Mortgage Finance Exercise

Property NOI from a suburban office building is expected to be S8m per annum rising 3% per annum over the next 10 years. Assume 5% of NOI for management fees and reserves. Th e ten year treasury is 5.0% Fixed rate debt is available for an S0 basis point spread over the 10 year treasury with a 25 year amortization schedule. Minimum Debt Service Coverage is 1.2X. What is the maximum 1. amount of debt that you can support with this property