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CEcD Exam Prep > Real Estate Development > Flashcards

Real Estate Development Flashcards

1
Q

most real estate transactions are entirely driven through _____ transactions with no active participation from the public sector

A

private sector

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2
Q

public sector participates in the _____ process for approvals like zoning, building, parking, etc

A

regulatory

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3
Q

______ is development that serves the economy, community, and environment

A

smart growth - how and where should development be accommodated

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4
Q

mixed use refers to combining

A

multiple land uses in a single district (residential, office, retail)

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5
Q

common tenets of mixed use development

A

office, hotel, retail, housing spaces together
walkable communities
promotion of vertical vs. horizontal developments
consideration of environmental costs
incorporation of multiple forms of movement into a single development (transit, auto, walking, biking)

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6
Q

the information age makes it easier for companies to locate where

A

land and office are least expensive

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7
Q

the information age has contributed to increased

A

suburban and greenfield development

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8
Q

explain lifestyle centers

A

like a town center - shopping spaces without roofs or anchor tenants; open air and typically smaller than the typical mall

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9
Q

green building refers to a trend that pays more attention to

A

environmental awareness, attention to the bottom line of energy costs and building costs, observation that “greener” workspaces attract talent

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10
Q

four primary types of development and redevelopment

A

build-to-suit
spec development
greenfield development
redevelopment/reuse

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11
Q

build-to-suit=

A

business hires a contractor or developer to build a customized structure

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12
Q

speculative development =

A

a facility is build prior to securing a tenant

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13
Q

greenfield development =

A

takes place on larger tracts of land previously undeveloped in rural or suburban areas

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14
Q

redevelopment or reuse =

A

takes previously developed property or areas to higher, more productive use; encourages infill rather than sprawl

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15
Q

list the phases of the real estate development process

A
  1. predevelopment
  2. market, financial, political feasibility
  3. site and engineering analysis
  4. financing
  5. contractor negotiations
  6. construction
  7. marketing
  8. building occupancy and management
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16
Q
  1. predevelopment
A

developer or business considers multiple sites - OR - they have a site and are considering building sizes, uses, or layouts; if all is well with a site the developer will secure control

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17
Q
  1. market, financial, political feasibility
A

three concerns addressed:

  1. there is sufficient MARKET demand
  2. there will be sufficient return on FINANCIAL investment
  3. project will be approved by the public sector POLITICALLY
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18
Q

public sector feasibility

A

can help determine the most efficient use of public funds and help shape a projects direction

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19
Q

private sector feasibility

A

helps with financing and shapes development programs and trajectories

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20
Q

market studies answer these questions

A

what products are appropriate for this market?
what will customers demand int he future?
what is the appropriate timing for this project?
what is the appropriate quantity and mix of uses?
are there financial considerations that the market won’t bear?
how can this project be best positioned for the competitive market?

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21
Q

financial feasibility addresses questions directly related to _____

A

the level of investment a project is likely to receive or the variety of metrics investors use to evaluate multiple real estate deals against each other

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22
Q

financial feasibility testing models may include

A

residual land value
discounted cash flows
rates of return

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23
Q

residual land value

A

what would a private developer play for this land under my project if it is developed as proposed

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24
Q

discounted cash flows

A

if my project receives income over time and I have to build it today, what is the present value of the project, taking into account the cost of borrowing money today and the recognition of income for years ahead

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25
Q

rates of return

A

there are multiple ways to measure the relationship between dollars spent (cash, equity, debt) and dollars received (bulk sales, ground lease, vertical lease, distributed profits), and different entities will value these returns differently

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26
Q

political feasibility

A

will the public sector approve a viable project in a reasonable amount of time?

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27
Q

the site and engineering process is intended to result in

A

a development plan on paper that can be discussed and submitted for the planning process

28
Q

shovel-ready certification programs help economic developers identify sites that are

A

immediately ready for development

29
Q

real estate financing is challenging because (3 reasons)

A
  1. large capital requirements are usually bigger than the assets of the developer or investor
  2. risky nature; long-term and relatively illiquid
  3. while land is considered a durable asset buildings are depreciable
30
Q

two types of finds that can be used to get projects going

A

debt capital and equity capital

31
Q

debt capital

A

money loaned to be paid back in fixed installments on a fixed schedule;
there can be more than one lien (EDOs can provide second loan)
banks no longer offer 80% of total costs or appraisal, now more like 40%

32
Q

equity capital

A

ownership investment into a project with no predetermined schedule for payback;
can bridge the gap between dept capital and the project cost;
subordinate to debt finacning so the lenders get paid back first

33
Q

contractor negotiations and public approvals involve setting up

A

development agreements (if public land is involved);
getting final permitting approvals
securing financial commitments including financing and construction loans
setting up construction contracts
negotiating prelease agreements

34
Q

major public approvals include

A

zoning
subdivision
site plan review
building permits

35
Q

major private developer agreements include

A 
land acquisition contracts
lender commitments
architect and engineering agreements
construction contracts
lease/sale contracts
insurance agreements
36
Q

cosntruction is the

A

actual development or construction of the site or building

37
Q

marketing to potential tenants and purchasers typically starts _____

A

before construction (Deepwater and I-95 Industrial Center)

38
Q

management of includes ____ and____ management

A

property and asset

39
Q

property management =

A

marketing, leasing, maintenance

40
Q

asset management =

A

capital improvements, refinancing, sale

41
Q

brownfields

A

real property, the expansion, redevelopment, or reuse of which is complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant

42
Q

what are the two types of potential property contamination

A

land or building

43
Q

site assessment is the process of determining

A

whether or not a property is contaminated and if so with what

44
Q

what does VCP and who has them

A

voluntary cleanup program; all states

45
Q

what parties might be interested in the redevelopment of contaminated sites

A

buyers and sellers
technical experts
citizens
government

46
Q

determining if cleanup is feasible financially should include considering

A 
environmental consultants tests
legal costs
remediation costs and additional timing
larger loan requirements
environmental monitoring costs
47
Q

while site assessment is paid for by developers remediation may be funded by___-

A

the public sector

48
Q

transferring a perperty with ______can be extremely complex

A

contamination

49
Q

most brownfield transactions are facilitated by a _____ or _______

A

lawyer or environmental expert trained in legal, environmental, or real estate matters

50
Q

while there are multiple remediation options for some sites, always consider how they will affect ____-

A

the neighborhood

51
Q

a covenant not to sue (CNTS) or ____ are crucial to maintain when the project is complete

A

no further action (NFA)

52
Q

public participation, especially with incentives, is genrally based on a “____” test. Meaning the development wouldn’t happen _____ the provision of incentives

A

but for

53
Q

but for example one: low income housing

A

there is no current market support or the likelihood of adequate market support in the future to justify the costs

54
Q

but for example two: grocery stores or hotel convention centers

A

current market support is inadequate to justify development but there is reasonable probability that if the property is developed it will generate revenues to repay it total cost or a portion of them

55
Q

another type of public sector involvement comes into play with money generation when the public owns a property that is ______ to a developer

A

uniquely valuable

56
Q

the majority of development regulations are handled by

A

cities, counties, and other local governments according to statute

57
Q

key public sector players in development regulations

A

planning and zoning departments
public works
building inspectors

58
Q

public agencies can facilitate development through

A

regulatory approvals
partial financing
provision of infrastructure
improving streetscape

59
Q

when the public is facilitating, the developer is ____

A

leading

60
Q

if a developer is leading the development process they will

A

acquire or lease property, identify the land use, conduct pre-development activiites

61
Q

if the EDO is the initiator they ____ or _____ the property for developmern

A

acquire or own

62
Q

Public initiator roles can be helpful in small towns or rural areas where the private sector ___

A

is unwilling to invest

63
Q

what are the four general classes of transaction structures

A

front-end assisting without offsetting
front-end assistance with guarantee
performance oriented assistance with initial explicit denomination
performance oriented assistance without formal denomination

64
Q

front-end assisting without offsetting

A

most commonly grants that write-down the cost of land

65
Q

front-end assistance with guaruntee

A

a write-down that requires partial or total repayment

66
Q

performance-oriented assistance with initial explicit denomination

A

developers can get the public funds they generate (example TIF)

67
Q

performance-oriented assistance without formal denomination

A

similar to TIFs but there is no formal denomination as part of the contract

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