Assume that you are looking to purchase and finance a $5,461,540 stand-alone retail building with Walgreens as a tenant. The building is 14,820 square feet with a lot size of 1.16 acres. It was built in 2008. It is priced at $369 per square foot of building space, with an annual NOI of $355,000 and a 6.50% cap rate. It has over 10 years remaining on a Corporate NNN Lease. Store sales have been increasing over the past 3 years. Daily traffic counts exceed 15,000+ vehicles per day. Within a 5-mile radius the population is 16,275 with an average household income of $80,168. The property is located at 326 West Lincoln Avenue, Fergus Falls, MN 56537.

1. If you pay 100% of the asking price and obtain an 80% Loan-To-Value ratio loan on this property, calculate the monthly payments based on a 30-year amortization and a 7% interest rate on the loan. Multiply the monthly payment by 12. What is the annual mortgage payment for this loan?

2. Assume that are charged 5% on the loan amount as loan origination fees paid upfront at the beginning of the loan term. Assume that you pay off the loan at the end of 5 years. What is your effective cost of borrowing (%) on this loan?

3. Ignoring Question # 2, calculate the amount of prepayment penalty on Question # 1 assuming the loan is prepaid at the end of month 30 with a prepayment penalty rate of 4% on the outstanding mortgage balance.

4. What is the DSCR (Debt Service Coverage Ratio) in Year 1 of the loan in Question # 1?

5. What is the annual BTCF ($) in Year 1 of the loan in Question # 1?

6. What is the annual BTROE (%) in Year 1 of the loan in Question # 1?