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Ann purchased a property for $1,000,000. She bought the property at a 7.00% cap rate. She finances the purchase with an Interest Only senior loan
Ann purchased a property for $1,000,000. She bought the property at a 7.00% cap rate.
She finances 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 8.00% interest only.
What is the weighted average cost of Ann's debt?
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