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(Solved): 68. Consider the following cash flow statement for a property fully leased to a new tenant on a NNN ...



68.

Consider the following cash flow statement for a property fully leased to a new tenant on a NNN basis beginning in Year 1:

Year 1
Potential Base Rent $750,000
Free Rent and Concessions $0
Absorption and Turnover Vacancy $0
Total Rental Revenue $750,000
Expense Recoveries $350,000
Total Tenant Revenue $1,100,000
Other Revenues $0
Potential gross Revenue $1,100,000
Vacancy and Collection Loss $0
Effective Gross Revenue $1,100,000
Recoverable Opex $350,000
NonRecoverable Opex $50,000
Total Opex $400,000
Net Operating Income $700,000

What is the Net Operating Income for Year 2 if scheduled base rent grows by 10% and all expenses grow by 2.5%?

What would the Year 1 NOI be if there were 3-months of downtime before the tenant's lease began AND the tenant had received 3-months of free base rent during the year?

What is the Y1 NOI return if the property was purchased for $15M?

What is the Y1 Levered NOI return if the property was purchased for $15,000,000, and had a $10,000,000 mortgage with annual debt service payments of $350,000?



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ANSWER...1)Calculation of net operating income:Year 2:Base rent = Year 1 base rent + 10% of year 1 base rentExpenses = Year1 expenses + 2.5% of year 1
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