The Income-Based REPE Interview Simulator

A tenant has signed a lease for 9,000 sf at $23/sf gross for five years. Commencement is in March, and there is a 3-month free-rent period. What is the calendar Year 1 rent income from this lease? (Interview tip: try this in your head without a calculator)

Your firm is considering buying a multi-tenant office building. All tenants have less than 2 years remaining on their leases, and none of the leases distinguish between Rentable and Usable Square Feet. What should you investigate in order to maximize returns?

As you are reviewing leases for a grocery-anchored shopping center, you notice that one of the leases contains a co-tenancy clause naming the grocery store and a soft goods retailer, which combine for 50% of the total leasable space in the center. How does this affect your model?

A restaurant lease for 5,000 sf contains a percentage rent clause that pays the landlord 10% of sales over the natural breakpoint. If the rent was $20/sf but the Tenant paid $145,000 in rent, what were the tenant’s sales that year? (Hint: Natural Breakpoint is where straight percentage rent is equal to the base rent)

Which of the following items are usually found in an Estoppel certificate?

A stabilized property your firm purchased several years ago has an excess one-acre parcel of vacant land. You received an unsolicited offer to buy the land for $2,000,000, but your Director thinks that is too low, and he would rather ground lease it. If the market cap rate for ground leases is 5%, which of the following make sense as a counter offer to the buyer?

A brand-new stabilized mixed use project that your firm is considering for its Core-Plus fund comes with property tax rebates on the City and County portion of the taxes. The rebate is 100% in year 1, then steps down 10% each year until it expires after 10 years. The total annual tax bill is $237,000 for all ten years, and the City portion is 50% and the County portion is 23%. What is the net present value of the rebates assuming a 4% discount rate?

A letter of intent for the last vacant space in one of your office properties arrives, and the proposed rent is exactly the asking price, $21 psf gross for five years. The LOI includes a Tenant Improvement Allowance of $5.00 psf, which was not part of the asking price. If the blended cost of capital on this property is 6.5%, what is the effective rent?

If you are creating an LBO model for a property that includes a property tax rebate, would it be better to just offset the expense by the rebate, and show the net effect? Or would it be better to show the full expense as well as the full rebate?

The rent roll for a large multi-family property includes 230 tenants. What is the most flexible and efficient method for entering this information in your model?