Question
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease with expense stop
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years:
Gross lease with expense stop and CPI adjustment. Rent will be $29 the first year and increase by the full amount of any change in the CPI after the first year with an expense stop at $9 per square foot. The CPI and operating expenses are followed: The CPI is expected to increase 3 percent per year. Expenses are estimated to be $9 during the first year and increase by $1 per year thereafter. Calculate the effective rent to the owner (after expenses) for the lease using a 10 percent discount rate.
Options
A. $23.78
B. $27.03
C. $21.62
D. $28.11
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1st Edition
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