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Question
Rent: Renew versus Releasing
Abes Furniture Store, a long term tenant is at the end of its lease term. Abe currently pays $15 per square foot on 20,000 feet and pays pro rata CAM of $4 per square foot. You offered Abe a five year renewal at $25 per foot, with a $5 per foot allowance for brightening up the store. Abe accepted your tenant allowance offer but has come back with a $20 per square foot rent counter offer, last and final, threatening to close after Christmas when his current term expires. You believe that if Abe closes, the store will remain vacant for 12 months and you will need to give a new tenant $25 per square foot as a tenant allowance. What rent would the new tenant have to pay on a four year lease, with pro rata CAM, for you to reject Abes offer? Assume interest rates are zero.
Answer
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Related questions
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