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QUIZ: Are You a New York Capital Markets Expert?

New York Capital Markets
New York Capital Markets
July 16, 2014 Meridian Capital

Are you a NY real estate news junky? Do you follow current trends and news stories? Do you consider yourself an NY investment expert? Take the quiz and test your skills, then share your results with your colleagues to see how well they do!

1

I am purchasing a property with little to no cash flow. What is the maximum loan-to-cost financing available?

10%
50%
63%
80%

YOU'RE CORRECT!

This may even stretch as far as 85% loan-to-cost and can be achieved by using a combination of senior and mezzanine debt. Many developers and value-add real estate investors have employed this less costly leverage scenario for note acquisitions, land acquisitions and repositioning deals in order to retain maximum control.

YOU'RE WRONG!

This may even stretch as far as 85% loan-to-cost and can be achieved by using a combination of senior and mezzanine debt. Many developers and value-add real estate investors have employed this less costly leverage scenario for note acquisitions, land acquisitions and repositioning deals in order to retain maximum control.

2

I am an experienced sponsor with $2 million to invest. What's the largest deal size I can buy?

$10 million
$40 million
$60 million
$80 million

YOU'RE CORRECT!

By acting as general partner (GP) equity and sourcing additional limited partner (LP) equity, and then applying leverage, a sponsor with $2 million in equity can take down a $80 million deal. The first step is structuring a 90/10 deal where your $2 million of GP equity represents 10% of the $20 million in total equity. The LP then provides the other $18 million (90%). At a 75% loan-to-value, the $20 million of total equity from the GP and LP can be leveraged, using senior debt, to fund an $80 million acquisition.

YOU'RE WRONG!

By acting as general partner (GP) equity and sourcing additional limited partner (LP) equity, and then applying leverage, a sponsor with $2 million in equity can take down a $80 million deal. The first step is structuring a 90/10 deal where your $2 million of GP equity represents 10% of the $20 million in total equity. The LP then provides the other $18 million (90%). At a 75% loan-to-value, the $20 million of total equity from the GP and LP can be leveraged, using senior debt, to fund an $80 million acquisition.

3

Which borough of New York City had the most closed loans, by loan count, in the first quarter of 2014?

Manhattan
Brooklyn
Queens
Bronx

YOU'RE CORRECT!

During the first quarter of 2014, 41% of all loans, by loan count, were written on properties located in Brooklyn. The average loan size was $2.5 million, indicative of the demand and inventory of smaller assets. New investors and funds remain focused on Brooklyn and are entering the market to capitalize on rising rents, continued gentrification and value arbitrage between Brooklyn and other boroughs.

YOU'RE WRONG!

During the first quarter of 2014, 41% of all loans, by loan count, were written on properties located in Brooklyn. The average loan size was $2.5 million, indicative of the demand and inventory of smaller assets. New investors and funds remain focused on Brooklyn and are entering the market to capitalize on rising rents, continued gentrification and value arbitrage between Brooklyn and other boroughs.

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