Given the following:

-Net Operating Income $900,000

-Cost of sale ( Broker + Atty) 6%

-Current loan balance $250,000

-Loan to value ratio 7.5%

-Capitalization Rate 9.5%

What is the cash available for the distribution in the equity partners under each of the possible scenarios?

a) The property is sold.

b) the property is refinanced.

Use the following formulas:

property is sold:

Value of the property (NOI/capitalization rate)

- Costs of sales

-

Gross proceeds

- debt repayment (payback mortgage loan)

- equity repayment

-

Funds avaliable for distribution

property is refinanced:

Value of the property (NOI/capitalization rate)

- LTV ratio

-

New loan

- debt repayment (payback mortgage loan)

- equity repayment

-

Funds avaliable for distribution

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