In: Accounting
2. An office building has the following investment characteristics:
Year 1 NOI $2,100,000
Year 2 NOI $2,200,000
Year 3 NOI $2,300,000
Year 4 NOI $2,400,000
Initial (going in) cap rate 7%
Loan Principal $18,000,000
Interest rate 5%
Amortization 30 years
Exit cap rate 8%
Holding period 3 years
Solve for each of the following:
Purchase price
Loan to value ratio
Annual debt service
Debt service coverage ratio for year 1
Loan balance at the end of year 3
Equity (Levered) IRR