UV_Levered_Setup_fa09

UV_Levered_Setup_fa09 - above information. Please use the...

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The University View Building: The Lender Meeting Your friend has told you that a loan broker who is a friend of the realtor is willing to provide financing if she proceeds with the purchase. The best loan option available is a fixed rate, 25 year, non-recourse first trust deed at 200 basis points (2%) over the current 10-year Treasury yield. With this loan, there is an origination fee of 2 points. She still assumes that she will hold the property for six years, and most likely sell at that point. The loan broker indicated that the loan amounts would be determined by the lower value of either a 70% loan to value (LTV) ratio, or a 1.3 debt service coverage ratio (DSCR). Given the risk inherent in debt financing, your leveraged discount rate should be about 15% Assignment: Extend the simple unleveraged pro-forma for the property based on the
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Unformatted text preview: above information. Please use the levered template posted on Blackboard as a guide. For NOI, please use the numbers found in the solution to the unlevered University View spreadsheet (given in the template). You will need to search online for the current 10-year Treasury rate to calculate your overall interest rate. The formulas you may need to complete this assignment: =PMT() for solving monthly payment (recall that your annual Debt Service obligation will be the =PMT()*12) =FV() for solving OLB =PV() for solving the loan amount where you are given a DSCR target =NPV() for solving the levered present value of the property =min() for determining which loan is chosen. This would go in the box labeled Actual Loan Amount Received =IRR() for calculating the levered project IRR....
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This note was uploaded on 06/08/2011 for the course BUAD 400x at USC.

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