Question
Ann purchased a property for $1,000,000. She bought the property at a 5.50% cap rate. She financed the purchase with an Interest Only senior loan
Ann purchased a property for $1,000,000. She bought the property at a 5.50% cap rate.
She financed the purchase with an Interest Only senior loan at 60% LTV at an interest rate of 4.00%.
She also decides to get subordinate / mezzanine financing for 20% of the capital stack (from 60%-80% LTV) at 7.00% interest only.
What is Anns return on equity (ROE) in year 1?
Ann purchased a property for $1,000,000. She bought the property at a 5.50% cap rate.
She financed the purchase with an Interest Only senior loan at 60% LTV at an interest rate of 4.00%.
She also decides to get subordinate / mezzanine financing for 20% of the capital stack (from 60%-80% LTV) at 7.00% interest only.
What is Anns return on equity (ROE) in year 1?
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Finance
Authors: Angelico Groppelli, Ehsan Nikbakht
7th Edition
1438010362, 9781438010366
