Question I
You own an industrial building offering 25,000 square feet of rentable space that is occupied by a single tenant. The tenant's current lease expires in two years and you're trying to estimate NOI for the third year of ownership. You expect to receive the market rent in year 3, $12.73/sf, whether the tenant decides to renew or vacate. What is the expected potential gross income for the building in year 3?
Question II
If the renewal probability is .60 and, conditional on the tenant vacating, expect that it will take 9 months to find a new occupant for the space, what is the effective gross income for the building in year 3?
Question III
The tenant is responsible for all operating expenses other than the property management fee. If the property management fee is 2.5% of effective gross income, what is the expected NOI in year 3?