Question: You have been asked to develop a pro forma statement of cash flow for HK Courier Centre, an industrial/warehouse property. In addition to recoverable operating

You have been asked to develop a pro forma statement of cash flow for HK Courier Centre, an industrial/warehouse property. In addition to recoverable operating expenses, the new tenant will be billed for pass throughs for insurance and property taxes. The information given to you is listed below.

Property Information

HK Courier Centre

Age 8 years old

Rentable Space 200,000 sq.ft.

Single Tenant 10 year lease

Financial Information Rent $7.00 per sq.ft., flat

Recoverable Expenses from Tenant $1.50 per sq.ft.,

fixed Operating Expenses $700,000

Property Taxes $50,000

Insurance $15,000

Other Cash Outlays CAPEX/Improve Allowance $6,000

a) What are Common Area Maintenance (CAM) charges? (5 marks)

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