George Mason University Mortgage Finance Commercial Real Estate Case Study
Description
- 1. Halsey asks you to perform an analysis of some commercial real estate. Your analysis includes selling the property at the end of the fifth year. The property’s NOI at the end of the sixth year is $80,000 and you estimate that NOI will grow at 2% per year thereafter. Halsey’s required return is 12 %. What value will you use for the reversion value of the property at the end of the fifth year?
- 2. 15 years ago, Adele had a $150,000, 30-year mortgage, with an interest rate of 7% with monthly payments. Today an investor is asking to buy the loan from the lender. If the current market interest rate is 5%, what is the maximum amount of money the investor will pay to buy the loan?
3. Eagle Retail leases 1,500 sf (square feet) of space at $12.00/ sf. Due to the virus, it will be vacant for one month. The retail space has expenses of $6.50/sf. The lease has an expense stop at $6.00/sf. Please report the annual NOI (net operating income) for this space.
