Problem
1. Assuming that the appropriate discount rate for rental cash flow is 10%, what is the NPV of each anchor tenant's lease? Be sure to incorporate Tenant Improvements (T15) and leasing commissions (LCs).
2. What is the effective rent (including T15 and LCs} that each anchor would pay? You may assume that Tls, LCs, and the first year's rent are paid together [time 1) and that the anchor tenant fills spaces AIS-19.
3. For Walgreens, calculate these values under two different assumptions: that it vacates after the initial lease term, and that it vacates after using all five extension options. No leasing commissions will be paid after Year 25 if Walgreens exercises its options.