Worksheet Debt Worksheet (Please show all work)

Note: Questions may build on each other.

Question 1 (2 pt)

Alissa Stack has identified an industrial building to purchase to be leased to Jesses Shoes for light manufacturing. She has located a property that Jesses shoes will leased (triple-net) for $2,000,000 per year. She believe she can purchase property for a 6.25% cap rate. What is the price of the of the industrial building?

Question 2 (2 pts)

Allisa has 15% in equity. If she can borrower up to $17,600,000 in a first mortgage loan. How much capital does she need to raise in subordinate debt (mezzanine or preferred equity debt structure) dollar and percentage?

Question 3 (2 pts)

If cap rates shift to 7.0%, what percentage of the value of the building will be levered?

Question 4 (2 pts)

With the cap rate increasing to 7.0%, how much of the original equity has been lost both dollar and percentage?

Question 5 (2 pts)

The minimum debt yield allowed by the subordinate debt lender is 7.0%. What was the original debt yieldon the property?