Real Estate Development

Question 1

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

Answer 1

private sector

Question 2

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

Answer 2

regulatory

Question 3

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

Answer 3

smart growth - how and where should development be accommodated

Question 4

mixed use refers to combining

Answer 4

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

Question 5

common tenets of mixed use development

Answer 5

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)

Question 6

the information age makes it easier for companies to locate where

Answer 6

land and office are least expensive

Question 7

the information age has contributed to increased

Answer 7

suburban and greenfield development

Question 8

explain lifestyle centers

Answer 8

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

Question 9

green building refers to a trend that pays more attention to

Answer 9

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

Question 10

four primary types of development and redevelopment

Answer 10

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

Question 11

build-to-suit=

Answer 11

business hires a contractor or developer to build a customized structure

Question 12

speculative development =

Answer 12

a facility is build prior to securing a tenant

Question 13

greenfield development =

Answer 13

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

Question 14

redevelopment or reuse =

Answer 14

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

Question 15

list the phases of the real estate development process

Answer 15

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

Question 16

1. predevelopment

Answer 16

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

Question 17

2. market, financial, political feasibility

Answer 17

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

Question 18

public sector feasibility

Answer 18

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

Question 19

private sector feasibility

Answer 19

helps with financing and shapes development programs and trajectories

Question 20

market studies answer these questions

Answer 20

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?

Question 21

financial feasibility addresses questions directly related to _____

Answer 21

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

Question 22

financial feasibility testing models may include

Answer 22

residual land value
discounted cash flows
rates of return

Question 23

residual land value

Answer 23

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

Question 24

discounted cash flows

Answer 24

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

Question 25

rates of return

Answer 25

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

Question 26

political feasibility

Answer 26

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

Question 27

the site and engineering process is intended to result in

Answer 27

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

Question 28

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

Answer 28

immediately ready for development

Question 29

real estate financing is challenging because (3 reasons)

Answer 29

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

Question 30

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

Answer 30

debt capital and equity capital

Question 31

debt capital

Answer 31

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%

Question 32

equity capital

Answer 32

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

Question 33

contractor negotiations and public approvals involve setting up

Answer 33

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

Question 34

major public approvals include

Answer 34

zoning subdivision site plan review building permits

Question 35

major private developer agreements include

Answer 35

``` land acquisition contracts lender commitments architect and engineering agreements construction contracts lease/sale contracts insurance agreements ```

Question 36

cosntruction is the

Answer 36

actual development or construction of the site or building

Question 37

marketing to potential tenants and purchasers typically starts _____

Answer 37

before construction (Deepwater and I-95 Industrial Center)

Question 38

management of includes ____ and____ management

Answer 38

property and asset

Question 39

property management =

Answer 39

marketing, leasing, maintenance

Question 40

asset management =

Answer 40

capital improvements, refinancing, sale

Question 41

brownfields

Answer 41

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

Question 42

what are the two types of potential property contamination

Answer 42

land or building

Question 43

site assessment is the process of determining

Answer 43

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

Question 44

what does VCP and who has them

Answer 44

voluntary cleanup program; all states

Question 45

what parties might be interested in the redevelopment of contaminated sites

Answer 45

buyers and sellers technical experts citizens government

Question 46

determining if cleanup is feasible financially should include considering

Answer 46

``` environmental consultants tests legal costs remediation costs and additional timing larger loan requirements environmental monitoring costs ```

Question 47

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

Answer 47

the public sector

Question 48

transferring a perperty with ______can be extremely complex

Answer 48

contamination

Question 49

most brownfield transactions are facilitated by a _____ or _______

Answer 49

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

Question 50

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

Answer 50

the neighborhood

Question 51

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

Answer 51

no further action (NFA)

Question 52

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

Answer 52

but for

Question 53

but for example one: low income housing

Answer 53

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

Question 54

but for example two: grocery stores or hotel convention centers

Answer 54

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

Question 55

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

Answer 55

uniquely valuable

Question 56

the majority of development regulations are handled by

Answer 56

cities, counties, and other local governments according to statute

Question 57

key public sector players in development regulations

Answer 57

planning and zoning departments public works building inspectors

Question 58

public agencies can facilitate development through

Answer 58

regulatory approvals partial financing provision of infrastructure improving streetscape

Question 59

when the public is facilitating, the developer is ____

Answer 59

leading

Question 60

if a developer is leading the development process they will

Answer 60

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

Question 61

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

Answer 61

acquire or own

Question 62

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

Answer 62

is unwilling to invest

Question 63

what are the four general classes of transaction structures

Answer 63

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

Question 64

front-end assisting without offsetting

Answer 64

most commonly grants that write-down the cost of land

Question 65

front-end assistance with guaruntee

Answer 65

a write-down that requires partial or total repayment

Question 66

performance-oriented assistance with initial explicit denomination

Answer 66

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

Question 67

performance-oriented assistance without formal denomination

Answer 67

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