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)