Use
the following information to answer the following questions:
The
asking price is 15,000,000
The
gross building area is 3,000 square meters
10
percent of the building is common area.
The
potential gross income is 700 per square meter of net leasable area.
The
vacancy rate is 10 percent.
The
operating expenses are around 800,000 a year.
1. What is the property generating in NOI?
2.
What would be the overall capitalization rate?
A
bank will loan 60 percent of the price at 5 percent rate amortized over 20
years.
3.
What is the equity dividend rate?
4.
What is the mortgage constant rate?
5.
Will the buyer have positive or negative leverage?
6.
If the new owner can reduce vacancy to 5% and reduce operating expenses to
600,000, what will the equity dividend rate be?
Please kindly find below the answers I came up with:
ReplyDelete1. What is the property generating in NOI?
901,000
2. What would be the overall capitalization rate?
6.0%
A bank will loan 60 percent of the price at 5 percent rate amortized over 20 years.
3. What is the equity dividend rate?
3.0%
4. What is the mortgage constant rate?
8.0%
5. Will the buyer have positive or negative leverage?
-0.63 (negative)
6. If the new owner can reduce vacancy to 5% and reduce operating expenses to 600,000, what will the equity dividend rate be?
7.9%
Samy