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You are considering purchasing a 50,000 rentable sf office building. You project a ...

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Finance

You are considering purchasing a 50,000 rentable sf office building. You project a

$30.50 full service rental rate (operating expenses are projected to be $8.50 in the first

year). If you project 3% annual rent escalation and 4% annual operating expense escalation and it costs 13,000,000, what is the NPV after 5 years assuming an 8% annual discount rate and a sale at the end of 5 years using an 8% exit cap rate.

Sale expenses are 6% of sales price. Assume a 5% vacancy and bad debt factor and assume no debt all cash transaction.

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