Virtual Deal Simulator
The Rollover Risk: A Single-Tenant Office Acquisition
A credit tenant, a 78,000-square-foot building, and three years left on the lease — the cap rate isn't the number that decides this deal.
You’ll Practice
- Recognize how lease rollover risk on a single-tenant asset changes underwriting even when the in-place tenant is investment-grade
- Calculate and correctly interpret a going-in cap rate against actual purchase price and NOI
- Assess tenant renewal probability using real signals — sunk TI investment, relative footprint size, submarket relocation cost — instead of assumption
- Build a lender submission package appropriate for a single-tenant credit-lease acquisition
- Compare lender quotes on loan-term-to-lease-term alignment and rollover mitigants, not just headline rate
- Negotiate structural protections (reserves, springing triggers) without blowing up the deal
The Off-Market Lead
An acquisitions broker you've worked with twice before sends a one-line text: "Client's under contract on an office deal, his first one ever, wants financing help and honestly wants someone to talk him through the risk. Can you call him today?" The client is Tom Ricci — a seasoned industrial and multifamily buyer who's built a fifteen-property portfolio without ever owning a single square foot of office space. He's under contract to buy a 78,000-square-foot, single-tenant building in Alpharetta, Georgia, leased entirely to Cornerstone Assurance Group, a regional insurer, as one of its claims-processing back-offices. The number that got him excited: $850,000 of in-place NOI against a $12,000,000 price. The number that's keeping him up at night: only three years left on the primary lease term.
- Property
- 78,000 SF single-tenant office building, Alpharetta, GA
- Purchase price
- $12,000,000
- In-place NOI
- $850,000/year
- Tenant
- Cornerstone Assurance Group (regional insurer) — claims-processing back-office
- Lease
- 9-year original term; 3 years remaining, plus two 5-year renewal options
- Buyer
- Tom Ricci — 14 years in industrial and multifamily acquisitions, first office deal