Loan information: 80% LTV with 25-year amortization at 4.5%

1. Current and estimated yearly NOI until 2022: $127,326
2. 10-year lease with the tenant
3. Lease started on 07/2019
4. Rent from 07/2020 to 07/31/22 is at $8.25 per square feet per year
5. Then $8.75 for the next three years; $9.25 for the next three years and then $9.75 in the last year!
6. The tenant has 4 five-year renewal options. The first five-year renewal will be offered at $9.95 per square feet per year with a 2% increase every year. This 2% rent increase every year will be offered during all renewal options.

7. Additional fixed income source of $12,000 per year (Note: this income is generated by utilizing space outside the building).

   Current lease for the additional tenant expires on 07/2022.

   The additional tenant has 6 five-year renewal options with no rent increase.

   Renewal is almost certain for all 6-five-year options.

Calculate NPV and IRR using 10 year holding period. How will your answer change (with same 10 year holding) if the main tenant does not renew after their 10-year lease expiration

How will your answer change if the tenant was not on a NNN lease (assume all original lease renewal options for this question with the same 10 year holding period)?

At what price would you walk away from this deal?