Three Approaches to Value
There are three common approaches to determining value for commercial real estate:
1. Replacement Cost Approach. Value based on the cost of reconstructing the subject property less an age adjustment. Based on this approach, the Owner’s estimate of value of the Roscoe Portfolio is:
$8.264,389 ($409 PSF)
2. The Market / Comparable Sales Approach. Value relative to recent sales of comparable properties. Based on this approach, the Owner’s estimate of value of the Roscoe Portfolio is:
$7,255,080 ($359 PSF)
3. The Income Approach. Value as a function of the financial return to a potential investor. Based on this approach, the Owner’s estimate of value of the Roscoe Portfolio is:
$4,831,293 ($239 PSF)
The straight average of these three values:
$6,783,561 ($336 PSF)
The listing price is 11% below this average value:
$5,995,000 ($297 PSF)
Leveraged Internal Rate of Return 17.74%
All Cash Internal Rate of Return 9.86%
Average Cash on Cash Return 7.40%
While there are strong leases in place with varying lengths and staggered expirations, a diverse tenant mix, and low vacancy, there are three primary areas of upside potential:
Remeasure. The non-residential leases in the Roscoe Portfolio are based on the condominium square footage, which, similar to useable square footage, excludes perimeter walls, demising walls and common areas. The Roscoe Portfolio was re-measured by a licensed architect to determine rentable square footage, which includes perimeter walls, ½ of demising walls, and prorata share of common spaces. The resulting increase adds 1,842 square feet of rentable space to the portfolio, increasing potential rental income by 14.74% to be captured by a future owner.
Sale of Individual Units. The Roscoe Portfolio is being sold as a package of 15 condominium units, and is priced accordingly. A future owner could sell off condominium units individually at potentially higher prices.
Change of Use. A future owner could potentially change the use of some of the property to include a more valuable mix of residential units, retail space and office space.
Vail Resorts. For the coming 2018/19 ski season, the Crested Butte Ski Resort will be part of Vail Resorts' Epic Pass, which includes all the Vail Resorts ski areas as well as their partner resorts around the world. Further, Vail has announced that it will be buying the Crested Butte ski area, making Crested Butte Vail's fifth Colorado ski resort along with Beaver Creek, Breckenridge and Keystone.
507 Red Lady Avenue (Built 1994)
- Majestic Plaza Unit 110, 5,958 Rentable SF
Independent movie theater with 3 screens (300 seats total) and concession that includes a full liquor license.
Tenant since 2005.
- Majestic Plaza Unit 110a, 931 Rentable SF
Newly renovated office space with stunning views, private entrance and private bathroom.
509 / 511 Red Lady Avenue (Built 1994)
- Majestic Plaza Unit 120, 1,492 Rentable SF
Shawn Harvey Dentistry
Full service dental medical office.
Tenant since 2005.
- Majestic Plaza Unit 121, 1,393 Rentable SF
US Postal Service
Post office box unit.
Tenant since 1996.
- Majestic Plaza Units 220 – 223, 3,282 total Rentable SF
Film production company specializing in ski films.
Tenant since 2006.
525 Red Lady Avenue (Built 1997)
- Majestic Plaza Unit 241 - 246, 5,855 total Gross SF
Various residential tenants. One year leases. "Deed restricted to long term rentals for terms of no less than six (6) consecutive months" through the Town of Crested Butte.
717 Sixth Street (Built 1981, Renovated 1997)
- Majestic Plaza Unit A, Retail, 799 Rentable SF
Locally owned whole home electronics sales, installations and programming.
Tenant since 2015.
- Majestic Plaza Unit B, Retail, 483 Rentable SF
Misty Mountain Floral
Full service flower shop specializing in weddings and events.
Tenant since 2001.