The stabilized NOI at opening will be $700,000 and comparable cap rates are 5%. The construction lender is willing to finance the project based on the terms and conditions shown below.

a. Based on the budget, calculate the oustanding construction loan at the end of the year.

b. How much equity will you be able to withdraw at the end of the construction period if you take-out a mortgage with the terms and conditions shown below?

\begin{tabular}{lr|} \hline Development Budget: & \\ Land & 2.000.000 \\ Site preparation & 250.000 \\ Hard costs & 7.000.000 \\ Professional fees & 300.000 \\ Permits & 125.000 \\ Project management & 150.000 \\ Leasing commissions & 16.000 \\ Other soft costs & 195.000 \\ & 10.036.000 \\ Interest & 113.000 \\ \hline TOTAL & 10.149.000 \\ \hline \end{tabular} Cash flow: The land is purchased and site preparation occur in the first month. The soft cost (excluding interest) are evenly distributed over the 12 month period. The hard costs are evenly distibuted over month 3 to month 12. All cash flows occur at the end of the month. Construction loan: \begin{tabular}{l|r|} \hline Stabilized NOI at opening & 700.000 \\ Comparable cap rates & 5,0% \\ \hline & \\ \hline & \\ \hline Mortgage loan: & \\ & \\ Term (years) & 5 \\ Amortization period (years) & 25 \\ Mortgage rate & 4,0% \\ Maximum LTV & 75,0% \\ Minimum DSCR & 1,25 \\ \hline \end{tabular} \begin{tabular}{lr|} \hline Development Budget: & \\ Land & 2.000.000 \\ Site preparation & 250.000 \\ Hard costs & 7.000.000 \\ Professional fees & 300.000 \\ Permits & 125.000 \\ Project management & 150.000 \\ Leasing commissions & 16.000 \\ Other soft costs & 195.000 \\ & 10.036.000 \\ Interest & 113.000 \\ \hline TOTAL & 10.149.000 \\ \hline \end{tabular} Cash flow: The land is purchased and site preparation occur in the first month. The soft cost (excluding interest) are evenly distributed over the 12 month period. The hard costs are evenly distibuted over month 3 to month 12. All cash flows occur at the end of the month. Construction loan: \begin{tabular}{l|r|} \hline Stabilized NOI at opening & 700.000 \\ Comparable cap rates & 5,0% \\ \hline & \\ \hline & \\ \hline Mortgage loan: & \\ & \\ Term (years) & 5 \\ Amortization period (years) & 25 \\ Mortgage rate & 4,0% \\ Maximum LTV & 75,0% \\ Minimum DSCR & 1,25 \\ \hline \end{tabular}