RECA Commercial Unit2 Question with 100 % correct answers | Verified

(New supply) At the macro level, assessing new supply can be obtained through various sources that report building starts and units under construction. These sources include the following: (x4) - Non-residential building starts are compiled by Statistics Canada on a quarterly basis. Investment is measured in dollars and is split into the categories of Industrial, Institutional, and Commercial. Another measure of future supply is the number and percentage growth of development permits issued by a municipality. Many municipalities in Alberta release in-depth permitting data. For example, the City of Edmonton releases a monthly report identifying the number of permits issued and the construction value, cross-tabulated by permit type in the categories of commercial, industrial, institutional, residential, and miscellaneous. The more direct assessment of future supply is to research projects under construction and in the planning stages. This usually requires gathering information from the local city planning department and monitoring competitors in the market place. One other way to assess new supply is to investigate potential market expansion. However, this component is more difficult to find information on and fraught with more uncertainty. This uncertainty can be minimized by exploring the municipal plans to see if there is the potential for development that might be competitive to the subject property. In Alberta, this involves examining the Municipal Development Plan (MDP), Area Structure Plan (ASP), Neighbourhood Structure Plan (NSP), and land use maps. Although much of the potential development is uncertain, discussion with planning authorities and monitoring the local business news and business networks may allow the determination of future projects, depending on availability of financing or growth in market demand. 3 miscellaneous product types - hotel, leisure (e.g. golf courses), and special use (e.g. casinos). A census metropolitan area - (CMA) is formed by one or more adjacent municipalities centred on a population centre known as the core. A CMA must have a total population of at least 100,000 of which 50,000 or more must live in the core. A family-owned cupcake shop in Edmonton typically belongs to which economic sector? A- BasicB- Non-basic C- Micro D- Non-micro - Micro?? / No Non-basic A Joint Venture is similar to a partnership in that it is created when two or more entities enter into a contractual agreement together. However, a JV differs from a partnership in many ways, including the following (x6) - JV participants share specific income and expenses related to the project as opposed to sharing in the total profit or loss JV participants can claim their own expenses against their share of the project income JV participants can combine resources to create a larger operation, yet maintain ownership of their respective resources JV participants are usually only able to bind themselves contractually, as opposed to binding all participants A JV only exists for a specified period of time as it is typically created to meet a specific goal Liability for debts can be completely limited in a JV by having each entity state they will each pay for their own expenses and cannot make any agreements that bind the others A JV is not a legal entity from a tax perspective. If an investor is involved in a one-time transaction with a party that they do not intend to continue to do business with, a JV is usually the appropriate avenue for tax reasons. A lease abstract - A lease abstract is a document outlining the key economic and legal elements of a lease, including a description of the premises, the names of the parties to the agreement and their primary addresses, net rents and other items of value (e.g. tenant improvements, escalations), the leaseterm, and the key covenants and conditions with references to the relevant page, clause, or exhibits in the lease agreement. Although there is no substitute for a careful review of each lease agreement, the rent roll and lease abstracts should provide the key data needed to prepare a pro forma statement. A leveraged DCF analysis involves the following steps: (x3) - Forecasting the expected future cash flows after debt service Determining the equity discount rate Valuing the leveraged investment A market analysis can provide the user with information about the following: (x7) - Extent of demand for a particular product type Existing and expected supply of competing products Market rental rates, market selling prices, or cap rates Capacity of the market to absorb new product in a timely manner at an expected price Attributes of competing product Profile of users or investors in the market Effect on public infrastructure, tax revenue, and other fees