Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help don't COPY other chegg answers I will know because they are false. I will upvote Common information for the first block of numerical

image text in transcribed

image text in transcribed

image text in transcribed

please help don't COPY other chegg answers I will know because they are false. I will upvote

Common information for the first block of numerical questions in this HW. You want to purchase an office building in Brooklyn. The property contains 27,500 square feet of rentable space and is currently occupied by multiple tenants each with differing maturities on their respective leases. No lease is currently shorter than 1 year. The annual rent in the 1st year of ownership is $42.50/sqft. The vacancy rate is 6.5%. You expect to incur collection losses (from tenant default) on 1.5% of the square feet during your first year. The seller's asking price for the property is $7,000,000. The loan must satisfy both the minimum DSCR of 1.2 and maximum LTV of 70%. If you buy the property at the asking price of $7,000,000 using the biggest loan you can get (use the answer from the previous question), what will be your annual mortgage payment? ? State your answer as a number rounded to the nearest cent (e.g. if you get $13.57654, write 13.58) Common information for the first block of numerical questions in this HW. You want to purchase an office building in Brooklyn. The property contains 27,500 square feet of rentable space and is currently occupied by multiple tenants each with differing maturities on their respective leases. No lease is currently shorter than 1 year. The annual rent in the 1st year of ownership is $42.50/sqft. The vacancy rate is 6.5%. You expect to incur collection losses (from tenant default) on 1.5% of the square feet during your first year. If the annual IRR for this property is 8.5%, then based on the cap rate in the previous question, what does this imply for expected NOI growth rate for this property? Write your answer in percent rounded to two decimal points, but do not include the \% sign (e.g. if you get %13.57654, write 13.58 ) Common information for the first block of numerical questions in this HW. You want to purchase an office building in Brooklyn. The property contains 27,500 square feet of rentable space and is currently occupied by multiple tenants each with differing maturities on their respective leases. No lease is currently shorter than 1 year. The annual rent in the 1st year of ownership is $42.50/sqft. The vacancy rate is 6.5%. You expect to incur collection losses (from tenant default) on 1.5% of the square feet during your first year. Suppose you buy the property at the asking price of $7,000,000 and own it for exactly 1 year. You get the maximum loan you can get that satisfies both the minimum DSCR of 1.2 and maximum LTV of 70% (use your answer in the previous question) and finance the rest with your own money (downpayment that you found in the previous question). In two years, the NOI is expected to be the same. You sell the property at the end of year 1 , at a cap rate of 50 basis points below the cap rate at purchase (answer to the previous question) and you pay off the loan balance when you sell. Compute the IRR on this investment. Write your answer in percent, but do not include the \% sign (e.g. if you get 13.57654%, write 13.58 )

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions