Business Analysis: Sofia Lofts ULI Case
Adley--Activity Week 2
Sofia Lofts
3051 Broadway
San Diego, CA 92102
APN# 5396010800
Sofia Lofts is a mixed-use development consisting of a renovated three-bedroom historic home surrounded by two newly-constructed and elongated eight-unit apartment buildings, providing a large courtyard and community space. While the project type was originally designed to be exclusively multi-family, the home is currently occupied as office space by a technology company. The property is situated on a major thoroughfare in the Golden Hill section of San Diego, CA.
The following BOE and financial worksheet summaries have been created from the Sofia Lofts ULI case study (n.d.), augmented with reasonable assumptions, comparative analysis, and industry …show more content…
The lesser of debt coverage ratio (DCR) and loan-to-value (LTV) usually determines loan amount. Both metrics utilize NOI, whereby a DCR of 1.0 indicates net operating income equals debt service. Similarly, LTV is a multiple of a NOI/Cap Rate-determined value (or development cost). Lenders typically require a DCR of 1.2 and 80% LTV in the Sofia Lofts ULI case study (n.d., p. 11). The LTV calculation provided the lesser loan amount of $3,327,031, versus the DCR amount of $3,994,814. In personal finance, the general rule is to borrow only what you need and maybe less. However, in real estate development it appears having a cushion is always …show more content…
Conversely, even without all of the common metrics required (i.e. NOI, Cap Rate, DSR, LTV), the analysis has to start somewhere. The BOE Summary is that attempt, riddled with both reasonable and ridiculous assumptions, in order to get the ball rolling.
Reference:
Peca, S. (2009). Real Estate Development and Investment: A Comprehensive Approach. Hoboken, NJ: John Wiley & Sons, Inc.
Peiser, R. & Hamilton, D. (2012). Professional real estate development: The ULI guide to the business (Third ed.). Washington, D.C.: The Urban Land Institute.
Sofia Lofts. (n.d.). ULI Case Studies. Retrieved from http://casestudies.uli.org/sofia-lofts/
Schmitz, A. (2012, June 8). Professional Real Estate Development: Developer’s Tool Kit. The Urban Land Institute. Retrieved from
Sofia Lofts
3051 Broadway
San Diego, CA 92102
APN# 5396010800
Sofia Lofts is a mixed-use development consisting of a renovated three-bedroom historic home surrounded by two newly-constructed and elongated eight-unit apartment buildings, providing a large courtyard and community space. While the project type was originally designed to be exclusively multi-family, the home is currently occupied as office space by a technology company. The property is situated on a major thoroughfare in the Golden Hill section of San Diego, CA.
The following BOE and financial worksheet summaries have been created from the Sofia Lofts ULI case study (n.d.), augmented with reasonable assumptions, comparative analysis, and industry …show more content…
The lesser of debt coverage ratio (DCR) and loan-to-value (LTV) usually determines loan amount. Both metrics utilize NOI, whereby a DCR of 1.0 indicates net operating income equals debt service. Similarly, LTV is a multiple of a NOI/Cap Rate-determined value (or development cost). Lenders typically require a DCR of 1.2 and 80% LTV in the Sofia Lofts ULI case study (n.d., p. 11). The LTV calculation provided the lesser loan amount of $3,327,031, versus the DCR amount of $3,994,814. In personal finance, the general rule is to borrow only what you need and maybe less. However, in real estate development it appears having a cushion is always …show more content…
Conversely, even without all of the common metrics required (i.e. NOI, Cap Rate, DSR, LTV), the analysis has to start somewhere. The BOE Summary is that attempt, riddled with both reasonable and ridiculous assumptions, in order to get the ball rolling.
Reference:
Peca, S. (2009). Real Estate Development and Investment: A Comprehensive Approach. Hoboken, NJ: John Wiley & Sons, Inc.
Peiser, R. & Hamilton, D. (2012). Professional real estate development: The ULI guide to the business (Third ed.). Washington, D.C.: The Urban Land Institute.
Sofia Lofts. (n.d.). ULI Case Studies. Retrieved from http://casestudies.uli.org/sofia-lofts/
Schmitz, A. (2012, June 8). Professional Real Estate Development: Developer’s Tool Kit. The Urban Land Institute. Retrieved from