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FINC 475 > Chapter 5 Lecture > Flashcards

Chapter 5 Lecture Flashcards

1
Q

Real Estate Financial Statements are based on ______

A

cash flows

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2
Q

Reconstruction operating statement?

A

matching it to the market

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3
Q

stabilized

A

LU

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4
Q

non-stabilized

A

LU

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5
Q

What are RE Revenues?

A
  • rent
  • reimbursement of certain expenses
  • other non rental income
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6
Q

reimbursement of certain expenses

A
  • operating

- taxes

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7
Q

other non rental income

A
  • washer and dryers
  • concierge services
  • telecom resale
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8
Q

PGRI

A

potential gross rental income = rent checks coming in

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9
Q

PGMI

A

potential gross misc. income

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10
Q

parking, billboards, advertising, events, vending machines, laundry machines, (basically anything ither than rent. Also called operating income)

A

PGMI

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11
Q

people who dont pay you, but occupy the space

A

collection loss

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12
Q

PGI =

A

PGRI + PGMI

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13
Q

PGI - VCL=

A

effective gross income (EGI)

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14
Q

effective means

A

actual

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15
Q

examples maintenance, property tax, utilities, tenant improvement, management fees

A

operating expenses

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16
Q

unlevered returns -> IRR

A

NOI

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17
Q

levered IRR

A

BTCF

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18
Q

terminal cap rate =

A

sales cap rate

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19
Q

tertiary markets

A

LU

20
Q

primary markets

A

LU

21
Q

______ is what general property valuation is based on (goes into cap rate calculation)

A

NOI

22
Q

______ is basically the dividend that property will pay out

A

NOI

23
Q

OM =

A

offering memorandum

24
Q

MOB

A

medical office building

25
Q

how many of each type of unit they have

A

unit mix

26
Q

Estimating ability to command rent

A
  • Types of Leases
  • History of recent operations
  • Verify records of comparable properties
  • Estimate recent gross income through research
  • Find comparable properties
27
Q

types of leases

A
  • leasehold estates
  • gross/service vs. net
  • flat/fixed/straight vs. variable
28
Q

Estimation of operating expenses

A

Subject property’s operating history

Recent expense history of comparable properties

Published compendiums of similar properties as benchmarks

29
Q

total rent assuming 100% occupancy (full) at current market

A

potential gross income (or rent)

30
Q

Adjusting potential gross rent to reflect losses from vacancies and uncollectible accounts and to income income from other sources other than rents

A

effective gross income

31
Q

PGI/EGI

A 
potential gross income 
less: vacancy and collection losses
plus: other income
\_\_\_\_\_\_\_\_\_\_\_\_\_\_
equals EGI
rental income @ full occupancy
Plus: other income
Equals PGI
Less: vacancy & collection losses
\_\_\_\_\_\_\_\_\_\_\_\_\_\_
equals EGI
32
Q

calculating PGI

A

square feet of leasable space x per square foot annual rent rate = PGI

33
Q

What are RE Operating Expenses?

A

Strictly confined to “running of” the property (operations) and not financing (no interest!)

34
Q

RE operating expenses: usual costs

A 
Management (fees & or salaries)
Utilities, Insurance, Supplies
Marketing and accounting expense
Maintenance (janitorial, repairs, lawn)
Property Taxes (not income taxes)
Reserve for Replacement of Capital Items (Roof, carpet)
35
Q

Net operating income is simply…

A

property level income less property level expenses

36
Q

how does one create the operating statement?

A

LU

37
Q

factors that impact rent rates

A
  • economic factors
  • desirability of the subject property
  • external changes
  • viability of new supply
  • new buildings
  • obsolescence of existing stock
38
Q

demand and supply factors that impact rent rates

A
  • economic factors

- desirability of the subject property

39
Q

relative desirability factors that impact rent rates

A
  • external changes
  • viability of new supply
  • new buildings
  • obsolescence of existing stock
40
Q

desirability of the subject property

A
  • location
  • features
  • age - obsolescence
  • physical
  • styling
  • image - sex appeal
41
Q

desirability of the subject property: location

A
  • access - transportation
  • visibility
  • geography/physical features
  • neighborhood
42
Q

changes in urban patterns; i.e. change in linkages

A

external changes

43
Q

external changes: changes in urban patterns

A
  • new transportation route
  • new suburb
  • environment of neighborhood
  • technology
44
Q

viability of new supply

A
  • land available?

- cost vs. rent = return

45
Q

viability of new supply: land available?

A
  • rezoning potential

- building conversion?

46
Q

new buildings

A

where located? features?

47
Q

obsolescence of existing stock

A
  • (razed/abandoned)

FINC 475 (18 decks)

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