PMMF Presentation on

JKJ PENSION FUND

Richa Sharma Parth Tripathi Swetabh Srivastava Deepika Mehra Garima Verma

Property 1: Investment: $3,600,000 Undeveloped Land Los Angeles,CA

Property Description:
This property contains three undeveloped sites in the Wilshire section of Los Angeles. The lots are labeled as lots A,B and C and described as follows :

LOTS

Undeveloped area(sf) Area after zoning (sf) 120,000 812,000

Cost/revenue

Lot A

Return=$35,500

Lot B

180,000

900,000

Cost=$ 24,000

Lot C

60,000

270,000

Break even

Assumptions:
Time of lease for all the lots is equal to that of lot A i.e. 20 years. The cost of zoning has been assumed to be $ 10 per sf. Since information about the costs involved in obtaining clearances and building other facilities over the lots are not mentioned so these have not been considered. The time taken for zoning has been assumed to be 2 years.

Decision:
Difficulty of obtaining approvals & clearances : One of the major hurdles in developing the three lots is the hectic process of obtaining approval by the City Council and the Planning Commission. Further, Environmental Impact statement will have to be prepared, as well as traffic studies and public hearings will have to be done. Very favorable selling price: Since the selling price is very high at $ 32 per sf of land, the gain obtained from selling the property is much more than the costs involved. Keeping in mind all these aspects, it is suggested that the property should be kept SOLD as it is the best options considering the costs and benefits involved.

Property 2: Investment: $21,400,000 Wilshire Plaza Garage Los Angeles,CA

Property Description: The Wilshire Plaza Garage in Whishire contains 3,500 spaces on five levels, three of which are subterranean. The garage is located off Wilshire Plaza beside the Royal Plaza Hotel. The details of the parking spaces are provided as follows:
Parking spaces Income Details

1600

1,060,000

Random self park basis

1000

628,000

Transient spaces on daily or hourly basis Used by adjacent hotel & ABC Entertainment centre

900

200,000

Assumptions: The projects have been made considering the going concern principal, that is, the firm will sustain infinitely. The Plaza may consider the option of taking the 900 spaces on lease after the expiry of the lease period Decision: Concentration risk : Since this property has only leasing spaces it is more vulnerable to suffer from industry specific risks like tourism industry etc. Since the return obtained considering both the options of owning the additional 900 spaces and without owing them, is much less than the initial investment .It is not profitable to hold the leasing space. Keeping in mind all these aspects, it is suggested that the property should be SOLD as it is the best options considering the costs and benefits involved.

Property 3: Investment: $1,500,000 Wilshire Ground Leases Los Angeles,CA

Property Description: This property contains the following three ground leases:
Wilshire East Associates Dated: 10/27/68 Sids Restaurant Banco Los Angeles

10/27/81

7/16/73

Lease Term

December 31,2043

February 28,2017

August 31,2023

Renewal Options

N/A

2*5 Years @ FMV

N/A

Fixed rent (net)

$58,000 annually

$74,996 annually

$85,000 annually

Assumptions:
There are no renewal options for the Sid s Restaurant All the lease terms are evaluated from the present year i.e. from 1994 and not from the dated year as given above.

Decision:
Holding a diversified portfolio : Since this portfolio of three investments is very diversified consisting of a power plant , a restaurant and residential property it is usually advisable to hold such a portfolio in order to mitigate the industry specific risks High annual rent : The annual rent obtained from all the leases is very high and thus the duration to obtain the break even is very less. The present value of total return obtained from the leases is $1,983,783.31 , higher than the initial investment of $1,500,000 Keeping in mind all these aspects, it is suggested that the property should be HELD as it is the best options considering the costs and benefits involved.

Property 4: investment: $18,750,000 River Bank Center Hotel Mobile, AL

Property Description: The Riverbank Center Hotel is a 28-storey structure containing 375 guest rooms. The hotel is connected to a 13-storey 161,618 square foot Riverbank Center Office building by a walkway. Assumption: Rooms, food & beverage increase by 12% every year Other item in Revenue column increases by 8% Total department and total house expense increases by 5% Growth rate is taken as 3% after 1998 till perpetuity Discount rate is taken as 11%

Decision: Diversification by property type: The property has the best convention and meeting facility in the city. Also given that in recent years, Mobile has attracted an average of 161 conventions annually, attracting 55,000 delegates per year. Geographic Location: The location of the hotel as per the case is in the center of downtown Mobile thereby enjoying easy access via interstate 10 & 65. The city enjoys a lot of tourist attractions. Size : Size is perfect Potential Growth: Revenue growth of the hotel is splendid as it has been seen that the market demonstrated demand for approximately 330,000 room nights in 1994. Since 1994 population has been increasing so is the demand so growth is inevitable. Ease of management: Given that the hotel is managed by a reputable nationwide operator meaning that the management has a lot of hand in the hotels profit. Keeping in mind all these aspects, I suggest that the property should be kept in HOLD as its occupancy rate is expected to increase year on year thereby indicating that the profit is bound to increase. The minimum value for the sale of property at 11% discount rate is $10905935.

THANK YOU