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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (34010)	4/1/2009 12:48:11 PM
From: Madharry	Read Replies (1) \| Respond to of 78783

yes but-dont you have to account for the value of the assumable mortgage somehow. also if i read the article correctly the implication is that the buyers put up $19.5 million to buy the property and just assumed the mortgage balance. doesnt sound like they bought any mezzanine debt.

To: peter michaelson who wrote (34010)	4/2/2009 1:02:15 AM
From: Spekulatius	2 Recommendations Read Replies (1) \| Respond to of 78783

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%.