You are a Real Estate developer building a small office tower in Montreal. The construction will take one year and the units have all been pre-leased.
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?
Please make your calculations to the right of the data on this worksheet.
Upload your file onto Moodle by the deadline indicated on the course outline.
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
TOTAL			10,149,000
Winter 2022
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:
LTC			65.0%
Interest rate			5.5%
Stabilized NOI at opening			700,000
Comparable cap rates			5.0%
Mortgage loan:
Term (years)			5
Amortization period (years)			25
Mortgage rate			4.0%
Maximum LTV			75.0%
Minimum DSCR			1.25