FNCE 721 Writing Example 1
Assumptions for Refinancing
We are confident in making the assumption that Publix will not go dark between now and
the expiry of its lease in December 2009. After analyzing the current competitive situation, and
especially the t
FNCE 721 Writing Example 2
Question #1 (Contractual Issues)
(A): Pulte structured the deal as companion contracts so that it would be an all or nothing
deal for them. Having a large, unified tract of land for residential development is contingent upon
Notes on BANKRUPTCY
Bankruptcy is the attempt to resolve the default between the creditor and the lender. The
lender has the right to foreclose on the property if the borrower breaches the terms of the
The lender can actually take control
Notes on CAP RATES
Cap Rate = Stabilized NOI/Value = 1/Multiple
o Cost approach (Cost now-deterioration(economic depreication) + land) and
comparable sales approach can also be used to determine property value.
o Difference in the cost and cap rate approa
Notes on CORPORATE REAL ESTATE DECISIONS
Determining how to find retail and warehouse space cheaply for a company, where to
locate, where to expand, how will the transportation system work?
Is it more profitable to buy, operate, pay interest payments for
Notes on DEBT AND MORTAGES
Loan to Value is the amount of the loan divided by the believed collateral value.
Interest Coverage Ratio is the NOI divided by the interest payments, to see how many
times the cash can cover the interest payments. (Same for deb
Notes on EXIT STRATEGIES
Developers exit to free-up capital for another investment, to alter your risk profile,
getting rid of inherited property, or like real estate private equity funds, leaving with the
SELLING-find a buyer, pay realtor fe
Notes on PRO FORMAS
Typically evaluated by predicted net operating income over 5-7 years.
Gross Rent-The rent that would be made with 100% occupancy. Net rent is then just
adjusted for vacancies.
o Percentage Rent and Ancillary Income are separate line it
FNCE 721 Questions
Answer whether each of the underlined statements is true, false, or uncertain.
Your grade depends entirely upon your explanation.
A real estate lender that wants some equity returns without
Notes on Risks and Opportunities
Operating Cost-Unexpected increases in operating costs could severely reduce net cash
Vacancy-If leasing to government agencies that have low lease obligations, vacancy