RE250 CHP 1 HOMEWORK

Each commercial property has unique features, whether it is its age, the building design of its structures, occupancy or its location. As such, real estate markets consist of assets that are considered:

heterogenous

A primary determinant of the feasibility of new construction is the relationship between the current level of market value and the cost of new construction. We would expect the supply of properties to:

increase if current market values are greater than the cost of construction

The investment grade property market is typically targeted by all the following groups of investors EXCEPT:

individual investors

Which of the following would be considered a tangible asset?

land

Especially in terms of retail properties, which of the following attributes is considered the most likely to result in drastic value differences between otherwise similar properties?

location attributes

Commercial real estate assets are markedly different from assets in other financial markets due to their heterogeneity, immobility, localized nature, illiquidity, and market segmentation. Based on your understanding of these characteristics, which of the following statements best describes what is meant by highly segmented markets?

properties can be grouped based on classification such as property type, location, investor type or price

Real estate consists of the physical structures and infrastructure that accompany the land. All of the following are examples of an improvement to the land EXCEPT:

the buildings and parking lot

Capital markets can be divided into two broad categories: equity interests and debt interests. Equity investors in real estate expect to earn a return on their investment through:

the collection of rent and selling or refinancing the asset

Competition for the currently available supply of locations and space coupled with the existing supply of leasable space, determines:

the current level of rental rates for each submarket and property

An example of a real estate asset that trades in the private debt market is a(n):

commercial mortgage

Considered a fundamental pricing metric in commercial real estate markets, the ratio of a property's annual net operating income to its market value is more commonly referred to as a(n):

capitalization rate

When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include:

fences

Participants in the capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. Bank lending as a source of financing for the acquisition of real property occurs in the:

private debt market

Commercial real estate assets are unique when compared to other goods due to their heterogeneity, immobility, localized nature, illiquidity, and market segmentation. Based on your understanding of these characteristics, which of the following statements best describes what is meant by immobile markets?

properties are difficult to physically move from one location to the next

Capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. An example of a real estate asset that trades in the private equity market is a(n):

real property

Helping to constrain entry into real estate related occupations, which of the following branches of government is directly involved in establishing rules and regulations for the licensing of professionals in the field of real estate?

state government

The term real estate is used in three fundamental ways. When real estate is defined as the land and its improvements, it is being viewed as purely a(n):

tangible asset

The demand for real estate derives from the need that market participants (e.g., owner occupants, tenants, renters) have for shelter and convenient access to other locations. This competition for physical location and space occurs in the:

user market

real estate is defined as land and its permanent improvements. Which of the following is an example of an improvement to the land?

water and sewer systems

If we desire to classify land by its use, land that consists of residential, industrial, commercial, and institutional land uses would be classified as:

urban land