You would like to buy an industrial property in Pointe-Claire that has two tenants occupying all of the leasable area. The current owner provides you with the following information.

One tenant has six years remaining on his lease. It is a triple-net lease with a base rent of $50,000 per year for 5,000 square feet. The tenant has always paid his rent on time.

The second tenant has 4 years remaining on his lease. It is a double-net lease with a base rent of $30,000 for 4,000 square feet. The tenant has always paid his rent on time

There is a small common area of 1,000 square feet.

The owner provides you with an income statement showing the following expenses for last year. Maintenance expenses are expected to increase by $2,000 starting this coming year. All other expenses are not expected to change.

Property taxes $8,000

Income taxes $7,000

Property insurance $5,000

Snow removal $1,000

Maintenance $5,000

Management and Other $3,000

Depreciation $6,000

The property has no expected vacancy or credit losses. The owner has allowed a local company to put up a sign on the side of the building for $1,000 per year. The capitalization rate for comparable properties is 10%.

Calculate the value of the property using the Income Capitalization Approach.