real estate valuation

Finance 433: Real Estate Valuation
Case 3
Individual work; due Nov 19.
Vantage Point, the 679-unit high-rise condo development, located at 1281 9th Ave, San Diego, CA 92101, was the largest condo development project in downtown San Diego. Due to construction delays, the condo project entered the market at a perfectly wrong time – 2009. The Canadian developer, Pointe of View Developments originally contracted with nearly 300 buyers at Vantage Pointe, but even those purchasers were unable to get loans at the time the construction was completed because of new lending guidelines that required condo developers to secure a high percentage of pre-sales. Many of those original buyers backed out and the condo project became a complete failure. Finally in September 2010, the Real Estate Investment Trust Equity Residential bought the Vantage Pointe project for $200 million and converted it to an apartment project. Please evaluate whether Equity Residential paid a fair price for the project by conducting a valuation analysis of the property. Use both the direct capitalization approach and the DCF approach.
1) Refer to http://www.utsandiego.com/news/2010/oct/11/downtown-san-diegos-largest- high-rise-sold-to-apa/ for news report of the sale of the project;
2) Use CoStar to find out more details about the project characteristics; 3) Use the following websites to assist you in finding out rent: www.craigslist.org;
www.rentometer; www.finestexpert.com; www.trulia.com; 4) Consider lease up when you use DCF approach of valuation; use stabilized NOI when