10 Questions to Test Your Real Estate Knowledge

Questions are based on the following scenario.
Answers with explanations will be provided at the final session of CPOMP 2024.

A medical practice has 14 partners, 10 of whom will invest equally to construct a 40,000 SF medical office building (MOB) at a total cost of $21MM. The annual triple-net rent will be set to produce an 8.00% Return on Investment ($1.68MM). There is no annual rent escalator. The as-complete appraised value is $20MM. The doctors secure a construction-to-permanent loan with the following terms:

  • 12-month interest-only period followed by a 10-year term using a 25-year mortgage-style amortization
  • Fixed-rate of 5.50% (contingent upon the building being owner-occupied by the practice)
  • Personal joint and several guarantees of 125% pro-rata
  • Debt approved at lesser of 80% loan-to-value (LTV) or loan-to-cost (LTC)
  • Debt service coverage ratio of at least 1.20x post-distribution

Glossary of Terms (this will be a pop up when clicked with the glossary terms)

Quiz (no answers)

1. How much cash equity will the partners have to contribute to fund the project?
2. Once the building is completed and rent payments start, how much cash must the partners withhold at the end of the year to meet a debt service coverage ratio (DSCR) of at least 1.20x pre- and post-distribution?
Name(Required)

Location

924 N Magnolia Avenue
Suite 202 PMB 1419
Orlando, FL 32803

407-264-7253

info@cpomp.org

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