Carla has a tough job in that she is trying to lease space in a new building that hit the market at the wrong time. She did not have a say in the decision to develop the property yet her job couldbeinjeopardyifherbossattributespartoftheleasingproblemsatBaysidetoher abilitiesratherthan currentconditionsinthemarketplace .Inordertofullyprepareforher meeting with Bill Martin, Carla decides to go back in time and perform financial analysis of the proposed development immediately prior to the beginning of construction. She thinks that she can show that ground should never have been broken on this development, and hence it is notherskillsthataretheproblem.Carladecidestoperformandinterpret thefollowing calculations:

A simple comparison of total development costs (Exhibit 2) with estimated property value upon completion and stabilization, where a potential value range is estimated based on NOI in Exhibit 3 and a range of cap rates.

A front door analysis. She assumes a minimum DCR of 1.25 and a10% interest only loan.Pertheexistingsituation,thereisnoequityand noLTVrequirement. Shouldthe loan have been undertaken? Why or why not?