Intra-lease discount rate

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Reference no: EM131871262

Suppose expected first lease rent is $30/SF/yr net, on a 1200,000 SF building. The first lease will be signed in one year with rent paid annually, in advance. Leases will be for 5 years with a fixed rent. Expected rental growth between leases is 3%/yr, with no vacancies expected in between leases. Suppose the intra-lease (low risk) discount rate is 8%/yr, while the inter-lease (high risk) discount rate is 11%. What is the PV of this space?

Reference no: EM131871262

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