Question #$3$

The city recently finalized the entitlements for a for$-$sale

townhome development project you've been working on for

several years now. They agreed to a total of $125$ lots with an

average of $2,000SF$ of saleable space $($i$.$e$.,$ dwelling space$)$ each.

Your sources and uses statement for the project overall is as

follows:

$($Unless otherwise noted, $"$SF$"$ will refer to "Saleable SF$"$ when used

in this question$)$

Q$3($a$).$ What is your projected sale price per SF$?$

Group of answer choices

$$140$

$$88$

$$40$

$$180$

Q$3($b$).$ As an opening gambit in your negotiations, you propose a pro rata release price structure to your lender.$$

If they accepted, what would the release price be per SF$?$

Group of answer choices

$$88$

$$17$

$$140$

$$105$

Q$3($c$).$After picking themselves off the ground and wiping away their tears of laughter, your lender informs you that they were thinking of requiring paydowns equal to $85\%$ of net sale proceeds.

What release price per square foot is your lender requesting?

Group of answer choices

$$119$

$$140$

$$93$

$$126$

Q$3($e$).$ What is the lender$$s release percentage under their proposed release price structure $($rounded to the nearest percent$)?$

Group of answer choices

$56\%$

$63\%$

$74\%$

$85\%$

Q$3($f$).$ With few other options, you begrudgingly agree to the lender$$s request.$$

$...$And that$$s when they casually mention that they also require a minimum release price by applying a $1\mathrm{.}50$x multiple on the pro rata debt for each parcel being sold.

What minimum release price per SF would this second approach necessitate?

Group of answer choices

$$132$

$$119$

$$140$

$$88$

Q$3($g$).$What would the release percentage be based solely on the minimum release price in Q$3($f$)($rounded to the nearest percent$)?$

Group of answer choices

$67\%$

$150\%$

$100\%$

$80\%$

Q$3($i$).$ Briefly explain the rationale behind using both of the two accelerated release price methods $($from a lender$$s perspective$).$ What is the lender looking for from each?