Although the appraised value is important, it is best that you forget the appraised value and focus on the Project Loan Amount. This is the way commercial lenders determine the loan amount. These are normally used by appraisers. Actually, the CAP rate represents the annualized yield to the investor based on the sales price of the project. Note how this compares with the ball park method used above.
All commercial projects are simply investments, like purchasing a certificate of deposit or a bond.
The value of the commercial real estate project is determined by the net income it produces for the owner. In other words, the commercial lender will look to the project to make the payments on the loan rather than considering the borrowers financial strength to make the payments. Lenders are very interested in the management company or the owners ability to manage the project because they want to make sure the project will continue to make the payments on the loan.