UGA REAL 4000 EXAM 3 Dietz |Questions and
Answers (Chapter 22, 18, 8, 16 NCQPs
included)
In contrast to rent for residential units, rent for U.S. commercial properties is
typically quoted as a(n) - -annual cost per square foot.
- In a neighborhood retail shopping center, a grocery store (e.g., Publix)
often serves as a(n) - -anchor tenant
- Lenders may request that property owners of rental properties include a
clause in their lease agreement that gives the lender the right to terminate
the lease and evict the tenant, even if the tenant has fulfilled all of its
responsibilities under the lease, in the case that the owner of the property
defaults on her mortgage. This part of the lease agreement is more
commonly referred to as a relocation option. - -false
- An office or retail landlord will often give a new tenant a certain amount of
________ allowance to cover the cost of refurbishing the rental space to meet
the needs of the tenant's business. - -tenant improvement
- A concept called "concession" means that an owner must provide the
tenant with uninterrupted use of the property without any interference from
any entity that may threaten to impose upon the tenant's leasehold interest
in the property. - -false
- In making single-asset real estate investment decisions, the first pass often
involves calculating a series of returns, ratios, and multipliers. Which of the
following is often cited as a limitation associated with this type of analysis? -
-They fail to incorporate cash flows beyond the first year of the analysis.
- T or F: BTCF is an unlevered cash flow, while NOI is a levered cash flow. - -
false
- Given the following information, calculate the cash down payment (equity)
required to purchase the specific property:
purchase price: $500,000;
loan amount: 75% of purchase price;
up-front financing costs: 2.5% of loan amount - -134,375
- Given the following information, calculate the debt coverage ratio for this
investment:
potential gross income: $120,000;
, vacancy rate: 9%;
net operating income: $60,000;
operating expenses: $51,300;
acquisition Price: $520,000;
debt service: $40,000. - -1.50
- Given the following information, calculate the going-in capitalization rate
for the specific property:
first-year NOI: $19,000;
acquisition price: $155,000;
equity investment: 20% - -12.26%
- If you look to rent a space in an office building that cost $25/sqft (full-
service) and has:
A total usable space for you (the tenant) of 2,000sqft
A total usable area in the building of 25,000sqft
A total common area in the building of 5,000sqft
What is the total rent you will pay in the first month? - -$5,000
- Assume the following for a floor in a multistory office building with a total
usable area of 20,000 sq ft; a total common area of 5,000 sq ft; a total
rentable area of 25,000 sq ft; and a tenant called "Highwoods Inc." that has a
usable area: 4,000 sq ft and an annual flat rental rate of $25 per sq ft.
How much total rent does Highwoods Inc pay per year at this property? - -
$125,000
- *Note, these are the same assumptions as the previous question*
Assume the following for a floor in a multistory office building with a total
usable area of 20,000 sq ft; a total common area of 5,000 sq ft; a total
rentable area of 25,000 sq ft; and a tenant called "Highwoods Inc." that has a
usable area: 4,000 sq ft and an annual flat rental rate of $25 per sq ft.
What is the load factor for this property? - -1.25
- NOI is considered the fundamental determinant of market value for
income-producing properties - -True
- The starting point in calculating net operating income is the total annual
income the property would produce assuming 100% occupancy and no
collection losses is called Effective Gross Income (EGI) - -False
- One complication that appraisers may face is the variety of lease types
that may be available for a particular property type. Which of the following
Answers (Chapter 22, 18, 8, 16 NCQPs
included)
In contrast to rent for residential units, rent for U.S. commercial properties is
typically quoted as a(n) - -annual cost per square foot.
- In a neighborhood retail shopping center, a grocery store (e.g., Publix)
often serves as a(n) - -anchor tenant
- Lenders may request that property owners of rental properties include a
clause in their lease agreement that gives the lender the right to terminate
the lease and evict the tenant, even if the tenant has fulfilled all of its
responsibilities under the lease, in the case that the owner of the property
defaults on her mortgage. This part of the lease agreement is more
commonly referred to as a relocation option. - -false
- An office or retail landlord will often give a new tenant a certain amount of
________ allowance to cover the cost of refurbishing the rental space to meet
the needs of the tenant's business. - -tenant improvement
- A concept called "concession" means that an owner must provide the
tenant with uninterrupted use of the property without any interference from
any entity that may threaten to impose upon the tenant's leasehold interest
in the property. - -false
- In making single-asset real estate investment decisions, the first pass often
involves calculating a series of returns, ratios, and multipliers. Which of the
following is often cited as a limitation associated with this type of analysis? -
-They fail to incorporate cash flows beyond the first year of the analysis.
- T or F: BTCF is an unlevered cash flow, while NOI is a levered cash flow. - -
false
- Given the following information, calculate the cash down payment (equity)
required to purchase the specific property:
purchase price: $500,000;
loan amount: 75% of purchase price;
up-front financing costs: 2.5% of loan amount - -134,375
- Given the following information, calculate the debt coverage ratio for this
investment:
potential gross income: $120,000;
, vacancy rate: 9%;
net operating income: $60,000;
operating expenses: $51,300;
acquisition Price: $520,000;
debt service: $40,000. - -1.50
- Given the following information, calculate the going-in capitalization rate
for the specific property:
first-year NOI: $19,000;
acquisition price: $155,000;
equity investment: 20% - -12.26%
- If you look to rent a space in an office building that cost $25/sqft (full-
service) and has:
A total usable space for you (the tenant) of 2,000sqft
A total usable area in the building of 25,000sqft
A total common area in the building of 5,000sqft
What is the total rent you will pay in the first month? - -$5,000
- Assume the following for a floor in a multistory office building with a total
usable area of 20,000 sq ft; a total common area of 5,000 sq ft; a total
rentable area of 25,000 sq ft; and a tenant called "Highwoods Inc." that has a
usable area: 4,000 sq ft and an annual flat rental rate of $25 per sq ft.
How much total rent does Highwoods Inc pay per year at this property? - -
$125,000
- *Note, these are the same assumptions as the previous question*
Assume the following for a floor in a multistory office building with a total
usable area of 20,000 sq ft; a total common area of 5,000 sq ft; a total
rentable area of 25,000 sq ft; and a tenant called "Highwoods Inc." that has a
usable area: 4,000 sq ft and an annual flat rental rate of $25 per sq ft.
What is the load factor for this property? - -1.25
- NOI is considered the fundamental determinant of market value for
income-producing properties - -True
- The starting point in calculating net operating income is the total annual
income the property would produce assuming 100% occupancy and no
collection losses is called Effective Gross Income (EGI) - -False
- One complication that appraisers may face is the variety of lease types
that may be available for a particular property type. Which of the following
