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A landlord is considering granting a 10 year lease with a break and a review...

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Finance

A landlord is considering granting a 10 year lease with a break and a review in year 5. On the assumption that the break is exercised it is likely that it will be followed by a one year void period. The current market rent for a 10 year lease without the break is 1,250,000. Investors require a total return of 6% p.a. and yields are 3.5%. What rent should the landlord charge for the initial term? Also Calculate the rental impact of the break on the following two assumptions: (a) the likely void is 2 years; and (b) in addition to (a) the landlord's required return is 7%

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