courses Scenario 3 The owner of a strip mall is leasing out an empty 3,000 sq ft store front. The owner is currently earning a 12% annual rate of return on a very similar property. On top of rent, the tenant must pay. CAM charges of $3 per sq ft, which are fixed over the term of the lease. There are no common areas. The owner has the following perspective tenants: Old Fashioned Donuts: It is demanding a 7-year lease at below- market rent of $17 per sq ft. Rent will step up by $1 per sq ft each year after year 1. This tenant is offering to add an overage rent (also called a "percentage rent") clause . The clause specifies tha the tenant must pay 10% on gross sales over a breakpoint level $300,000 per year. The tenant's gross sales are expected to be $400,000 the first year, and increase 6% per year thereafter. The tenant is demanding a $20,000 move-in concession to defray the moving costs. $400,000 the first tenant is demanding a $20,000 mo moving costs. . Mango Republic: This tenant sells clothing. It is demanding a triple net lease with a flat rent of $24 per sq ft over the 7 year lease term. There is no overage rent clause or move-in concession in this lease. ent" Question 30 3A. Referring to Scenario 3 above, what is the annual effective rent (per sq ft) on the Old Fashioned Donuts lease' courses Scenario 3 The owner of a strip mall is leasing out an empty 3,000 sq ft store front. The owner is currently earning a 12% annual rate of return on a very similar property. On top of rent, the tenant must pay. CAM charges of $3 per sq ft, which are fixed over the term of the lease. There are no common areas. The owner has the following perspective tenants: Old Fashioned Donuts: It is demanding a 7-year lease at below- market rent of $17 per sq ft. Rent will step up by $1 per sq ft each year after year 1. This tenant is offering to add an overage rent (also called a "percentage rent") clause . The clause specifies tha the tenant must pay 10% on gross sales over a breakpoint level $300,000 per year. The tenant's gross sales are expected to be $400,000 the first year, and increase 6% per year thereafter. The tenant is demanding a $20,000 move-in concession to defray the moving costs. $400,000 the first tenant is demanding a $20,000 mo moving costs. . Mango Republic: This tenant sells clothing. It is demanding a triple net lease with a flat rent of $24 per sq ft over the 7 year lease term. There is no overage rent clause or move-in concession in this lease. ent" Question 30 3A. Referring to Scenario 3 above, what is the annual effective rent (per sq ft) on the Old Fashioned Donuts lease
