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Angus Cartwright III Essay

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REV: SEPTEMBER 30, 2004

Angus Cartwright III
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Angus Cartwright, III, an investment advisor, was based in Arlington, Virginia, the home of many members of the DeRight family. In September 2003 his attention focused on the needs of two cousins at different stages of their lives. John DeRight had recently sold his business to a medium-sized public company in exchange for $18 million of the company's stock. He then retired and expected to live comfortably on the $500,000 in dividends paid on the stock plus retirement and other income he had of an equal amount. He felt the need to diversify his investments, however, and planned to sell up to half of his stock and reinvest it in real estate and other investments. Even …show more content…

The land value of the property, for purposes of depreciation, was estimated at
$2,100,000 and the depreciation period (cost recovery period) for the building would be 27.5 years.
Nearby was the second property, a five-story, 75,000 square foot office building, 900 Stony Walk, with 67,000 square feet of rentable space. The building was rented to lawyers, accountants, and small service firms which each rented between 5,000 and 7,500 square feet. 900 Stony Walk was completed in 1998 and had been operating at a 95% occupancy level since its initial rentup. The asking price was
$11.6 million, but the broker believed a price of $11.5 million would be accepted. The projected gross rental income for 900 Stony Walk was $1,742,000 with cash flow before financing of $1,057,200. A new $8 million mortgage at a 6.5% interest rate had been arranged. The term was 10 years with amortization over 20 years. The land value for purposes of depreciation was estimated at $3,500,000.
Since it was a nonresidential building, 900 Stony Walk would have to be depreciated on a straightline basis over 39 years. Like Alison Green, real estate taxes would be at a rate of 12% of gross rent.
The third property was Ivy Terrace, an 80-unit garden apartment project under construction near
Arlington, Virginia. The property was for sale for $8.6 million, but the broker was certain it could be purchased for $8.4 million. A 10-year, $5.5

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