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Question 5 (15 marks) Bourke Retail Group is considering two leases. Parkville Property Partners has offered two lease term sheets A and B. Both leases are net, meaning Bourke Retail Group has to assume all operating expenses. The additional terms of the two leases are shown in the table below. For all calculations, assume that the discount rate is 8%. Lease A B Term 6 years 7 years Rent Net $350 per square meter per year Net $290 per square meter per year Concession One year of free rent, in the final | Two years of free rent, up front year of the lease Payment Annual rent is due at the beginning Annual rent is due at the beginning of each year of each year Operating expenses $65 per square meter per year, $52 per square meter per year, expected to grow by 2% per year, expected to grow by 3% per year, paid by tenant throughout the lease | paid by tenant throughout the lease term term A. From Parkville Property Partners' perspective, what is the present value of the two leases? (3 marks) B. From Parkville Property Partners' perspective, what is the effective rent of the two leases? Assuming that all other things are equal and based on above terms, which lease should Parkville Property Partners prefer? (4.5 marks) C. From Bourke Retail Group's perspective, what is the present value of the two leases? (3 marks) D. From Bourke Retail Group's perspective, what is the effective rent of the two leases? Assuming that all other things are equal and based on above terms, which lease should Bourke Retail Group prefer? (4.5 marks)