REAL 4000: UGA-EXAM 3 Dietz
Questions Fully Solved.
In contrast to rent for residential units, rent for U.S. commercial properties is typically quoted as
a(n) - Answer annual cost per square foot.
In a neighborhood retail shopping center, a grocery store (e.g., Publix) often serves as a(n) -
Answer 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. - Answer 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. -
Answer 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. - Answer 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? - Answer 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. - Answer 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 - Answer 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. - Answer 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% - Answer 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? - Answer $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? - Answer $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? - Answer 1.25
NOI is considered the fundamental determinant of market value for income-producing
properties - Answer True
Questions Fully Solved.
In contrast to rent for residential units, rent for U.S. commercial properties is typically quoted as
a(n) - Answer annual cost per square foot.
In a neighborhood retail shopping center, a grocery store (e.g., Publix) often serves as a(n) -
Answer 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. - Answer 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. -
Answer 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. - Answer 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? - Answer 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. - Answer 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 - Answer 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. - Answer 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% - Answer 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? - Answer $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? - Answer $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? - Answer 1.25
NOI is considered the fundamental determinant of market value for income-producing
properties - Answer True
