Problem 3

You have been asked to develop a pro forma statement of cash flow for bets distribution center, and Internet based order fulfillment slash distribution slash office slash warehouse property. In addition to recoverable operating expenses, the new tenant will be billed for pass throughs including insurance and property taxes, which will then be paid by the owner. The information given to you is listed below.

Property Information:

BETTS DISTRIBUTION CENTER

Age of Improvement: 8 years old

Rentable Space: 200,000 sf

Single Tenant: 10-year term, net net

Financial Information:

Rent: $7.00 psf (7-year term), flat

Recoverable expenses from Tenant: $1.50 psf, fixed

Operating Expense: $700,000

Property Taxes: $50,000

Insurance: $15,000

Other Cash Outlays:

Allowance for CAPEX/Improvement Allowance: $60,000

1. Develop a proforma for the Betts property for a base year showing net operating income (NOI)

2. If you were to work on future proformas for Betts, list at least five major factors you would consider.