You are considering purchasing a small mixed-use building. As part of your analysis, you want to project the NOI for next year (20X1). The seller provides you with the following rent roll and information.

	Unit 1	Unit 2	Unit 3
Unit type	Office	Office	Retail
Lease-end date	Dec. 31 20X9	Dec.31 20X8	June 30 20X6
Lease Type	Gross	Double net	Triple net
Square feet	16,000	8,000	8,000
Rent per square foot	12	10	8
Percentage rent factor			5%
Breakpoint			250,000

The common areas are 2,000 square feet

The anticipated sales for the tenant in Unit 3 are $300,000 for 20X1.

No vacancy and credit losses are expected over the foreseeable future.

The owner has allowed a local company to put up a sign on the side of the building for $2,000 per year.

The owner provides you with an income statement showing the following expenses for last year (20X0). Maintenance expenses are expected to increase by $3,000 starting in 20X1. All other expenses are not expected to change.

- Property taxes $70,000

- Income taxes $ 6,000

- Property insurance $ 3,000

- Snow removal $ 2,000

- Maintenance $ 8,000

- Management and Other $12,000

- Mortgage interest $90,000

- Depreciation $65,000

a) Calculate the projected NOI for next year (20X1).

b) Using the 20X1 projected NOI as an estimate for the stabilized NOI and a cap rate of 8%, what is the value of the building?