real estate finance II Class 6A: DEVELOPMENT DCF PROFORMA GROUND-UP DEVELOPMENT Basic Construction Loan Proforma

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1 real estate finance II Class 6A: DEVELOPMENT DCF PROFORMA GROUND-UP DEVELOPMENT Basic Construction Loan Proforma

2 Semester Progression Session: Date Class 1: 9/12 Class 2: 9/19 Class 3: 9/26 Class 4: 10/3 Class 5: 10/10 Class 6: 10/17 Topics Course Overview Introduction to Real Estate Development Finance: Financial Feasibility of Development Projects. A. Development Proforma: Development Proforma components: Construction Budget B. Development Debt Overview: Types of loans, lender s underwriting. HW1 Basic Construction Loans: Construction lending, drawdowns, interest capitalization, interest reserve/carry. Application for construction loans for ground-up development & takeout upon completion. Introduction of Case Study 1 HW2: Proforma DCF Valuation Development Loans: Sourcing low-cost loans CRA loans. Valuation of completed development: RCA presentation: transaction prices for buildings and land. Development Loan Underwriting: Assessing loan qualification for Constr Case Study 1. Construction Loan Proforma: drawdowns, interest and operating reserves: Peiser Ch 4 case study. Sourcing low-cost loans TIF for multifamily. Cont. case Study 1: HW3. Construction Loan model (cont): Drawdowns & repayment. Review Interest & Operating Reserves. For sale development loans: Construction loans with pay-down through sales e.g. land subdivisions, condominiums, mixed-use. 10/24 ULI conference Class 7: MIDTERM (PART 1) EXAM 10/31 11/7 (optional) Presentation and beta testing of ASSESS: a new financial analysis tool Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

3 OBJECTIVES OF THIS CLASS DEVELOPMENT DCF PROFORMA for BASIC CONSTRUCTION LOAN Interest Reserve & Operating Reserve Construction Loan Amount Basic Construction Loan Drawdowns Repayment of Construction Loans: Permanent Loan take-out By Condominium sales Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

4 BRIEF EXAMPLE OF CONTRUCTION LOAN Commitment for $2,780,100 of future advances in a construction loan to cover $2,750,000 of actual construction costs over a three month period. 8% interest (nom.ann.), compounded monthly, beginning of month draws: Month New Draw Current Interest New Loan Balance 1 $500,000 $3, $503, $750,000 $8, $1,261, $1,500,000 $18, $2,780, and so on Construction schedule must estimate the amount and timing of the draws. The accumulated interest ( = $30,100 in this case) is a very real part of the total cost of construction. AKA Financing Cost. Typically a commitment fee is also required, up front (in cash). Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington /17/ 16 4

5 CONSTRUCTION LOAN - Excel Loan Commitment $ 2,780,100 Interest Rate 8.00% Monthly Rate 0.67% 31-Jan 28-Feb 31-Mar Construction Draws $ 500,000 $ 750,000 $ 1,500,000 Loan Balance 0 $ 500,000 $ 1,253,333 $ 2,761,689 Interest Cost $ 3,333 $ 8,356 $ 18,411 Ending Balance $ 503,333 $ 1,261,689 $ 2,780,100 TWO ISSUES: 1. WHAT IS THE EFFECTIVE INTEREST RATE? 2. HOW IS INTEREST ACTUALLY PAID? Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington /17/ 16 5

6 EFFECTIVE INTEREST RATE NOMINAL RATE: 10% Peiser Ch 4 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

7 EFFECTIVE INTEREST RATE CALCULATION Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

8 INTEREST RESERVE Interest on loan is charged when draws are made. But Developer has no cash flow to pay currently. So, interest is ACCRUED. BUT, Lender does not want to wait until project completion to be paid interest. So, Lender provides additional funds up front, of which some is set aside as the LOAN INTEREST RESERVE. THE INTEREST RESERVE IS CHARGED on outstanding loan balance. THEREFORE, CALCULATE AMOUNT OF THIS LOAN INTEREST RESERVE. 10/17/ Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

9 Estimate Constr. Interest Reserve Calculation Example: a) Loan amount $10,000,000 b) Acquisition Portion $4,000,000 c) Construction Portion $6,000,000 d) Construction duration 18 months e) Paydown duration 6-months f) Expected avg. interest 7% 10/17/ Session 2-9 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

10 CALC: Construction Interest Reserve I. At loan closing, LOAN AMOUNT: (b) x (d) x (f) = $4,000,000 x 18 months x 7%/12 months= $420,000 II. Construction Phase First year [(a) (b)] x (d) x (f) x 60% Second year [(a) (b)] x (d) x (f) x 40% = ($10,000,000-4,000,000) x 60% x 7%= $252,000 => For additional 6 months in Year 2 = $126,000 = ($10,000,000-4,000,000) x 40% x (6 months x 7%/12) => For 6 months Year 2 = $84,000 TOTAL = $462,000 III. From Construction Completion during Lease-up (a) x (f) x (e) x ½= $10,000,000 x 7%/12 months x 6 months x ½= $175,000 Total Interest Carry= I + II + III= $1,057,000 10/17/Session Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

11 EXCEL: Interest Reserve Calc Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

12 Int. Res. Calc: Acq. Loan for 18 mths vs $420,000 using 7% rate Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

13 Int. Res. Calc: Constr. Loan Year 1 Note: draw down over year approx 50% vs $252,000 using 7% rate Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

14 Int. Res. Calc: Constr. Loan Year 2 For new drawdowns in Year 2: Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

15 Int. Res. Calc: Constr. Loan Year 2 For existing drawdowns (of Year 1) in Year 2: Not appropriate since all draws done at start of Yr 2 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

16 Int. Res. Calc: Constr. Loan Year 2 For Total Interest Cost in Year 2: Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

17 Int. Res. Calc: Constr. Loan Yrs 1&2 Closer to proforma calc. vs $462,000 using 7% rate???? Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

18 CALC: Construction Interest Reserve I. At loan closing, LOAN AMOUNT: (b) x (d) x (f) = $4,000,000 x 18 months x 7%/12 months= $420,000 II. Construction Phase First year [(a) (b)] x (d) x (f) x 60% Second year [(a) (b)] x (d) x (f) x 40% = ($10,000,000-4,000,000) x 60% x 7%= $252,000 => For additional 6 months in Year 2 = $126,000 = ($10,000,000-4,000,000) x 40% x (6 months x 7%/12) => For 6 months Year 2 = $84,000 TOTAL = $462,000 III. From Construction Completion during Lease-up (a) x (f) x (e) x ½= $10,000,000 x 7%/12 months x 6 months x ½= $175,000 Total Interest Carry= I + II + III= $1,057,000 Or, $462,000 - $126,000 = $336,000 Or, $420,000+$336,000+$175,000 = $931,000 10/17/Session Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

19 Int. Res. Calc: Lease-up Period Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

20 Int. Res. Calc: Lease-up Period Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

21 TOT. Int. Reserve Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

22 WEST RIVER COMMONS Project Read Peiser pgs Ground-up Development of: Land acquired at $1.25M Improvements comprising: 57 Rental Apartment Units 3 For-sale Condominium Apartments Ground Floor Retail: 2 stores TOTAL TIME-FRAME: Development Period: 36 months including Construction Period of 12 months Operating Period 5-7 years Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

23 Remember our development budget Total Gross f Usable Number of Units Square Footage (Input Gross) 75,696 70,425 Percentage of Total Square Footage 100% Deve lopme nt Costs a Land $16.53 per gross ft 2 $ 1,251,500 Land Carry b 3.65% rate 12 months 27,418 Approval Fees $1.17 per gross ft 2 88,800 Environmental Remediation $1.46 per gross ft 2 110,574 Construction Hard Cost $98.77 per gross ft2 7,476,741 Soft Costs: Architecture & Engineering 5.06% of hard cost 378,000 Legal & Other Fees $228,910 estimate 228,910 Appraisal & Title $10,883 estimate 10,883 Marketing $1,225 per total units 73,500 Taxes during Construction $50,000 estimate 50,000 Insurance during Construction $19,800 estimate 19,800 Total Soft Costs 761,093 Contingency 2.82% of hard cost 210,825 T ota l Deve lopme nt Cost be fore Inte re st a nd Ope ra ting Rese rve $ 9,926,951 23

24 Loan Principal + Interest (estimated) SEE EXAMPLE, PEISER TEXTBOOK CHAPTER 4 24

25 PLUS, Operating Reserve (for interest) until positive net cash flow achieved Total Project Cost before Operating Reserve $ 10,466,505 Estimate of Operating Reserve d Gross Potential Rent (monthly) $74,360 Lease-Up Period (months until stabilization) Average Occupancy during Lease-Up 6.0 =(30%+100%)/2 Avg Occupancy First half Year 1 Average Occupancy during Lease-Up 30% 65% MARKET INPUT CALCULATE Estimated Rent during Lease-Up =monthly rent*months*occupancy =$74,360*6*65% Estimated Op. Expense during Lease-Up 290,003 Estimated Op. =annual Op Exp* lease-up/12 Estimated Op. 159,649 NOI during Lease-Up 130,354 Construction Interest during Lease-Up =loan bal*rate/12*lease-up months Construction Interest during Lease-Up 415,041 First-Year Operating Reserve Required =Lease-up Constr Interest - Lease-up NOI First-Year Operating Reserve Required 284,687 Total Project Costs $ 10,751,191 25

26 TOTAL DEVELOPMENT COSTS Development Costs a Land $16.53 per gross ft 2 $ 1,251,500 Land Carry b 3.65% rate 12 months 27,418 Approval Fees $1.17 per gross ft 2 88,800 Environmental Remediation $1.46 per gross ft 2 110,574 Construction Hard Cost $98.77 per gross ft2 7,476,741 Total Soft Costs 761,093 Contingency 2.82% of hard cost 210,825 Total Development Cost before Interest and Operating Reserve $ 9,926,951 Estimate of Construction Interest c Construction Loan $6,917,349 Construction Interest 12.00% Construction Period (months) 12 Average Draw 65.00% Estimated Construction Loan Interest 539,553 Total Project Cost before Operating Reserve $ 10,466,505 Estimate of Operating Reserve d Gross Potential Rent (monthly) $74,360 Lease-Up Period (months until stabilization) 6.0 Average Occupancy during Lease-Up 65% Estimated Rent during Lease-Up 290,003 Estimated Op. Expenses during Lease-Up 159,649 NOI during Lease-Up 130,354 Construction Interest during Lease-Up 415,041 First-Year Operating Reserve Required 284,687 Total Project Costs $ 10,751,191 10/17/ Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

27 1&2 DEVELOPMENT FUNDING Land & Predevelopment Soft Costs Hard & Soft Costs during Construction Construction Budget TOTAL DEVELOPMENT BUDGET Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

28 Predevelopment: Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

29 TOTAL DEVELOPMENT BUDGET Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

30 Costs over Development Period Land & Predevelopment Costs Development Costs Land Land Carry Approval Fees Environmental Remediation Construction Hard Cost Soft Costs: Architecture & Engineering Legal Appraisal & Title Marketing Taxes during Construction Insurance during Construction TOTAL Contingency Development Subsidies Total Development Cost, Excluding Construction Loan Interest & Operating Reserves Total Time Zero Year 1 Total Year 2 Total 1,251,500 1,251, ,418 $27, ,800 $88, ,574 $110,574 0 Costs 0 7,476,741 7,476,741 0 Construction 378, , , , ,883 10, ,500 36,750 36,750 50,000 25,000 25,000 19,800 9,900 9, , ,650 71, , , ,413 (2,476,984) (2,476,984) - 7,449,968 $1,718,085 $5,554,820 $177,063 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

31 DEVELOPMENT COSTS quarterly Construction Costs Development Costs Land Land Carry Approval Fees Environmental Remediation Construction Hard Cost Soft Costs: Architecture & Engineering Legal Appraisal & Title Marketing Taxes during Construction Insurance during Construction TOTAL Contingency Development Subsidies Total Time Zero 1,251,500 1,251,500 27,418 $27,418 88,800 $88, ,574 $110,574 7,476, , , ,910 10,883 10,883 73,500 50,000 19, , ,825 (2,476,984) Development Lease-Up Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8 $1,869,185 $1,869,185 $1,869,185 $1,869, ,000 Post-construction Soft Costs Lease-up Phase 9,188 9,188 9,188 9,188 9,188 9,188 9,188 9,188 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 26,353 26,353 26,353 26,353 26,353 26,353 26,353 26,353 (619,246) (619,246) (619,246) (619,246) Total Dev Cost Excl. Constr Loan Interest & Reserves 7,449,968 $1,718,085 $1,672,205 $1,294,205 $1,294,205 $1,294,205 $44,266 $44,266 $44,266 $44,266 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

32 DEBT PROGRESSION CONSTRUCTION LOAN Drawdowns Yr 1 Partially Repay CONST. LOAN from CONDO SALES + take new PERM LOAN for rental property NOI amortizes PERM LOAN Yr 4-9 Drawdowns Yr 2 NOI amortizes PERM LOAN Yr 3 RENTAL PROPERTY Sale repays PERM LOAN Yr 10 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

33 Estimate TOTAL DEVELOPMENT COSTS Development Costs a Land $16.53 per gross ft 2 $ 1,251,500 Land Carry b 3.65% rate 12 months 27,418 Approval Fees $1.17 per gross ft 2 88,800 Environmental Remediation $1.46 per gross ft 2 110,574 Construction Hard Cost $98.77 per gross ft2 7,476,741 Total Soft Costs 761,093 Contingency 2.82% of hard cost 210,825 Total Development Cost before Interest and Operating Reserve & Subsidies $ 9,926,951 Estimate of Construction Interest c Construction Loan $6,917,349 Construction Interest 12.00% Construction Period (months) 12 Average Draw 65.00% Estimated Construction Loan Interest 539,553 Total Project Cost before Operating Reserve $ 10,466,505 Estimate of Operating Reserve d Gross Potential Rent (monthly) $74,360 Lease-Up Period (months until stabilization) 6.0 Average Occupancy during Lease-Up 65% Estimated Rent during Lease-Up 290,003 Estimated Op. Expenses during Lease-Up 159,649 NOI during Lease-Up 130,354 Construction Interest during Lease-Up 415,041 First-Year Operating Reserve Required 284,687 Total Project Costs $ 10,751,191 10/17/ Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

34 TOTAL DEVELOPMENT COSTS Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

35 3. CONSTRUCTION LOAN 1. Determine Construction Loan Amount Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

36 CONSTRUCTION LOAN AMOUNT DESIRED: TOTAL CONSTRUCTION COST less AVAILABLE EQUITY: $7.87M less $1.11M = $6.76M BUT, SOME EQUITY ALREADY USED IN: LAND ACQUISITION $1.25M DEVELOPMENT COSTS pre-construction $225,000 LENDER PROVIDES: CONSTRUCTION LOAN AMOUNT BASED ON CONDITIONS Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

37 LENDER S CONDITIONS DCR? No, interest accrues Debt Yield? No, short-term loan LOAN-TO-COST based on Construction Budget (75%) SALES REVENUES. or TAKE-OUT PERMANENT LOAN FOR REPAYMENT OF LOAN AMOUNT + ACCR. INTEREST Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

38 DETERMINE PERMANENT LOAN LENDER S CONDITIONS? TYPICAL LOAN CONDITIONS FOR INCOME-PRODUCING PROPERTY: 1. LTV 2. DCR 3. DEBT YIELD 4. POSITIVE CASH FLOW during Operating Phase Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

39 Operational DCF Proforma INPUTS: Rents: Multifamily & Retail Sales Revenues of Condos Market Analysis Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

40 RENTAL REVENUES Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

41 SALES REVENUES & Net Proceeds Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

42 REVS + EXPENSES = Proforma NOI Revenue Factor Annual Revenue/Cost Gross Potential Revenue a $892,317 Less: Vacancy 5.00% ($44,616) Less: Bad Debt 0.50% ($4,462) Effective Gross Revenue $843,240 Expenses b Property Management 3.00% of Effective Gross Revenue $25,297 Controllable Costs c $ 1,950 per unit $103,350 Real Estate Taxes 1.36% of estimated total project cost $135,000 Insurance $400 per unit $21,200 Utilities $500 per unit $26,500 Replacement Reserve $150 per unit $7,950 Total Expenses $319,297 Net Operating Income $523,942 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

43 CALCULATE MAX. LOAN AMOUNT Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

44 Calculate Loan on Condos Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

45 Textbook ref: Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

46 ANNUAL OPERATING CASH FLOW POSITIVE BTCF Note: No Cap Ex. here Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

47 TOTAL MORTGAGE FINANCING Financing Assumptions Total Apartments Condominiums Equity $1,356,858 1,222, ,874 Mortgage Principal a 6,917,349 6,234, ,500 Interest Rate 5.75% 12.00% Amortization 30 N/A Annual Debt Service $482,587 $436,619 $45,968 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

48 CONSTRUCTION LOAN AMOUNT LENDER S CONDITIONS Total Development costs: $8.27M LTC of 85%: $7M PERMANENT LOAN TAKE-OUT (incl. Condo mort): $6.9M THEREFORE, MAX CONSTRUCTION LOAN BALANCE: $6.9M Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

49 CONSTRUCTION LOAN DRAWS Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

50 CONSTR. LOAN INTEREST CALCS Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

51 CONSTR. LOAN INTEREST DETAILS Construction Loan Account and Interest Calculation Beginning Balance Loan Draw & Releases Construction Draw Initial Request Construction Releases on Condo sales Operating Deficit Trial Balance Ending Balance before Interest Average Loan Balance Before Interest Total Construction Loan Interest calc: Total Construction Loan Interest (12%) Interest Accrued during Construction Period Interest Accrued during Operating Period Interest Paid from Operations Interest Paid from Condominium Sales Total Time Zero Year 1 Total Year 2 Total 366,645 5,588,891 6,093, ,227 5,554, ,063 (682,500) 0 (682,500) ,026, ,227 5,479,646 6,026, ,227 5,479,646 6,026, ,613 2,923,145 5,807,718 =avg.bal*rate/4 =avg bal*rate (do quarterly) 1,101,145 5, , , ,313 5, , , ,833 (390,095) 0 0 (390,095) (45,968) 0 (45,968) 0 Ending Balance 6,691, ,645 5,588,891 6,075,692 Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

52 The classical construction finance structure: Phase: Construction Lease-Up Stabilized Operation Financing: C.O. Construction Loan Bridge or Mini-perm Loan Permanent Loan Source: Commercial Bank Commercial Bank Insurance Co. Via Mort Broker or Mortgage Banker: Life Insurance Co. Pension Fund Conduit ècmbs Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington /17/ 16 52

53 DCF PROFORMA STEPS 1. DEVELOPMENT FUNDING: Land Acquisition Many Predevelopment Soft Costs 2. CONSTRUCTION BUDGET 3. CONSTRUCTION FINANCING VALUATION + PERMANENT LOAN SIZING 4. EQUITY RETURNS Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington

54 LESSONS OF THIS CLASS BASIC CONSTRUCTION LOAN PERMANENT LOAN AMOUNT CONSTRUCTION LOAN AMOUNT INTEREST RESERVE OPERATING RESERVE DRAWDOWNS Copyright : Richard Peiser & David Hamilton Professional Real Estate Development 3rd Ed;, Geltner/ Miller/Clayton/ Eichholtz Real Estate Finance 2007;Brueggeman/Fisher, Real Estate Finance & Investments 2011, modified by Dr P Derrington /17/ 16 54