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% ofNOI for management fees and reserves. The ten year treasury is 5.0% Calculate the NPV at 9% and the IRR of each financing strategy. Which financing option would you take: a) the first mortgage alone, b) the first mortgage plus the Mezzanine loan or c) the high LTV loan?- I. 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% ofNOI for management fees and reserves. The ten year treasury is 5.0% Calculate the NPV at 9% and the IRR of each financing strategy. Which financing option would you take: a) the first mortgage alone, b) the first mortgage plus the Mezzanine loan or c) the high LTV loan