Question

Using the info below, calculate the rent for the next 11 years for TomFoolery and Blue Mold Grocer and please show all work! Thanks.

REAL ESTATE FINANCE As a loan officer at Last National Bank, you have been asked to make a recommendation as to the maximum loan that your bank should extend to the potential buyer of the Norad Shopping Center. The rent roll is given below. Market research indicates that the current market rental for leasing a comparable vacant unit is $22.00 per square foot per year. Your research also indicates that the market rent is expected to increase by 2.20 % annually. - Calculate the total gross rents for the next 11 years. A template has been provided to assist you. RENT ROLL SIZE(SF) LEASE TYPE TENANT TomFoolery Dance Studio TERM REMAINING CURRENT RATE 1,800 Step, 5 years $22.60 $.50/year Blue Mold Grocer 1,250 Graduated 10 years $18.65 10.

Answer 1

1. Rent for both the tenants are calculated as in below excel. In Step lease, the rent is increased by the fixed amount as given periodically, however in graduated lease, rent is increased by the percentage given periodically.

For each tenant, the rent for a year will be the product of the rent per square feet in that year and the total area occupied. The rent per sqft will change(in current case increase) over the year based on the lease type.

Values for each tenant each year will be as shown in the excel below:

Years ->				1	2	3	4	5	6	7	8	9	10	11
TomFoolery Dance Studio	Size	1800
	Lease Type	Step, $0.5/Year	0.5
	Term (years)	5
	Current Rate	22.6	Rate per sqft	22.6	23.1	23.6	24.1	24.6
	Final Rent		Final Rent	40,680.0	41,580.0	42,480.0	43,380.0	44,280.0
Blue Mold Grocer	Size	1250
	Lease Type	Graduated (per yr)	2%
	Term (years)	10
	Current Rate	18.65	Rate per sqft	18.65	19.0	19.4	19.8	20.2	20.6	21.0	21.4	21.9	22.3
	Final Rent		Final Rent	23,312.5	23,778.8	24,254.3	24,739.4	25,234.2	25,738.9	26,253.7	26,778.7	27,314.3	27,860.6

FORMULAS IN EXCEL:

Years ->

1

2

3

4

5

6

7

8

9

10

11

TomFoolery Dance Studio

Size

1800

Lease Type

Step, $0.5/Year

0.5

Term (years)

5

Current Rate

22.6

Rate per sqft

=D7

=F7+$E$5

=G7+$E$5

=H7+$E$5

=I7+$E$5

Final Rent

Final Rent

=F7*$D$4

=G7*$D$4

=H7*$D$4

=I7*$D$4

=J7*$D$4

Blue Mold Grocer

Size

1250

Lease Type

Graduated (per yr)

0.02

Term (years)

10

Current Rate

18.65

Rate per sqft

=D12

=F12*(1+$E$10)

=G12*(1+$E$10)

=H12*(1+$E$10)

=I12*(1+$E$10)

=J12*(1+$E$10)

=K12*(1+$E$10)

=L12*(1+$E$10)

=M12*(1+$E$10)

=N12*(1+$E$10)

Final Rent

Final Rent

=F12*$D$9

=G12*$D$9

=H12*$D$9

=I12*$D$9

=J12*$D$9

=K12*$D$9

=L12*$D$9

=M12*$D$9

=N12*$D$9

=O12*$D$9