Amanda Rodriguez is an alternative investments analyst for a US investment management firm, Delphinus Brothers. Delphinus Chief Investment Officer, Michael Tang, has informed Rodriguez that he wants to reduce the amount invested in traditional asset classes and gain exposure to the real estate sector by acquiring commercial property in the United States. Rodriguez is to analyze potential commercial real estate investments for Delphinus Brothers. Selected data on three commercial real estate properties is presented in Exhibit 1. Exhibit 1 Selected Property Data Property #1 Property #2 Property #3 Property Type Downtown Office Building Grocery- Anchored Retail Center Multi- Family Building Location New York, NY Miami, FL Boston, MA Occupancy 90.00% 93.00% 95.00% Square Feet or Number of Units 100,000 sf 205,000 sf 300 units Gross Potential Rent $4,750,000 $1,800,000 $3,100,000 Expense Reimbursement Revenue $333,333 $426,248 $0 Other Income (includes % Rent) $560,000 $15,000 $45,000 Potential Gross Income $5,643,333 $2,241,248 $3,145,000 Vacancy Loss ($564,333) ($156,887) ($157,250) Effective Gross Income $5,079,000 $2,084,361 $2,987,750 Property Management Fees ($203,160) ($83,374) ($119,510) Other Operating Expenses ($2,100,000) ($342,874) ($1,175,000) Net Operating Income (NOI) $2,775,840 $1,658,113 $1,693,240 Rodriguez reviews the three properties with Tang, who indicates that he would like her to focus on Property #1 because of his prediction of robust job growth in New York City over the next ten years. To complete her analysis, Rodriquez assembles additional data on Property #1, which is presented in Exhibits 2, 3 and 4. As part of the review, Tang asks Rodriguez to evaluate financing alternatives to determine if it would be better to use debt financing or to make an all cash purchase. Tang directs Rodriguez to inquire about terms with Richmond Life Insurance Company, a publicly traded company, which is an active lender on commercial real estate property. Rodriquez obtains the following information from Richmond Life for a loan on Property #1: loan term of 5 years, interest rate of 5.75% interest- only, maximum loan to value of 75%, and minimum debt service coverage ratio of 1.5