3. Lease Analysis You have an office building with a 25,000 sf vacancy. You have two proposals: Tenant A Tenant B Size 25,000 sf 25,000 sf Starting Base Rent $45.00 sf NNN $40.00/sf NNN Annual increases 3% $1.00 psf/yr Term: 10 years 10 years Free Rent: 4 months (rent only) None (rent only) TI Allowance: $100/sf $25/sf Start Date: 10/1/2022 10/1/2022 Assume there is no parking revenue or moving allowances and that first year opex is $14.00 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 6% 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?