BMC is considering the investment of an R&D property with 125,000 s.f. of leasable space (net rentable area). The total cost of the investment is $9,250,000. Currently, the market rent of R&D space is $11.00/s.f. Vacancy and credit loss are estimated to be 8.0% of the gross potential income. After tenant reimbursement, the landlord will be responsible for $4.5/s.f. of operating expenses. A mortgage lender is willing to provide debt financing of up to 70% of the purchase price (LTV), assuming that the property meets the required DCR of 1.30. The lender will charge an interest rate of 6.00% and the loan will be amortized over 25 years.

What is the financial feasibility of this investment?

Answer rating: 100% (QA)

To determine the financial feasibility of this investment we need to calculate the potential rental ... View the full answer