Properties were acquired for $10,750,000 against a syndicated offering price of $13,161,798 and an appraised value of $6,980,000.
Valuation ladder
Acquisition price$10.75M
Offering price$13.16M+22.4%
Appraised value$6.98M53.0% of offering
Premium / discount to appraised value
88.57%
Cap rate spread & load
Upfront load (all-equity)6.00%equity = offering price
Load net of reserves7.40%
Acquisition Price
$10,750,000
Offering Price
$13,161,798
Appraised Value
$6,980,000
Upfront Load
$2,411,798
Load on Equity
6.00%
Load on Offering Price
6.00%
Acquisition Cap Rate
—
Syndicated Cap Rate
—
Premium / Discount
88.57%
Appraisal / Offering %
53.03%
Less Reserves %
3.60%
Strengths
- Acquisition cost established at $10,750,000 with zero acquisition fee
Concerns
- Offering price represents an 88.57% premium over appraised value ($6,980,000)