As an analyst working for Bunhill Investment Ltd, you are asked to assess the viability of...

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As an analyst working for Bunhill Investment Ltd, you are asked to assess the viability of the purchase of The Geary Office Park, which is for sale with an asking price of 32,150,000. You have been presented with the partially completed cashflow below: Growth Vacancy PGI Vacancy & Collection EGI Opex Year 0 Net Operating Income Capital -32,150,000 Before Debt Net CF -32,150,000 Year 1 Year 2 Year 3 Year 4 1.00% 4.00% 1.00% 4.00% 2.00% 4.00% 2.00% 4.00% 2,444,100 2,468,541 2,493,226 -139,875 -98,742 -99,729 2,304,225 2,369,799 2,393,497 -305,513 -308,568 -311,653 1,998,713 2,061,232 2,081,844 1,998,713 2,061,232 2,081,844 Using a 4 year investment time horizon and assuming that income growth and vacancy continue at the rates indicated and that Opex continues at the same percentage rate as year 3, complete the currently blank before debt net cash flow for year 4. For the capital value at sale, you may assume the asset is sold at a yield of 5.75% based on the year 4 net operating income. Assuming initial market yields for this type of property in this location are 6.50%, is this asset at purchase, underpriced, overpriced or priced about right? (Ignore purchasers' costs and sales costs) Assuming you can obtain a bank loan from a senior lender, which has a full amortisation period of 25 years, an all in interest rate of 5.10% (which includes the credit margin), with a debt service cover ratio covenant in year 1 of 1.50x net operating income and no arrangement fees. Use the before debt net cashflow line for years 0 to 4 (which includes your answer from part a, for year 4) as your starting point to: produce a 4 year after debt net cash flow from year 0 to the end of year 4. calculate the mortgage constant, an initial loan to value (LTV) in year 0 and exit loan to value (LTV) at the end of year 4. Using the information provided and your completed ungeared and geared cashflows together with any further assumptions you deem necessary, calculate the following metrics for this property and discuss the implications of each of your solutions and who might be interested in each metric and why? Bank Exit Ratio Cash on Cash Return year 1 Breakeven Ratio in year 1 As an analyst working for Bunhill Investment Ltd, you are asked to assess the viability of the purchase of The Geary Office Park, which is for sale with an asking price of 32,150,000. You have been presented with the partially completed cashflow below: Growth Vacancy PGI Vacancy & Collection EGI Opex Year 0 Net Operating Income Capital -32,150,000 Before Debt Net CF -32,150,000 Year 1 Year 2 Year 3 Year 4 1.00% 4.00% 1.00% 4.00% 2.00% 4.00% 2.00% 4.00% 2,444,100 2,468,541 2,493,226 -139,875 -98,742 -99,729 2,304,225 2,369,799 2,393,497 -305,513 -308,568 -311,653 1,998,713 2,061,232 2,081,844 1,998,713 2,061,232 2,081,844 Using a 4 year investment time horizon and assuming that income growth and vacancy continue at the rates indicated and that Opex continues at the same percentage rate as year 3, complete the currently blank before debt net cash flow for year 4. For the capital value at sale, you may assume the asset is sold at a yield of 5.75% based on the year 4 net operating income. Assuming initial market yields for this type of property in this location are 6.50%, is this asset at purchase, underpriced, overpriced or priced about right? (Ignore purchasers' costs and sales costs) Assuming you can obtain a bank loan from a senior lender, which has a full amortisation period of 25 years, an all in interest rate of 5.10% (which includes the credit margin), with a debt service cover ratio covenant in year 1 of 1.50x net operating income and no arrangement fees. Use the before debt net cashflow line for years 0 to 4 (which includes your answer from part a, for year 4) as your starting point to: produce a 4 year after debt net cash flow from year 0 to the end of year 4. calculate the mortgage constant, an initial loan to value (LTV) in year 0 and exit loan to value (LTV) at the end of year 4. Using the information provided and your completed ungeared and geared cashflows together with any further assumptions you deem necessary, calculate the following metrics for this property and discuss the implications of each of your solutions and who might be interested in each metric and why? Bank Exit Ratio Cash on Cash Return year 1 Breakeven Ratio in year 1