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Use the information provided to answer the following question. A developer is considering developing a Class A office building. The developer s preliminary estimate of
Use the information provided to answer the following question.
A developer is considering developing a Class A office building. The developers preliminary estimate of value is $ Initial discussions with lenders indicate that loans are available for this property type at percent interest and year amortization periods with monthly payments. Lenders further have indicated they are using a DSCR ratio or a percent loan to value LTV ratio for Class A office buildings, whichever results in the lower loan amount. Lenders typically select the lower amount and then round the amount down to the nearest $
Recent sales for Class A office buildings have indicated that capitalization rates are approximately percent. The developers forecast of a stabilized NOI is $ which reflects a percent vacancy and $ in operating expenses.
The Annual Debt Service using debt service coverage ratio DSCR is $
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