01
Upside — and the risk behind it
An 86,000 SF, five-tenant building. In-place rents $13.75–$17.50 (average $15.42 net); market rent about $18.00. Leases expire between December 2026 and August 2030.
- Total in-place rent: $1,326,500 a year.
- WALT is only about 1.3 years by area (1.4 by rent): 60,000 SF — 70% of the building — expires within 24 months.
- If every lease were reset to $18.00, rent would rise by $221,500 a year (17%) — about $4.0M of value at a 5.5% cap.
- But the same rollover is the risk: re-leasing takes time, may need inducements, and lenders size loans on in-place income.
要点This is a value-add deal priced as if it were core if you pay a market cap rate on in-place NOI without discounting for 70% rollover. Price the downtime and leasing costs explicitly.