You have been asked to develop a pro forma statement of cash flow for Betts Distribution Center, an Internet-based order fulfillment/distribution/office/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 CENTERAge of Improvement8 years oldRentable Space200,000 square feetSingle Tenant10-year lease term, net, net

Financial Information:

Rent$7.00 per square feet (7-year term), flatRecoverable Expenses from Tenant$1.50 per square feet, fixedOperating Expenses$700,000Property Taxes$15,000Insurance$50,000

Other Cash Outlays:

Allowances for: Recurring CAPEX/Improve Allowance$60,000

Required:

a. Develop a pro forma statement for the Betts property for a base year showing net operating income (NOI).