Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You want to purchase an office building in Brooklyn. The property contains 2 7 , 5 00 square feet of rentable space and is currently

You want to purchase an office building in Brooklyn. The property contains 27,500 square feet of rentable space and is currently occupied by multiple tenants each with differing maturities on their respective leases. No lease is currently shorter than 1 year.

The annual rent in the 1st year of ownership is $42.50/sq ft.

The vacancy rate is 6.5%.

You expect to incur collection losses (from tenant default)on 1.5% of the square feet during your first year.

1. What is the Potential Gross Income (PGI) for the first year?

2. What is the Effective Gross Income (EGI) for the first year?

3. If operating expenses are expected to be 40% of EGI,what is the Net Operating Income (NOI) generated by the property in the 1st year of ownership?

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Finance For Managers

Authors: E. Martinez Abascal

1st Edition

0077140079, 9780077140076

More Books

Students also viewed these Finance questions

Question

15.7 Explain the six steps in the termination interview

Answered: 1 week ago

Question

15.1 Define employee relations and employee engagement.

Answered: 1 week ago