Question
a 250000 sf space is expected to rent in a 10-year fixed rent lease, successfully in perpetuity. you expect the first lease will be signed
a 250000 sf space is expected to rent in a 10-year fixed rent lease, successfully in perpetuity. you expect the first lease will be signed one year from now. the second lease begins 10 years later and the third 10 years later and so on. the rent is constant within each lease but changes to the market rate between new lease signings. the rent is expected to grow at a rate of 1% per year. the rent of the first lease is $15/sqft per year. a) what is the PV of each lease as of the time of its signing, use the intra-lease discount of 6%. b) what is the expected rent for the second lease and the third lease? c) if the inter-lease discount is 10%, what is the present value of the commercial real estate structure?
I just need to know what formulas to use to solve parts a and c
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