Level of current debt held on the property

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Consider a property purchased several years ago financed using a fixed rate, interest only CMBS loan at a 75 LTV that is maturing in the next year. Due to economic weakness, cap rates across the market have spiked up. How would an increase of 200 basis points in cap rates affect the valuation of the given property? Would the current environment make you consider the level of current debt held on the property, if any? Also, with the loan maturing soon, how is your equity position being affected by the change in cap rates with regards to "re-capping" or selling the property, particularly if the lender now requires a lower LTV? How about if cap rates decreased by 200 basis points on an economic recovery?

Reference no: EM133002840

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