAJG J~iQanO)~ p~~ I~ ~~~; 114,557 SF x 51.47/SF = ~168,399 Parking Lease Income: 277 Spaces z~47.22/Space = 13.080 Total Monthly Income $181,479 Present Value Analysis-- Monthly Income Sttram: a Present Value of One per Period* = Preseat Value a181,479 x 137.9544 (7.59b) = S2S,035,827 Cost per Square Foot $218.54/SF ~181,479 x 153.5146 (6.3496) _ ~27,859,676 Cost per Square Foot ~243.19/SF .{ • rf, p;•; :., -•Y v . ;...tn;:sri•:l v:r:: ti:ri '. {4'4~{'v.','l+.r" . . . ~ " • ~ n ,•~vy ~' . ~ ~ . . .. . .w ~.(.~vNAvi~N'i+'4':}`,y+~~+~ .. ~ r '+•tiiY;Y ; ~`.bi!$ ' ..'~`.~`. ~ ~ . . r.~ ' • '= ' ~ : }. . ' X.:•.r.r fi? ' ~ .i.Yf'~rX •J~:.w'~f~'7.>.?•:d'i $}`.i}%n.{' ~4'H ~x. +r ~• A • • ' Total Building Cost ~30,670,149 I.ess: Transit Grants ~9-~,~) Total Building Cost - Marion County ~20,826,149 = $181.80/SF * Beginning of Period Payments for 26 years T~niquP 'I~, o Market Rent Versus Scheduled R nt/Ownership nalvsis--The second technique will compare the previously concluded present value of the market rent income stream as presented in technique one with the proposed scheduled contract rendownership scenario proposed by the Melvin Mark Development Company. In this case the scheduled contract rent is $1.30 per square foot for the office space plus $40 per parking space. These rates will be discounted to present value and will be adjusted for the reversion at the end of the 26-year period. The reversionary value will be the value of the building plus the land. c9sos2 12 PAL11~R, GROTIi & PIETKA, INC.