Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oxford Street Development Company's new project The LuLu DeLux has three components: Office, Retail, and Multifamily. There are 12,500 feet of office space, 25,000 feet

Oxford Street Development Company's new project The LuLu DeLux has three components: Office, Retail, and Multifamily. There are 12,500 feet of office space, 25,000 feet of retail space and 10 apartments. The office space is subject to a ten-year gross lease at $30 per sq ft per year with $.50 annual increases. Base year expenses $12 per square foot. Expenses are expected to rise at 3% per annum. The retail space pays a $20 base rent per sq ft per year and 8% participating rent over a natural breakpoint on a ten-year lease. The base rent increases at the beginning of year 6 to $25 per square foot and the percentage rent resets. First year sales are $300 per square foot. Sales are expected to grow at a rate of 4% per annum. Retail expenses are 1.5 times the level of office expenses on a per square foot basis. The retail tenants reimbureses 90% of actual expenses. Of the 10 apartments there are 5 one bedrooms and 5 two bedrooms. Multifamily montly rents start at $1500 for one bedroom and $2700 for a two bedroom. All leases are one-year leases. They will rise each year at the CPI of 3.5%. Residential expenses are 40% of rents. You will hold the building for 10 years.

What is the year 6 NOI of the office, retail, and multifamily space ( please calculate NOI of each place separately). What is the total NOI for the investment period?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions