GBC Group is venturing into a commercial investment property, featuring a leasable building area of 100,000 square feet with an existing tenant paying a gross rent of $50 per square foot and estimated operating expenses at 50%. The lender is proposing a permanent loan with a loan-to-value ratio of 70%, amortized over 15 years at a 5% interest rate (MPF = 0.007881). Considering a vacancy rate of 5% and a cap rate of 5%, what would be the indicated Breakeven Occupancy Ratio (BOR)? Question 10 options: 133 % 115 % 88% 106%

GBC Group is venturing into a commercial investment property, featuring a leasable building area of 100,000 square feet with an existing tenant paying a gross rent of $50 per square foot and estimated operating expenses at 50%. The lender is proposing a permanent loan with a loan-to-value ratio of 70%, amortized over 15 years at a 5% interest rate (MPF = 0.007881). Considering a vacancy rate of 5% and a cap rate of 5%, what would be the indicated Breakeven Occupancy Ratio (BOR)? Question 10 options: 133 % 115 % 88% 106%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A commercial property has PGI of $5 million, expenses of 40% of EGI and the vacancy is underwritten at 10%. What values would the following parameters suggest for the property. 70% LTV with a rate of 4.5% and 360 month amortization schedule. Given a property value of $45 million, calculate PGIM, EGIM, Cap Rate, Cash on Cash return and DSSCR.
A property is expected to have NOI of $100,000 the first year. The NOI is expected to increase by 5 percent per year thereafter. The appraised value of the property is currently $1.25 million and the lender is willing to make a $1,125,000 participation loan with a contract interest rate of 5.5 percent. The loan will be amortized with monthly payments over a 20-year term. In addition to the regular mortgage payments, the lender will receive 50 percent of the NOI in excess of $100,000 each year until the loan is repaid. The lender also will receive 50 percent of any increase in the value of the property. The loan includes a substantial prepayment penalty for repayment before year 5, and the balance of the loan is due in year 10. (If the property has not been sold, the participation will be based on the appraised value of the property.) Assume that the appraiser would estimate the value in year 10 by dividing the NOI for year 11 by an 8 percent capitalization rate. Assume that another…
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