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Real Estate Private Equity Funds (Chapter 19) Assume that you have acquired a commercial property...

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Real Estate Private Equity Funds (Chapter 19) Assume that you have acquired a commercial property that is consistently expected to generate $500,000 per year in NOI. Your investor-partner has an initial capital contribution of 90% of the required equity to the deal, while your initial capital contribution as the developer-partner is 10% of the required equity. The deal structure is 80% debt and 20% equity. The value of the property at the time of purchase was $6,000,000. The future market value of the property at the end of five years is expected to be $7,000,000. Assume that the loan on the property is at a 5% interest rate (compounded annually) with a 5 -year term with interest-only mortgage payments. Pari Passu (i.e., pro rata/proportion to the amount they invested): Assume that you share cash flow from operating the property (NOI less debt service) in proportion to the capital (equity) investment. Calculate the developer-partner's noncumulative pari passu distribution and the investor-partner's nencumulative paripassu distribution in Year 1. Edit View Insert Format Tools Table

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