PowerPoint Ch1

Question 1

What are the three ways the term Real Estate is used?

Answer 1

1. Tangible asset
2. Bundle of Rights
3. Industry/Profession

Question 2

What is a tangible asset?

Answer 2

.

Question 3

What is an intangible asset?

Answer 3

.

Question 4

What are improvements ON the land?

Answer 4

fixed structures

Question 5

What are improvements TO the land?

Answer 5

made to make the land suitable for building construction

Question 6

What is raw land?

Answer 6

Does not include ANY improvements TO the land

Question 7

What are the bundle of rights?

Answer 7

exclusive possession, use or enjoyment, disposition

Question 8

How much of the worlds economy is from real estate?

Answer 8

Half

Question 9

How much of the US’ gross domestic product is generated from real estate?

Answer 9

25%

Question 10

How much of real estate is housing?

Answer 10

17-18%

Question 11

How much of local government revenue is made from real estate?

Answer 11

20%

Question 12

What are the characteristics of the real estate market?

Answer 12

• Heterogeneous Products (uniqueness)
• Immobile Products
• Localized Markets
• Segmented Markets
• Privately Negotiated
• Transactions with high transaction costs

Question 13

What are the three markets/sectors that make up RE?

Answer 13

-User (space) markets
-Capital markets
-Property markets

Question 14

The user (space) market is the market for the _____ real estate.

Answer 14

physical

Question 15

What market/sector are rental rates determined?

Answer 15

User (space) market

Question 16

True/False User (Space) Market is usual local.

Answer 16

True

Question 17

What is the User (Space) Market?

Answer 17

“Buyers” receive right to use space

Question 18

Both demand & supply side of user markets are very specific to ____ & ____.

Answer 18

location & building type

Question 19

What kind of effect does segmentation have on user markets?

Answer 19

rental prices for physically similar spaces can vary widely across locations & property types

Question 20

What is the function of capital markets?

Answer 20

Provide the financial resources (debt and equity) necessary for development and acquisition of real estate asset.

Question 21

What are equity participants?

Answer 21

owners of real estate

Question 22

What are debt participants?

Answer 22

the lenders of real estate

Question 23

What are examples of owners in private markets?

Answer 23

Individuals, partnerships, limited liability companies, private equity funds

Question 24

What are examples of owners in public markets?

Answer 24

Exchange-listed real estate investment trusts (REITs) and real estate operating companies

Question 25

What are examples of lenders in private markets?

Answer 25

Banks, insurance companies, finance companies, private lenders

Question 26

What are examples of lenders in public markets?

Answer 26

Commercial mortgage-backed securities (CMBS) and mortgage REITs

Question 27

What are public capital markets?

Answer 27

Small homogeneous units (shares) of ownership in assets trade in public exchanges

Question 28

True/False: There are only a few buyers and sells in the public capital market

Answer 28

False: there are many

Question 29

How are public capital markets characterized?

Answer 29

by a high degree of liquidity

Question 30

Explain private capital markets.

Answer 30

-absence of a centralized market (or even price lists)
-Assets trade infrequently in private transactions (thus a lack of transparency)
-Common for “whole” assets to be traded in a single transaction (indivisibility)
-Less liquidity than in public markets
-Higher transaction costs (typically)

Question 31

Property market is ___.

Answer 31

integrated