$1.$ Lease Valuation A building owner is evaluating the following alternatives for leasing space in an office

building for the next five years. Expenses are estimated to be $$9$ psf for the first year and forecast to

increase at $$1$ psf per year thereafter.

a$.$ Net lease with CPI adjustments. Rent is $$16$ psf for the first year. After year $1,$ the rent will be

increased by any increase in the CPI which is expected to be $3\%$ per year. Again, all the expenses

are reimbursed by the tenant.

b$.$ Gross lease. Rent will be $$28$ psf each year with the lessor responsible for paying all of the

operating expenses.

c$.$ Gross lease with an expense stop and CPI adjustment. Rent will be $$24$ psf the first year and

increase by the full amount of the CPI $(3\%)$ after the first year with an expense stop for the

landlord at $$9$ psf$.$ The CPI and operating expenses are assumed to change as suggested above.

d$.$ Net lease with steps. Rent is $$15$ psf for the first year and will increase $$1\mathrm{.}50$ per square foot

for each year until the end of the lease. All operating expenses are paid $($reimbursed$)$ by the

tenant.

Calculate the annuity rental equivalent $($ARE$)$ net of expenses for each lease using a $10\%$ discount rate.

Report your answer in $$/$psf including two decimal places.