CAM charges for retail leases in a shopping mall must be calculated. The retail mall

consists of a total area of $2\mathrm{.}8$ million square feet, of which $838,000$ square feet

have been leased to anchor tenants that have agreed to pay $$5$ per rentable

square foot in CAM charges. In$-$line tenants occupy $1\mathrm{.}3$ million square feet, and the

remainder is common area, which the landlord believes will require $$11$ per square

foot to maintain and operate each year.

Required:

If the owner is to cover total CAM charges, how much will in$-$line tenants have to

pay per square foot for CAM charges?

Note: Do not round intermediate calculations. Round your final answer to $2$

decimal places.

Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has

estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NOI will

be as follows:

A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $$1,000,000.$ During

years $4,5,$ and $6,$ market rents are expected to be higher. It is further expected that beginning in year $7$ and every year thereafter, NOI

will tend to reflect a stable, balanced market and should grow at $3$ percent per year indefinitely. Zenith believes that investors should

earn a $12$ percent return $()$ on an investment of this kind.

Required:

a$.$ Assuming that the investment is expected to produce NOI in years $1$ to $8$ and is expected to be owned for seven years and then

sold, what would be the value for this property today? $($Hint$.$ Begin by estimating the reversion value at the end of year $7.$ Recall

that the expected IRP$=12$ percent and the growth rate $(g)$ in year $8$ and beyond is estimated to remain level at $3$ percent.$)$

b$.$ What would the terminal capitalization rate $(R_T)$ be at the end of year $7?$

c$.$ What would the going$-$in capitalization rate $(R)$ be based on year $1$ NO$?$

Complete this question by entering your answers in the tabs below.

Assuming that the investment is expected to produce NOI in years $1$ to $8$ and is expected to be owned for seven years and

then sold, what would be the value for this property today? $($Hint: Begin by estimating the reversion value at the end of year

Recall that the expected IRP $=12$ percent and the growth rate $(g)$ in year $8$ and beyond is estimated to remain level at $3$

percent.$)$

Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar.