Leases in this market are fypically written for five years at a flat rate with the tenant paving the increases in expenses over a base year. The base year is established within the first year of the lease based on a percentage of total expenses divided ty the tecant's percentage of space. These are all full-service leases. The market rents are increasing by 50.25 annually. 50 , market rents start at 5 1875 per square foot and increase each vear by 50.25 boh. Fer example, if the market rate for Year 1 is $15.00 p.5. leases would be structured for 515.00 flat for the term of the lease. The following year. leases would be structured at $15.25 fiat for the term, and so on. Suite 100 , comprising 5,000 square feet, is leased to a computer hardware distributor an a five.year lease with three vears left. The lease rate is 518.25 per square foot per year. There is a high likeliheod of a rencwal for another tive year. Aswime resewal at then current market rate with 5 5.00 bs. improvement allowance. Suite 101, comprising 5.000 square feet, is leased to an electronic reproduction firm on a seven-year lease at a fat rate of $18.75 per square foot per year, This lease has seven vears left to run. Suite 112 has 2.500 square feet and is vacant. in har beet leased etfective the first of the year at the projected market rate of 518.75 per square foot per year with standard finishing. This space is assumed to be of average finish at that rate. Fenant imptovernents with average finish cost of $ 25.00, all things considered. A new leate can be assumed to be for five vears, and it will roll over at the market rate. Suite 114 , comprising 3.900 iquate feet, is leased ta a consumer groducts manufacturer on a fiveyear lease wish only two years left to run. The lease rate a 518.25 per seware foot per year. Assume renewall at theh current market rate with 55 gof improvement allowance. Suite 205, comprising 4.600 square feet on the second floor, is leased to an auto manufacturer on a five-year lease with three wears remaining at a fat rate of 518.25 per square foot per year. Assume fenewal at then current market rate with $5 goh improvement allowance. Suite 210 , comprisins 4.000 square feet on the iecond foor, is leased to a real estate investment company for five years with two years left. The lease rate is 5135.25 per square foot per year. Assume renewal at then current market rate with 5.500 ech improvement allowance. Suite 215 comprises 5.000 square feet on the second floor, and it is leased to a soft drink distributer. for five years with only two vears left. The leate rate is 5 15 ger square foot per year. Assume renewal at then current market rate with 5.9 get improvement allowance. Since the leases are flat rate for several years, there is a fairly large amount of pass-through income. The first year it should equal about 43,000 and increase by about 34 compounded each year. The market occupancy rate is currenty 95% and estimated to remain stable throughout the hold period of 5 years. The collectien loss of ertimated at eely 2k per yar because of the quality of the benants. Expenses are listed in the grid. Most are increasing by 3 w per year. Tenant improvement assumptions are listed above. Leasing commistions are 5 on new leases and 2% on renewals. No other capital costs are required other than Tenant lmgrovements and Leasing Commissions. Assignmenti Complete the attached Reconstructed Operating statement through year 5 . Assume a 8\% Cap Rate for purposes of calculating Year 5 Sale Price and selling eapenses of 5% of sale peice. Using a required rate of return of 112 , calculate the price you should pay for the property in Year 0