REM 500 Lecture Notes - Lecture 4: Earnings Before Interest And Taxes, Operating Expense, Capitalization Rate
30 Oct 2017
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Document Summary
Loan to cost ltc = loan/total costs: shows the proportion of the total costs that is covered by the development loan. Financial analysis: total project cost, project value at completion, compare. Project value: unit sales, property value = sum of all the expected unit sales prices, eg. Condos & single-family housing: rental projects, direct capitalization method, project value = noi/cap rate. Net operating income (noi: no financing, income taxes, depreciation, capital expenditures, measures one year of income when the property is fully complete and operational. Pgi total rent if fully occupied with no discounts for one year. Includes misc. income, % rent, expense reimbursements for triple-net tenants: measures on a unit basis for apartments, and a per square foot per year basis for the other property type. Vac - % of the pgi to account for vacancies, collection loss: relaxes the unrealistic expectation of full rent payment in the pgi, should be based on market conditions.
