Single Tenant "Absolute" NNN valuation

Good Afternoon and Happy New Year All,

I am seeking some feedback and opinions regarding valuation discounting on single tenant triple net lease disposition/acquisition price on lease terms of less than 120 months.

For example, assume you have an (A) credit rated tenant with zero likelihood of default, occupying 20,000 square feet of space in a 50/50 commercial flex/office building with annual base rent of $300,000 (flat for simplicity sake) and you are placing a value on the property for the purpose of selling. Assume the market cap rate for this type of product is 8% for this property and tenant on a ten year deal, producing a simple valuation of $3,750,000 ($300,000/8%).

Now assume, rather than 120 months on the lease, you have only 100 months with no certainty of tenant renewal beyond the 100th month. Assume nothing else.

Please feel free to comment as to how anyone on the forum would approach the valuation under the 100 month scenario, again, assuming a $3,750,000 value with a full 10 year lease in hand.

Looking forward to comments - Thanks - GNS1G1

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Saturday, January 4, 2014 @3:00pm EST