Winthrop Park Development Case: Further Guidelines for Analysis Peter Palandjian's Presentation to the Investment isory Committee of cambridge Savings Bank (CSB) presented by CSB's Senior Loan Officer, Harry Jones and Fred (re Allen, Committee member.) The Committee's task after listening to Peter's presentation, was to evaluate it via their loan underwriting process and come to an 'accept/reject/inodify' conclusion about his two requests for: 1. $18.5 million construction loan 2. $13.8 million permanent loan on page 10 of the case, they set the following action items for A. Construct income and expense statement for each component B. Determine the Value of each component. They would examine themselves: of Palandjian's real estate development project for which the developers are seeking funding the veracity of their skepticisms as well. This include the quegtion about the wisdom in not placing all the retail on the first floor c. Aggregate the components into a composite (Total project) D. Compare the result with Paladians' projection and attempt to reconcile any discrepancy as a basis for their final judgment. You are to play the role of Harry Jones in conducting tasks A to D above. Write you report to incorporate the tasks above. Here are some suggestions / indications for your curious attention. While exhibit 8 presents a unified project cost, 104 Mt Auburn is not a new construction. decide to segregate the project into existing (104 Mt Auburn) and new construction/ renovation (retail project) and price them separately. Proceed as follows: Suppose in your evaluation, you 3. Undertake cash flow projection for the development over 2001-2005, assuming a sale of the development project in 2005 size Rent/sf 2001-2005 104 Mt Auburn Office Space Retail Space Sub-Total 25992 sf 5427 sf 31419 Other Components: Old Wing Grendel's Den Blue Victorian Retail Link Sub-Total 7218 sf 4820 sf 1275 sf 13313 sf New Retail/Residential Construction 3-Story Retail 4/7 Story Luxury Condo 13236 sf Sub-Total 16270 sf To be Sold 29506 sf TOTAL (excluding Condo) 61002 sf Add: Luxury Condo Units 13326 sf GRAND TOTAL (A1l Dev.) 74326 sf 4. Value the property as of 2001 with a going-in cap rate of 5. Also estimate the value of the property in 200 and 2004 6. Given a Debt Coverage Ratio requirement of 1.3x for 2001 7. Using this loan amount, extend your cash flow to BTCF for 6.5% and in 2005 with a going-out cap rate of 6% using comparables in exhibits 9,10, 13, 14). cash flow, how much loan would the property qualify for? 2001 2005 and calculate the value of equity VeE Assume selling expense in 2005 is 4.5% and equity required return of 15% Winthrop Park Development Case: Further Guidelines for Analysis Peter Palandjian's Presentation to the Investment isory Committee of cambridge Savings Bank (CSB) presented by CSB's Senior Loan Officer, Harry Jones and Fred (re Allen, Committee member.) The Committee's task after listening to Peter's presentation, was to evaluate it via their loan underwriting process and come to an 'accept/reject/inodify' conclusion about his two requests for: 1. $18.5 million construction loan 2. $13.8 million permanent loan on page 10 of the case, they set the following action items for A. Construct income and expense statement for each component B. Determine the Value of each component. They would examine themselves: of Palandjian's real estate development project for which the developers are seeking funding the veracity of their skepticisms as well. This include the quegtion about the wisdom in not placing all the retail on the first floor c. Aggregate the components into a composite (Total project) D. Compare the result with Paladians' projection and attempt to reconcile any discrepancy as a basis for their final judgment. You are to play the role of Harry Jones in conducting tasks A to D above. Write you report to incorporate the tasks above. Here are some suggestions / indications for your curious attention. While exhibit 8 presents a unified project cost, 104 Mt Auburn is not a new construction. decide to segregate the project into existing (104 Mt Auburn) and new construction/ renovation (retail project) and price them separately. Proceed as follows: Suppose in your evaluation, you 3. Undertake cash flow projection for the development over 2001-2005, assuming a sale of the development project in 2005 size Rent/sf 2001-2005 104 Mt Auburn Office Space Retail Space Sub-Total 25992 sf 5427 sf 31419 Other Components: Old Wing Grendel's Den Blue Victorian Retail Link Sub-Total 7218 sf 4820 sf 1275 sf 13313 sf New Retail/Residential Construction 3-Story Retail 4/7 Story Luxury Condo 13236 sf Sub-Total 16270 sf To be Sold 29506 sf TOTAL (excluding Condo) 61002 sf Add: Luxury Condo Units 13326 sf GRAND TOTAL (A1l Dev.) 74326 sf 4. Value the property as of 2001 with a going-in cap rate of 5. Also estimate the value of the property in 200 and 2004 6. Given a Debt Coverage Ratio requirement of 1.3x for 2001 7. Using this loan amount, extend your cash flow to BTCF for 6.5% and in 2005 with a going-out cap rate of 6% using comparables in exhibits 9,10, 13, 14). cash flow, how much loan would the property qualify for? 2001 2005 and calculate the value of equity VeE Assume selling expense in 2005 is 4.5% and equity required return of 15%