Ann is looking to buy an office building in 2014. She plans to rent it out for 5 years (2015-2019) and sell it at the end of 2019.

(1) Use the first sheet of the spreadsheet (titled NOI) to compute the Net Operating Income (NOI) for this property for 2015. Fill in the missing information in the spreadsheet.

This property has two types of operating income, rental income and parking.

Rental Income in 2015 = (# square feet)*(Annual rent per square foot in 2015)

Parking is a fixed dollar amount given

Vacancy expenses in 2015 = (Rental vacancy rate in 2015)*(rental income in 2015)

Collection losses in 2015 = (collection loss rate in 2015)*(PGI in 2015)

Operating Expenses in 2015 = (Operating expense rate in 2015)*(EGI in 2015)

(1.a) What is the NOI for 2015?

(1.b) If this building is being sold in 2014 at an asking cap rate of 6.50%, what is the asking price?

00 D E F G H Green text represent inputs 20000.00 $72.50 $65,000.00 Purple text represent outputs 1 Inputs 2 Square feet 3 Annual rent per square foot 2015 4 Parking income 2015 5 6 Rental vacancy rate 2015 7 Collection loss rate 2015 8 Operating expense rate 2015 9 5 2015 2.40% % of square feet 2.00% % of PGI 47.00% % of EGI $1,450,000.00 $65,000.00 10 11 Rental Income Parking Potential Gross Income (PGI) Vacancy Expenses Collection losses Effective Gross Income (EGI) Operating Expenses Net Operating Income (NOI) 12 13 14 15 16 17 18 Asking cap rate 2014 19 Asking Price 20 6.50% 21 22