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Homework answers / question archive / Part Two Question: 1

Part Two Question: 1

Real Estate

Part Two Question:

1. Calculate the Max Debt for this property.

2. Calculate the amount of equity needed for this property.

3. Calculation the Net Sale Proceeds to Owner.

Going In Cap Rate

7.25%

Terminal Cap Rate

6.75%

Loan Interest Rate

4.15%

Max loan to value for debt

60%

Required Debt Service Coverage

1.45

Discount Rate

12%

Loan Amortization Period

20 years

Loan Term

10 years

Loan Fees

2.3%

 

Part One Direction

Complete pro forma for NOI

Commercial Complex                     4 tenants      Property will be held for 5 years

Tenant

Lease Type

Size

Current Lease

Rate

Rent Growth

CAM

Bank

NNN

Outparcel

$80,000/yr

1.75%

 

 

 

 

 

 

 

 

$4.25/sq ft

Tanant revenue is expected to grow at 2.35% per year

Limited to $2.50 per sq foot

Retailer

Percentage

3,125

Plus 4.25% revenue

Year 1 Revenues are $315,000

Pro rata on sq feet

Office

 

5,000

$18.25/sq ft

CPI

Pro rata on sq feet

 

OP EX Category

Cost

Growth Rate

Utilities

$1.25 per sq ft

2.85% per year

Taxes

$9,627 per year

2.75% per year

Insurance

$0.75 per sq ft

2.0% per year

Maintenance

$1.25 per sq ft

3.15% per year

 

CPI

Rate

Years 1-3

1.75%

Years 4-7

2.25%

Years 8-10

3.25%

 

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