HW Quiz 4 Flashcards
Which of the following are not a typical part of the negotiation or projection of reimbursable expenses?
Insurance
Utilities
Credit loss
Property taxes
CAM
Developer overhead cost, including the salary of the developer and his accounting staff
Vacancy cost
Credit loss
Developer overhead cost, including the salary of the developer and his accounting staff
Vacancy cost
Assume you are the owner of Kathy Center, a 114,503-leasable square foot strip shopping center in Bethesda, Maryland, which you purchased for $48.5 million. The average annual base rent is $18 per square foot. The vacancy rate of Kathy Center is 10%. The average gross potential rental revenue (GPR) is
$2,061,054
Total Operating Income ___ Total Operating Expenses ___ Net Operating Income
-, =
How does gross potential rental revenue (GPR) differ from Net Base Rental Revenue (NRR)?
GPR = base rent * total leasable square feet
GPR - Vacancy = Net Rental Revenue
TRUE or FALSE: Capital expenditures reflect a property’s actual wear and tear, for which you must spend money to keep your properties in competitive condition.
True
Total Operating Income ___ Total Operating Expenses ___ Net Operating Income ___ Tenant Improvement ___ Leasing Commissions ___ Capital Expenditures ___ Unlevered Cash Flow
-, =, -, -, -, =
Select all of the true statements:
Management fees for managing a building are only incurred if a third-party manager is hired
Gross potential revenue does not include vacancy
If a tenant does not pay their portion of the water CAM, the utility company will penalize that tenant
An increase in Cap-Ex will decrease NOI
None of the Options
Gross potential revenue does not include vacancy
TRUE or FALSE: Depreciation is essentially a fiction, created by Congress to benefit taxpayers by it serving as an income tax shield when calculating your income tax liability.
True
TRUE or FALSE: Unlevered cash flow is sometimes referred to as adjusted NOI, where the adjustment referenced is the deduction of normal reserves.
True
Gross Potential Rental Revenue ___ Vacancy ___ Net Base Rental Revenue ___ Percentage Rents ___ Total Rental Income ___ CAM Billings Expense Reimbursement ____ Property Tax Billings Expense Reimbursement + Ancillary Income ___ Gross Income ___ Credit Loss ___ Total Operating Income
-, =, +, =, +, +, =, -, =
How are depreciation schedules determined?
Through rigorous scientific testing
They are based off of capital expenditures
By monkeys with typewriters!
Determined by Congress
None of the Options
Determined by Congress
Which of the following statements is true:
Principal payments are tax-deductible
Increased leverage guarantees superior equity returns.
Interest payments are tax-deductible
None of the Options
Interest payments are tax-deductible
The advantages of increasing the TI allowance rather than offering lower base rent are (select all that apply):
TIs force tenants to spend money on your building, hopefully increasing its value
Tenants can use TI money for training staff and sending them to seminars easing their start-up costs
TIs are cheaper to the landlord than lower rents because they can be depreciated for tax purposes
TIs and lower base rent have the exact same effects
TIs help tenants finance fit-out costs
TIs occur upfront
TIs force tenants to spend money on your building, hopefully increasing its value
TIs are cheaper to the landlord than lower rents because they can be depreciated for tax purposes
TIs help tenants finance fit-out costs
TIs occur upfront
In property level pro forma analysis, what is the correlation between Tenant Improvement allowance (TI) and Leasing Commission (LC)?
The correlation between TI and LC is typically positive and high.
Unlevered Cash Flow ___ Debt Service ___ Before-Tax Levered Cash Flow ___ Income Tax ___ After-Tax Cash Flow
-, =, -, =
