Multiple Choice
Suppose the lease on a certain space will expire in one year The end of Year 1) . You believe that the probability of the existing tenant renewing is 50 percent. If he renews, you will need to spend only an estimated $5.00/SF to upgrade his space. If he does not renew, it will take $25.00/SF to modernize the space, plus $5.00/SF in leasing broker commissions to attract a new tenant, and even then you expect 6 months of vacancy. What expected cash flow forecast should you put in year 2 of your pro forma for this space, if you expect triple-net market rents on new leases in year 2 to be $20/SF?
A) $22.50/SF
B) $15.00/SF
C) - $2.50/SF
D) - $7.50/SF
E) - $20.00/SF
Correct Answer:
Verified
Correct Answer:
Verified
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