Question

Question 7 10 pts A national retailer uses 27,500 SF of "big box" store space and develops these properties for an average cost of $4.5 million. The space leases for $22 per foot (absolute net) with $5 per foot in operating expenses. If the company does a sale-leaseback, what is the approximate price (rounded to thousands) they can expect to get if the property is sold at a 6.25 cap rate? $11,880,000 $ 5,520,000 $ 7,920,000 $6,828,000 $ 9,680,000

Answer 1

Correct answer: $9,680,000

Operating Income Market value of Property = - Cap rate

Market value of Property = 27,500*22 0.0625

Market value of Property = $9,680,000

Please note:

Rate per foot is Absolute net thus no need to adjust operationg expenses rate.

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.