Problem I: CRE Mortgage Underwriting (50 points) First Floor Second Floor Annual rent increase Vacancy and collection losses Miscellaneous income Operating expenses (% EGI) CAPEX (% EGI) Holding period (years) Going-out cap rate on NCF at end of year 5 Sales expenses (e.g., broker commission) year 5 # Suites Rent/month (year 1) 2 $1,800 1 $3,600 5 $1,560 3% 10% 0 40% 5% 5 8.75% 4% 10% Discount rate (NCF) - beginning year 1 1. Find the value of the building at the beginning of year 1 and the implied going-in capitalization rate on NCF. (20 points) 2. Given the mortgage underwriting requirements below, what is the maximum loan amount a lender will approve if the loan is for 30 years at an annual interest rate of 8.25%? (20 points) a. Maximum LTV: 75% b. Minimum DSCR: 130% C. Minimum loan (debt) yield: 9.5% 3. Find the following for the approved loan: (10 points) a. Annual debt service b. LTV C. DSCR d. Loan yield