Jacksonville, Florida

Average cap rate: 7.67

Population: 1,637,666

Median Rate: 1,783

YoY% Change: 8.14%

MoM% Change: 0.89%

Assume Building: 100 units with each room priced at the median after inflation has been factored in

Fill rate 90%

1 year to complete the building

Assume Mortgage: credit rating A

Loan worth 80% of the value of the building

Cover 20% via equity

10-20 year mortgage from bank

Payments made monthly

Assume Debt via bond issue: able to raise

Credit rating BB

Payments semiannually

10% commission on bond issue

The Bond = 5% coupon rate

Find the value of the building project after completion

Find the value of the mortgage, the size of mortgage payments

Find the maximum amount you can raise via bond issue (coupon payments) -

you can issue another bond to cover your principal payment when it comes due

Find/Calculate the four different budgets that come from this project

Calculate what the value of the building must be at the end of year 5 if you want a return

On equity of 8% annually.

1. What is your methodology, ie, which equations did you use for each asset and why? Consider which asset is a perpetuity and which one is an annuity. 2. What data sets did you use and when did you access it keep in mind this is very important when it comes to due diligence. 3. What impact did time have the size of the mortgage payments. 4. Of the following factors, how do they impact the price of a bond a. Required rate of return b. Coupon Rate 5. Was your bond issue considered to be sold at a discount or at a premium? 6. Why do you think, in this project that I had the mortgage rated higher than the junior unsecured bond? 7. Also look at the treasure yield curve, what was the shape of the curve and what could it possibly mean for the economic outlook? 8. More specifically why would a bond with a shorter time to maturity be considered less risky and in what situation is it not.