3. Lease Analysis You have an office building with a 25,000 sf vacancy. You have two proposals: Tenant A 25,000 Starting Base Rent $48.00 NNN Size Annual Increases: Term: Free Rent: TI Allowance: 3% 10 years 4 months (Base Rent only) $100 psf Tenant B 25,000 $40.00 NNN $1.00/sf/yr 10 years None $25 psf Start Date: 10/1/2024 10/1/2024 Assume there is no parking revenue or moving allowances and that first year opex is $16.00 psf. Also pls assume commissions are $1/sf/yr for outside broker and $0.50/sf for inside broker. Using the lease analysis tool, please calculate the NPV for each. If the owner was considering selling the building in 3 years, please calculate the Capitalized Lease Value psf; assume a 7% cap rate If the owner is a long term holder, which lease would they prefer? If they prefer to sell after 3 years, which would they prefer? Why?
3. Lease Analysis You have an office building with a 25,000 sf vacancy. You have two proposals: Tenant A 25,000 Starting Base Rent $48.00 NNN Size Annual Increases: Term: Free Rent: TI Allowance: 3% 10 years 4 months (Base Rent only) $100 psf Tenant B 25,000 $40.00 NNN $1.00/sf/yr 10 years None $25 psf Start Date: 10/1/2024 10/1/2024 Assume there is no parking revenue or moving allowances and that first year opex is $16.00 psf. Also pls assume commissions are $1/sf/yr for outside broker and $0.50/sf for inside broker. Using the lease analysis tool, please calculate the NPV for each. If the owner was considering selling the building in 3 years, please calculate the Capitalized Lease Value psf; assume a 7% cap rate If the owner is a long term holder, which lease would they prefer? If they prefer to sell after 3 years, which would they prefer? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3. Lease Analysis
You have an office building with a 25,000 sf vacancy. You have two proposals:
Tenant A
25,000
Starting Base Rent
$48.00 NNN
Size
Annual Increases:
Term:
Free Rent:
TI Allowance:
3%
10 years
4 months (Base Rent only)
$100 psf
Tenant B
25,000
$40.00 NNN
$1.00/sf/yr
10 years
None
$25 psf
Start Date:
10/1/2024
10/1/2024
Assume there is no parking revenue or moving allowances and that first year opex is $16.00 psf. Also pls assume
commissions are $1/sf/yr for outside broker and $0.50/sf for inside broker.
Using the lease analysis tool, please calculate the NPV for each.
If the owner was considering selling the building in 3 years, please calculate the Capitalized Lease Value psf;
assume a 7% cap rate
If the owner is a long term holder, which lease would they prefer? If they prefer to sell after 3 years, which would
they prefer? Why?
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