A stabilized, Class A office building with a sale price of $50,000,000 is being offered in a suburban area of a Tier 1 market. Suppose you are an analyst at a life insurance company lender and a mortgage banker has asked your firm to provide a credit-approved term sheet for a 70% LTV mortgage loan. You expect the following operating results during the first year of ownership: Potential Gross Income (PGI) Effective Gross Income (EGI) Net Operating Income (NOI) $5,850,000 $5,400,000 $3,250,000 We covered debt coverage ratio (DCR) in Ch. 18. However, at that time you did not yet know how to calculate a mortgage payment, and so it was given to you in exercises. Let's revisit DCR. If the interest rate on the proposed loan is 6%, what is the DCR assuming the loan features a 25-year amortization? Hint: Remember to annual the mortgage payment (Input your answer as a rational number rounded to the nearest hundredth, e.g., 1.35)

A stabilized, Class A office building with a sale price of $50,000,000 is being offered in a suburban area of a Tier 1 market. Suppose you are an analyst at a life insurance company lender and a mortgage banker has asked your firm to provide a credit-approved term sheet for a 70% LTV mortgage loan. You expect the following operating results during the first year of ownership: We covered debt coverage ratio (DCR) in Ch. 18. However, at that time you did not yet know how to calculate a mortgage payment, and so it was given to you in exercises. Let's revisit DCR. If the interest rate on the proposed loan is 6%, what is the DCR assuming the loan features a 25 -year amortization? Hint: Remember to annual the mortgage payment (Input your answer as a rational number rounded to the nearest hundredth, e.g., 1.35)