Alissa Stack has identified an industrial building to purchase to be leased to Jesse’s Shoes for light manufacturing. She has located a property that Jesse’s shoes will leased (triple-net) for $2,000,000 per year. She believes she can purchase property for a 6.25% cap rate. Answer the following

1.What is the price of the of the industrial building?

2.Allisa has 15% in equity. If she can borrower up to $17,600,000 in a first mortgage loan. How much capital does she need to raise in subordinate debt (mezzanine or preferred equity – debt structure) – dollar and percentage?

3.If cap rates shift to 7.0%, what percentage of the value of the building will be levered?

4.With the cap rate increasing to 7.0%, how much of the original equity has been lost – both dollar and percentage?

5.The minimum debt yield allowed by the subordinate debt lender is 7.0%. What was the original debt yield on the property?