Expect triple-net market rents

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Suppose the lease on a certain space will expire at the beginning of 2010. You believe that the probability of the existing tenant renewing is 75 percent. If they renew, you will need to spend only an estimated $5.00/SF to upgrade his space. If they do not renew, it will take $20.00/SF to modernize the space and there would be 4 months of expected vacancy in that case. What expected cash flow (NOI) forecast should you put in year 2010 of your pro-forma for this space, if you expect triple-net market rents on new leases in 2010 to be $21.67/SF?

Question options:

  • Zero.
  • $7.92/SF.
  • $9.58/SF.
  • $11.11/SF

Reference no: EM131340905

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