Question

6. In an office building located in Toronto CBD area, four tenants share one floor. The floor has a total of 25,000 square feet that is partitioned into four interior office spaces: Space 1: 6000 sq.ft., Space 2: 4000 sq.ft., Space 3: 7000 sq.ft., Space 4: 3000 sq.ft.. The total usable space on the floor is 20,000 square feet. The total common area is 5,000 square feet. The tenants share the common area charges based on the size of their usable space. Space 2 and Space 3 are premium spaces while Space 1 and Space 4 are discount spaces. Here is the cost information: I. Premium space @$22 per sqft of rentable area. II. Discount space @$18 per sqft of rentable area. According to the above information, which of the following statement if FALSE? (A) The rentable space for Space 1 is 7,500 sqft. (B) The total rental income from four tenants is $505,000. (C) The tenant of Space 2 need to pay a common area charge of $22,000. (D) The total rent incl. common area charges of Space 3 is $154,000.

Answer 1

- Statement A is true as Space 1 total area is:

6000 + [5000 * (6000/20000)] = 7500

- Statement B is true as total rental income from 4 tenants is:

Space 1 : (6000 * 18) +{ [(6000/20000) * 5000] * 18} = $135,000

Space 2 : (4000 * 22) + {[(4000/20000) * 5000] * 22} = $110,000

Space 3 : (7000 * 22) + {[(7000/20000) * 5000] * 22}= $192,500

Space 4 : (3000 * 18) + {[(3000/20000) * 5000] * 18}= $67,500

Total Amount = 135000+110000+192500+67500 => $505,000

- Statement C is true as common area charges payable by tenant 2 is:

{[(4000/20000) * 5000] * 22} => $22,000

- Statement D is False as total rent (inclusive of common area charges) of Space 3 is:

  7000 * 22) + {[(7000/20000) * 5000] * 22}= $192,500