Question

Oxford Street Development Company's new project The LuLu DeLux has three components: Office, Retail, and Multifamily. There are 12,500 feet of office space, 25,000 feet of retail space and 10 apartments. The office space is subject to a ten-year gross lease at $30 per sq ft per year with $.50 annual increases. Base year expenses $12 per square foot. Expenses are expected to rise at 3% per annum. The retail space pays a $20 base rent per sq ft per year and 8% participating rent over a natural breakpoint on a ten-year lease. The base rent increases at the beginning of year 6 to $25 per square foot and the percentage rent resets. First year sales are $300 per square foot. Sales are expected to grow at a rate of 4% per annum. Retail expenses are 1.5 times the level of office expenses on a per square foot basis. The retail tenants reimbureses 90% of actual expenses. Of the 10 apartments there are 5 one bedrooms and 5 two bedrooms. Multifamily montly rents start at $1500 for one bedroom and $2700 for a two bedroom. All leases are one-year leases. They will rise each year at the CPI of 3.5%. Residential expenses are 40% of rents. You will hold the building for 10 years.

What is the year 6 NOI of the office, retail, and multifamily space ( please calculate NOI of each place separately). What is the total NOI for the investment period?

Answer 1

Office Space	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Area in feet	12,500	12,500	12,500	12,500	12,500	12,500	12,500	12,500	12,500	12,500
Rent in feet	30.00	30.50	31.00	31.50	32.00	32.50	33.00	33.50	34.00	34.50
Expenses in feet	12.00	12.36	12.73	13.11	13.51	13.91	14.33	14.76	15.20	15.66
NOI per feet	18.00	18.14	18.27	18.39	18.49	18.59	18.67	18.74	18.80	18.84
NOI	225,000	226,750	228,365	229,841	231,174	232,359	233,392	234,269	234,984	235,534
Retail Space	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Area in feet	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000
Rent per feet	20.00	20.00	20.00	20.00	20.00	25.00	25.00	25.00	25.00	25.00
Participating rent feet(8% of 300)	24.00	24.96	25.96	27.00	28.08	29.20	30.37	31.58	32.85	34.16
Expense Reimbursement - 90%	16.20	16.69	17.19	17.70	18.23	18.78	19.34	19.92	20.52	21.14
Expenses	18.00	18.54	19.10	19.67	20.26	20.87	21.49	22.14	22.80	23.49
NOI per feet	42.20	43.11	44.05	45.03	46.05	52.11	53.22	54.37	55.57	56.81
NOI	1,055,000	1,077,650	1,101,220	1,125,746	1,151,267	1,302,824	1,330,459	1,359,215	1,389,137	1,420,272
Apartment	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Number of flats	10	10	10	10	10	10	10	10	10	10
Rent (5*2700 + 5*1500)	4,200.00	4,347.00	4,499.15	4,656.62	4,819.60	4,988.28	5,162.87	5,343.57	5,530.60	5,724.17
Expenses	1,680.00	1,738.80	1,799.66	1,862.65	1,927.84	1,995.31	2,065.15	2,137.43	2,212.24	2,289.67
NOI (per ares / per flat)	2,520.00	2,608.20	2,699.49	2,793.97	2,891.76	2,992.97	3,097.72	3,206.14	3,318.36	3,434.50
NOI	25,200	26,082	26,995	27,940	28,918	29,930	30,977	32,061	33,184	ekkarill92 Next > < Previous Related Solutions Your company's research and development department has been working on a new process that, if it... Your company's research and development department has been working on a new process that, if it works, can produce oil from coal at a cost of about $15 per barrel versus a current market price of $100 per barrel. The company needs $10 million of external funds at this time to complete the research. The results of the research will be known in about one year, and there is about a 50-50 chance of success. If the research is successful,... Project Title: Development of pre-employment selection testing for entry-level Retail Salespersons in retail clothing stores. Scope... Project Title: Development of pre-employment selection testing for entry-level Retail Salespersons in retail clothing stores. 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