16655 Lecture Notes - Lecture 17: Net Present Value, Floating Interest Rate, Market Analysis
Document Summary
Project development: finance land acquisition with intent of developing it and selling it, highly fragmented, competitive, and local business, the developer is a facilitator of the development process. Developer challenges: national and local economies, competition among developers, changes in tenant or buyer"s preferences, project specific risk. Location (this is the single largest risk factor. Quantity and quality of services should be packaged. Development is impacted by the regulatory environment: application. If not in compliance, then appeals process city planning department input. Risks & feasibility: risk begins with land acquisition and peaks at completion, leasing or sales prior to completion, demand factors. Net cashflow schedule, project npv and irr. Based on the percentage of appraised value of completed development. Soft costs are normally financed by the developer. Architecture or engineering design, council approval, da and loan fees. Typical debt metric for real estate financing in australia. In multi-loan financing, a permanent loan must be in place first.
