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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (34011)	4/1/2009 12:50:02 PM
From: peter michaelson	1 Recommendation Respond to of 78783

Sorry, Madharry, I'm not sure what you mean. The new owner has put down $20mm and has a $640mm mortgage at 5.6%. On its face, that is said to be a 6.7% cap rate and $380 psf. For reference, I guess that implies it is a 1.7mm square foot building earning $44mm NOI. Unless my calculations are wrong, that implies an annual NOI of $38 psf (on 100% of the area) - which would mean rents are in the $50 range. Can that be right! No wonder no one else bid on it. Those are sky-high rents which are bound to decline. There must be a lot of tenants wanting to get to cheaper space.