A property investor purchased a retail property in London with a market value of 250.0 million. The property is multi-tenanted. The purchase is financed with a 170.0 million 5-year loan with an annual debt service due of 9.0 million that includes a 3.4 million annual amortisation. The net average annual cash flow of the investor is 14.85 million. You are a rating analyst and are being asked to estimate the following: (10 marks) a) Estimate the Debt Service Coverage Ratio (DSCR). b) Based on your estimate of the DSCR and a diversity score of 5: i) Estimate the Tenant's Contribution (TC) to the DSCR. ii) What is the Term default risk rating equivalent? c) As a rating analyst you haircut the market value of the property by 10.0%. Based on this haircut: i) Estimate the Haircut property value and Haircut Loan-to-Value (LTV) ratio. ii) Estimate the Refinancing Haircut LTV ratio. Table 1 provides the mapping of different DSCRs to the Term default risk rating equivalent. Table 1 DSCR 1.90 1.65 1.43 1.24 1.07 Diversity score 5 5 5 5 5 Weighted average Term default risk rating Tenant Rating equivalent Ba3 Baa2 Ba3 Baa3 Ba3 Ba2 Ba3 Ba3 Ba3 Ba3 A property investor purchased a retail property in London with a market value of 250.0 million. The property is multi-tenanted. The purchase is financed with a 170.0 million 5-year loan with an annual debt service due of 9.0 million that includes a 3.4 million annual amortisation. The net average annual cash flow of the investor is 14.85 million. You are a rating analyst and are being asked to estimate the following: (10 marks) a) Estimate the Debt Service Coverage Ratio (DSCR). b) Based on your estimate of the DSCR and a diversity score of 5: i) Estimate the Tenant's Contribution (TC) to the DSCR. ii) What is the Term default risk rating equivalent? c) As a rating analyst you haircut the market value of the property by 10.0%. Based on this haircut: i) Estimate the Haircut property value and Haircut Loan-to-Value (LTV) ratio. ii) Estimate the Refinancing Haircut LTV ratio. Table 1 provides the mapping of different DSCRs to the Term default risk rating equivalent. Table 1 DSCR 1.90 1.65 1.43 1.24 1.07 Diversity score 5 5 5 5 5 Weighted average Term default risk rating Tenant Rating equivalent Ba3 Baa2 Ba3 Baa3 Ba3 Ba2 Ba3 Ba3 Ba3 Ba3