An existing single tenant building measures 200,000 SF. It has a tenant paying an in place rent of $95/SF/Yr and operating expenses are $35/SF/Yr. The prevailing cap rate for this property is 6.0%. The building is for sale. Assume during due diligence that the buyer discovered that the roof needs to replaced at a cost of $2M. Assume that the seller agrees to an adjustment in price equal to the cost to replace the roof. What is the buyers effective acquisition cap rate after getting a credit for the roof work?

5.94%

6.06%

4.07%

4.10%