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Strategies & Market Trends : Value Investing

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To: peter michaelson who wrote (34010)	4/2/2009 1:02:15 AM
From: Spekulatius	2 Recommendations Read Replies (1) of 78790

re Hancock Tower - the 6.7% cap rate does not include the financing subsidy. Zero hedge put's these at a 190M$ value. zerohedge.blogspot.com So if net cost of purchase is indeed 470M$ and rents are 44M$ the cap rate is 9.5%. one problem I see with this is that it does not account for the cost of junior mezzanine debt acquired. The fact that the seller owned the mezzanine debt was the reason why he was the only bidder, IMO. We do not know how much they paid for the mezzanine debt. If we assume they paid 60M$ (approx. 10c/$) to pay off all the debt the Cap rate would be closer to 8.8%.

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