Question

Assume an office building is 80,000 square feet and has two tenants-A for 60,000sf and B for 20,000sf. A’s base rent is $16.00psf and B’s base rent is $18.00psf. Assume further that the building generates parking income of $200,000 and signage income of $25,000 per year. Operating expenses for the entire building are $9.00psf. What is the Net Operating Income (NOI)?

Group of answer choices $875,000 $775,000 $825,000 $925,000

Answer 1

Answer page or goording to the given information Formula for net operating income (Not)= Real Estate Revenue - operating expense -(a) calculating real estate revenue Rent rate for 60,000 sf to A = $16.00pst Thus Total rent paid by A = 16% 60,000 =$960000-> (1) Similarly Rent rate for 20,000 st to 8 = $18.00psf Thus Total rent paid by 8 = 18 X 20000 = $360000-> (2) parking income generated by the building - 4 200,000 > (3) Signage income generated by the building - $ 25000 > (4) adding equations (1), (2),13) and (4) = ¢ (960000 + 360000 + 200000 + 25000) = $ 1545000 <-> (5)

page toa given operating expense in the building is $9.00 psf Thus, Total expense for 80,000 square feet = $.9 X 80,000 = $ 720000 → (5) substituting equation (5) and (6) on nol formula Nol - $ 1545000 - $ 720000 = $ 825000 Therefore NOL = $ 895000 option © is correct