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RE 250 CH22 & CH23

Terms in this set (40)

class C office
The two most important determinants of the classification of an office property are age and obsolescence. Which of the following classes includes office buildings that are older and reasonably maintained, but are below current standards for one or more reasons?
flex space.
Newer industrial parks have begun to specialize in providing space that can be configured to suit the diverse needs of various tenants. This type of industrial space is more commonly referred to as:
the time value of money.
The effective rent calculation is a common measure used to compare the true cost of one lease to another. While there are a number of limitations to this methodology, the effective rent calculation captures:
midrise apartment buildings
The majority of residential units in the U.S. are contained in multifamily structures, or apartment buildings that contain five or more housing units. Which of the following multifamily structures will range in height from four to nine stories and are typically found in both cities and suburbs?
class A office
Which of the following classes of the office sector includes office buildings that are considered the most prestigious in their tenancy, location, amenities and overall desirability?
reversion interest
The lease is a contract between a property owner and tenant that transfers exclusive use and possession of space to the tenant, but allows the owner to retake possession of the property at the expiration of the lease. Which type of interest allows the owner to retake possession at the end of a lease?
trade fixtures
To the extent the tenant is permitted to alter the leased premises, the lease should clearly state when this may be done, and under what circumstances. The lease must also be clear about the ownership of such improvements once completed. Which of the following terms refers to items of personal property that are attached to the real property, are paid for and installed by the tenant, and may be removed by the tenant at the termination of the lease?
right of first refusal.
A tenant who expects her business to grow may wish to have a clause included in her lease that grants her the choice to lease adjacent space as soon as it becomes available. This lease option is more commonly referred to as a:
gross leasable area
In retail property types, rents are quoted on the basis of which of the following?
The owner is responsible for operating expenses up to the expense stop; expenses above the expense stop become the responsibility of the tenant .
Which of the following statements best describes the owner's and tenant's responsibility for operating expenses when there is an expense stop clause in the lease contract?
flat rent
The choice of which method to use in constructing the contracted rental rate can be impacted by the term of the lease. With a shorter lease term, which of the following methods is most likely to be observed?
anchors
The large and generally well-known retailers who draw the majority of customers to a shopping center are more commonly referred to as:
subordination clause.
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:
both property taxes and insurance
In a net lease, the tenant is responsible for paying a clearly defined portion of the property's operating expenses. Based on your understanding of the standard definitions of "netness" in commercial leases, the tenant is responsible for which of the following in a net-net lease?
1.25
Given the following information, calculate the load factor for this office property:
Total usable area: 20,000 sq. ft.
Tenant's prorated share of common area: 5,000 sq. ft.
operating expense escalation clause
In some leases, the method used to share responsibility for operating expenses is a hybrid of the four basic lease types. For example, the inclusion of which of the following clauses calls for only increases in one or more operating expenses, relative to a base year, to become the responsibility of the tenant?
tenant improvement allowance.
When securing a new tenant for a commercial rental property, the owner of the property might incur an additional expense that amounts to the cost of refurbishing the rental space to meet the needs of the tenant's business. The allocation of money for this added expense is more commonly referred to as a(n):
freestanding retail outlet.
Retail establishments are found in a variety of forms, the simplest of which is: (Hint: fast-food franchise)
retail
The choice of which method to use in constructing the contracted rental rate can also be impacted by the type of property being leased. With which of the following property types would one most expect to see a percentage rent method used?
concession.
When the supply of space exceeds the demand, it is common for owners to provide the tenant with a period of free or perhaps reduced rent. This is commonly referred to as a(n):
1 to 2%.
As compensation for contributions in the design phase, the architect is often given a percentage of the construction cost. For simple garden apartment designs, the average compensation will be:
build-to-suit.
Suppose that a developer pre-leases space to a financially strong, national tenant such as Home Depot, without having yet built the structure in which they will be leasing space. This is more commonly referred to as a:
structural engineer
Which of the following types of engineers is responsible for determining the requisite skeleton to maintain the building's integrity?
costs of material for construction
The construction budget has six main components: land costs, hard costs, construction soft costs, marketing soft costs, developer's fee, and total construction financing costs. Which of the following would be considered a hard cost?
fast-track construction.
When a developer decides to break down the project design into sequential phases and begins construction before the last phases of the design are complete, this procedure is more commonly referred to as:
market risk
In each stage of the development process, the developer faces risks that can have a profound impact on the success of the particular project. Which of the following risks is of primary concern after the construction phase has been completed?
development and construction phase
Based on your understanding of the relation between risk and the phases of an income producing property's life, which phase would you expect to entail the highest risk?
design-build.
In more complex development projects, a developer may choose to combine the roles of the architect and general contractor into one in order to mitigate design-cost conflicts that otherwise must be negotiated when plans are revised. This arrangement is more commonly referred to as a:
financial feasibility
The second stage of the development process requires an analysis of the project's feasibility. The developer will typically begin this stage of the development process with which of the following types of analysis?
hard construction costs
In considering the main components of a construction budget, which costs would be expected to constitute the largest portion of a development project's expense?
general contractor
With a multitude of players involved in the development process, it is important to understand where they participate within the various stages of development. Which of the following individuals is the least likely to be involved in the design stage of development?
ownership shares in the development entity
Since banks seldom loan 100 percent of construction costs, developers often turn to mezzanine financing to obtain necessary funds. With mezzanine debt, which of the following entities is typically pledged as collateral to the lender?
subordination agreement.
As an alternative to gap financing, a developer may form a contract with a construction lender that ultimately makes the original construction lien inferior to the lien securing a subsequent loan. This contract is more commonly referred to as:
mechanical engineer
Which of the following types of engineers is responsible for providing specifications and design for the HVAC system and other building systems?
soils engineer
The expertise of several types of engineers must be coordinated by the architect in bringing together the final structure design. Which of the following types of engineers is responsible for specifications to achieve safety and stability for a structure's foundation?
hard costs
The construction budget has six main components: land costs, hard costs, construction soft costs, marketing soft costs, developer's fee, and total construction financing costs. Which of the following types of costs typically constitute the greatest proportion of the project's construction budget?
electrical engineer
Which of the following types of engineers is responsible for designing the power sources and distribution system?
mezzanine debt use is less expensive than normal construction financing.
When construction costs exceed the amount of the construction loan, a developer may seek to cover the gap using mezzanine financing. All of the following statements regarding mezzanine debt are true EXCEPT:
subcontractors.
Companies or individuals who provide specialized construction activities such as installation of heating, ventilating, and air conditioning systems during the construction process are more commonly referred to as:
expansion
While uncertainties involving the multitude of players and stages in the development process provide a great deal of risk, market cycles tend to compound these risks. Out of the four phases of a market cycle, which would be the most desirable point for a developer to enter the market?
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