You own a business that occupies a 50,000 SF building. You have no loan on the property. In order to recapitalize your business, you want to sell the building and lease it back from the new owner. Market conditions include a 10% vacancy, an 8% cap rate, rents of $6/SF with expenses of $2/SF (landlord responsibility).

a. What is your real estate worth?

b. If you complete a sale-leaseback transaction, what are your net funds that you would have received at the end of year 1?