HADM 3210 Prelim 1 WHQ Questions

Which of the following are operating restrictions for REITs?

-A REIT must primarily be in the business of owning and operating real estate -Five or fewer individuals cannot own more than 50% of the REIT's stock -A REIT must pay out at least 90% of its taxable income in dividends -A REIT must have at least 100 shareholders

Select the reasons why ready access to equity is helpful for Real Estate Private Equity (REPE). Select all that apply. -REPE funds with significant pools of capital are treated as credible buyers who can close a transaction quickly. -REPE funds may be able to acquire the same property at a lower price relative to other real estate investors. -REPE funds frequently have the ability to close all-cash on a transaction and then obtain financing at a later date. -There is no advantage to having ready access to equity

-REPE funds with significant pools of capital are treated as credible buyers who can close a transaction quickly. -REPE funds may be able to acquire the same property at a lower price relative to other real estate investors. -REPE funds frequently have the ability to close all-cash on a transaction and then obtain financing at a later date.

In private equity business, the sponsor's promote is typically structured in one of the two methods. The most common way (common structure) is that the investors and the sponsor split all profits 80/20, including the preferred return as long as the investment IRR is greater than the preferred return. The alternative way (alternative structure) is that the the investors and the sponsor split 80/20 only on the profits in excess of the preferred return. Based on the assumptions in the example from the textbook, which of the following statements are true? (select all that apply)

-When the investment IRR is smaller than the preferred return, the two structures would give the sponsor the same rate of investment return. -Generally, the sponsor would prefer the common structure but usually agrees to the alternative structure. -In the common structure, the sponsor takes a larger share of fund profits than that in the alternative structure.

A typical real estate private equity fund is managed by the fund sponsor, who serves as the ___________partner. Investors in the real estate private equity vehicle, such as pension funds, college endowments, and high net worth individuals, are the ____________partners.

1. general 2. limited

______________is a method to true-up the payment of IRR-based profit splits based on measuring accrued earned amounts and funding these earned amounts with distributions. ______________is a private equity fund distribution provision that allows for the sponsor to be caught up to the same rate of return as the Limited Partners. ______________is a protection mechanism put in place by Limited Partners that returns any excess share of total profits to "the money" to comply with a percentage cap on distributions received by the sponsor.

1. lookback 2. catch up provision 3. claw back

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.1". The major inputs for this question: The Present Value of Money: $100.00; Growth Rate is assumed to be 4%. Using the completed "Fig PI.1" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate is 8% and other inputs unchanged, what is the Value at the End of Year 1? Please round your answer to the nearest whole number.

108

A 150,000 sf building rests on one acre and has a FAR of 6. How many more square feet can be built on the parcel? 67,800 111,360 120,000 None of the Options 0 108,000

111,360

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.3". The major inputs for this question: The Present Value of Money: $100.00; Growth Rate at Year 1 is assumed to be 3.9%; Growth Rate at Year 2 is assumed to be 3.9%; Growth Rate at Year 3 is assumed to be 3.9%. Using the completed "Fig PI.3" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate at Year 3 is 6% and other inputs unchanged, what is the Value at the End of Year 3? Please round to the nearest hundredths place.

114.43

Download Ch4_2NER" excel file located under "Modules/Quiz Files". There are three tabs in this file. Please read the tab "Instructions" carefully. Tab "Class Demo" shows the example we studied in class. Tab "Net Effective Rent" provides three rent scenarios. Using the completed "Ch4_2NER" as a template, change one of the inputs on the tab "Net Effective Rent" and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Annual Discount Rate at is 13% and other inputs unchanged, what is the Net Effective Rent for Scenario 2? Please write your answer to two decimal places, with no dollar sign. (e.g. 16.54, not $16.54).

13.6

List the buyers and sellers of two transactions (2016 and 2018). Related case materials: 1 Browse the official website of the hotel, including the video from its homepage. 2 Read the following case documents: 2.1 Press release 2.2 CoStar sales reports

2016 Buyers: Ares Real Estate Management Holdings LLC, Trinity Investment LLC, SMW Holdings LLC 2016 Sellers: Colony Capital Inc., Woodbridge Capital Partners LLC 2018 Buyers: The Blackstone Group L.P. 2018 Sellers: RC Kapalua Owner LLC, Ares Real Estate Management Holdings LLC, Square Mile Capital Management LLC, Trinity Investments

Please describe the size and price of the hotel transacted in 2016 and 2018 respectively. Related case materials: 1 Browse the official website of the hotel, including the video from its homepage. 2 Read the following case documents: 2.1 Press release 2.2 CoStar sales reports

2016: Size: 463 rooms, 605,000 SF Price: $173,000,000 2018: Size: 463 rooms, 605,000 SF Price: $275,000,000

Assume you want to sell an asset worth $200MM with a $100MM mortgage in place and have identified a $200MM U.S. Government-leased office building to acquire via a like-kind exchange. Assuming that you can finance 69% loan-to-value in the U.S. Government building, how much capital will you realize today? Assume a 3% sale expense and a 1% underwriting fee on the new loan for the purchase of the like-kind exchange. Write your answer in millions (MM) with 2 decimal places. The excel file Ch18_3exchange located under Modules/Quiz Files can be used as a template to help you solving this question.

30.62

Please download the "Ch0_Pre2" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PII.3". The major inputs for this question: The Cash Flow at Year 1 is $400; The Cash Flow at Year 2 is $650; The Cash Flow at Year 3 is $6,000; The Amount of Investment is $4,000. Using the completed "Fig PII.3" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Amount of Investment is 3,000 and other inputs unchanged, what is the Internal Rate of Return (IRR)? Input answer as a percentage without the %. Please round to the nearest tenth of a percent, i.e. enter 3.1 instead of 0.031 or 3.1%.

36.52

How many keys in the owned inventory of the Ritz-Carlton Kapalua hotel at the acquisition in 2016? 463 398 297 166 107 101 64

398

Ann Taylor leases 5,000 square feet from Peter's shopping center in Ithaca, NY. The lease contract has the following terms: Base rent = $10 per s. f. per year in 2017 (year 1) Base rent escalation = 3% per year Percentage rent = 5% for any sales above the breakpoint Breakpoint = $200 per s. f. per year The total store sales of Ann Taylor at Peter's center in January 2020 (year 4 of the lease) is $84,000 What are the rent payments for Ann Taylor in January 2020? (Note: Please round the monthly rent due to nearest integer with no dollar sign. You can reference " Ch4_1Retail Leases" excel file located under "Modules/Quiz Files". )

4,586

What is the term in the Ritz-Carlton Kapalua Hotel Management Contract? 10 years 15 years 20 years 30 years 40 years 50 years

40 years

How many square feet are in an acre? 42,250 35,850 43,560 40,560 27,880

43,560

You acquired a building for $100.00MM and financed the acquisition with a $75.00MM interest-only loan. 7 years later, you sold the property for $120.00MM. Assume 70% of the property was attributed to structure and that the structure was depreciated over a 39-year period. Also assume that capital gains are taxed at 15% and that accumulated depreciation is taxed at 25%. Also assume a 5% sales cost for the building and no prepayment penalty for the loan, you can calculate the net equity at sale. Let us define the Net profit as Net equity at sale minus the initial equity investment. What is your Net Profit ? Write your answer in millions (MM) with 2 decimal places. The excel file Ch18_2disposition located under Modules/Quiz Files can be used as a template to help you solving this question.

8

Download Ch4_2NER" excel file located under "Modules/Quiz Files". There are three tabs in this file. Please read the tab "Instructions" carefully. Tab "Class Demo" shows the example we studied in class. Tab "Net Effective Rent" provides three rent scenarios. Using the completed "Ch4_2NER" as a template, change one of the inputs on the tab "Net Effective Rent" and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Annual Discount Rate at is 14% and other inputs unchanged, what is the Net Effective Rent for Scenario 3? Please write your answer to two decimal places, with no dollar sign. (e.g. 16.54, not $16.54).

8.48

Ann leases a 5,000 square feet from Peter's office building in Ithaca, NY. The rent is $22 per s. f. per year, what is the monthly rent payment? (please round to the nearest integer and input the answer without a $ sign.)

9,167

Select all of the true statements: Stacking plans are not used in today's technologically sophisticated real estate industry Stacking plans are most useful for residential buildings A stacking plan is used by warehouses to indicate where different goods should go A stacking plan generally has tenants, expiration date, and rents

A stacking plan generally has tenants, expiration date, and rents

REITs are essentially: (select the best answer)

A tax exempt structure for real estate ownership

Which of the following facility/amenity is closest to the Pacific ocean beach? The Anuenue Room Aloha Garden Pavillion Ballrooms and Meeting Space Banyan Tree Restaurant Honolua Wing Kai Sushi

Banyan Tree Restaurant

Why were many REITs created in the 1990s?

Changes in the tax legislation and excessive leverage forced real estate companies to go public

Imagine you are the owner of a regional mall and you signed a lease with a woman's clothing store that states that if the anchor store goes dark, they will not pay rents. This lease clause is known as Tenant Mix Clause Radius Restriction Co-tenancy Clause Non-compete Clause

Co-tenancy Clause

Figure 1.11 of Chapter 1 in the Textbook shows the spectrum of real estate investment profiles, examples of transactions, general targeted returns and leverage levels employed. Please match the type of investment strategy with target levered IRR. Which of the following investment profiles contains the lowest risk? Core-Plus Core Value-Add Opportunistic

Core

Figure 1.11 of Chapter 1 in the Textbook shows the spectrum of real estate investment profiles, examples of transactions, general targeted returns and leverage levels employed. Please match the type of investment strategy with target levered IRR. Core Core-Plus Value-Add Opportunistic

Core 7-9% Core-Plus 9-12% Value-Add 12-16% Opportunistic 16%+

Select all of the true statements: Physical vacancy always equals economic occupancy Economic occupancy can exist without physical occupancy None of the Options Physical occupancy implies the space generates rent and is physically occupied Physical occupancy always indicates economic occupancy

Economic occupancy can exist without physical occupancy

In an apartment property, what in included in Gross Square Footage but not Net Leasable Square Footage? (Select all that apply) Bedroom space Elevator waiting areas Lobbies Mechanicals room Stairwells and elevators Laundry rooms located outside of unit

Elevator waiting areas Lobbies Mechanicals room Stairwells and elevators Laundry rooms located outside of unit

Which of the following type dominates the REIT market?

Equity REITs

A REIT has to be a public company.

False

Private equity funds raise money from (select all that apply): High net worth individuals The general public Pension funds Mutual Funds College endowments Non-profit foundations Sovereign wealth funds

High net worth individuals Pension funds College endowments Non-profit foundations Sovereign wealth funds

Overage (percentage rent) incentivizes the landlord to create and maintain a productive retail environment, resulting in _______ sales revenue.

INCREASED

What are the major broad groups of Real Estate Private Equity (REPE) sponsors?

Investment Houses Dedicated Real Estate Players Investment Banks

Anchor tenants usually pay _______rents than inline store tenants because of their ability to attract customers to the center.

LOWER

magine you are the owner of a regional mall and you signed a lease with a woman's clothing store that states you cannot lease space in the mall to another "top quality woman's clothing store". This lease clause is known as Co-tenancy Clause Non-compete Clause Radius Restriction Tenant Mix Clause

Non-compete Clause

What is overage? (select all that apply) A term used to refer to rent escalations Triple net rent It is percentage rent plus base rent. The market rent for a property less tenant improvements None of the Options

None of the Options

Imagine you have a building you bought 20 years ago for $100. It is now appraised at $10,000. Two years ago, you got a 90% LTV loan (value being set at $9,500) with no prepayment penalty and a 6% interest rate (assume no amortization). Capital gains taxes are 15%, ordinary income taxes are 35%, and taxes on accumulated depreciation are 25%. Use straight-line depreciation of 40 years. How much cash will you generate from this deal?

None of the options; Missing information

Which of the following real estate exit strategies will result in the most number of controlled properties? Fee simple disposition Refinancing Like-kind exchange Exchange for public company shares None of the Options

Refinancing

ICSC provides industry statistics for the U.S. Shopping center industry. The percentage GLA of the industry represents the ratio of the total gross leasable area of a specific type to the total industry. Please match the following percentage of GLA to its respective center type based on statistics provided on Ch2_ICSC2017.pdf file under "Modules/Quiz Files" ). Super-Regional Mall Regional Mall Community Center Neighborhood Center Strip Center Power Center

Super-Regional Mall 10% Regional Mall 5% Community Center 25% Neighborhood Center 31% Strip Center 12% Power Center 13%

A developer puts in 5% equity and a fund puts in 95% of the equity for a development deal. The pref rate is 10%, the promote is 20% to the developer and the 80% to "the money" and there are no fees. The acquisition and development costs of a deal (occurring at time 0), are $100. At the end of the year, the project is sold for $110. Which statement is true?

The fund and the developer will have the same IRR

From the SWOT analysis of Ritz-Carlton Kapalua hotel at the acquisition in 2016, pick the most important (to you) one for "Strength".

The most important "strength" to me is that it's a trophy Ritz-Carlton report. Marketing is everything and having a name like Ritz Carlton is always going to attract more customers. The fact that it is a resort while being in Hawaii in of in itself is going to garner a lot of reputation and customer traffic.

Assume a pref-promote structure where all money is treated equal, the sponsor puts in 10% equity, the fund 90%, and the promote is 20% to the sponsor and 80% to "the money" over a 12% preferred rate. The pref-promote compensation structure is advantageous to a sponsor because (select all that apply):

The sponsor gets greater compensation in relation to the equity he has put in if the deal generates a 15% IRR.

The major operational difference between a modern REIT and UPREIT is:

There is no major difference

Which statements are true of Class A buildings? (select all that apply) The term "Class A" is determined by universal standards by the National Association of Office Building Owners Association (NAOBOA) They are generally in prime locations They must have at least 5,000 sf floorplates None of the Options In weak markets Class A buildings are likely to maintain occupancy as they can drop rents and will still be the top choice for tenants

They are generally in prime locations In weak markets Class A buildings are likely to maintain occupancy as they can drop rents and will still be the top choice for tenants

Select all of the true statements: REITs are allowed to develop many properties None of the Options REITs must pay 95% of their taxable income as dividends UPREIT structures can help owners avoid paying capital gains taxes REITs must have at least 100 shareholders REITS cannot be private

UPREIT structures can help owners avoid paying capital gains taxes REITs must have at least 100 shareholders

The main advantage of 1031 exchanges is (choose the best answer): You can defer taxes You can avoid taxes forever It is easier to find a replacement property You can purchase a property, defer taxes, and sell it quickly soon afterwards None of the Options

You can defer taxes

Why would you choose to sell your building portfolio to a much larger public REIT? Choose the best reason:

You will have a more diversified and perhaps more liquid real estate holding

What is a flex building? a residential building with ground floor retail a building oriented for fitness a mixed use office/warehouse structure a building with many uses encompassing retail, residential, and office uses a heavy industrial property

a mixed use office/warehouse structure

The three basic components of rent in a retail leasing agreements are: base rent_______, base rent , and_______ rent (overage). [NOTE: For filling in blank questions, please use all low case letters (rather than upper case for the first letterboxing) and use singular nouns (rather than plural).]

escalation,percentage

Economic occupancy refers to the space that generates_____ , and physical occupancy is the space that is currently physically occupied. The difference is often referred to as "shadow" vacancy, which is the space a tenant _______for, but does not physically occupy. [NOTE: For filling in blank questions, please use all low case letters (rather than upper case for the first letterboxing) and use singular nouns (rather than plural).]

rent, pays

In the private equity capital raising marketing materials, a fund sponsor lays out their fund's investment cash flow waterfall distribution structure. An IRR-based hurdle rate is typically specified in the waterfall structure, above which the profits are split between the investors and the sponsor. What is the name of this hurdle rate?

the preferred return

Heavy manufacturing facilities are generally special purpose properties, which can be thought of more as pieces of equipment. True False

True

Key design issues for warehouse properties are clear height for ceilings and ease of entry and exit of the property. True False

True

Light assembly space combines warehouse, product assembly, and office space, and may be multi-tenanted. True False

True

Limited service hotels usually do not offer amenities such as room service, restaurants, banquet service, and convention space, etc... True False

True

Shopping mall owners want to maximize shoppers' exposure to retail stimuli because as shoppers are exposed to more stimuli, the more they will tend to spend. This is because the majority (roughly 90%) of the products sold in a regional mall are purchased on impulse. True False

True

When considering exit strategies, refinancing, in some cases, is preferable to an outright sale.

True

Please list the real estate exit strategies (select all that apply) Sale or disposition IPO 1031 exchange Like kind exchange Refinancing None of the Options Exchange for listed REIT shares

Sale or disposition IPO 1031 exchange Like kind exchange Refinancing Exchange for listed REIT shares

A typical type of so-called "opportunistic" real estate fund is involved with significant value enhancement needed through operating releasing or redevelopment.. True False

False

For any institutional real estate investor, as long as its property generates enough rental income to cover the expenses, debt payments and taxes, the investor should not have any reason to exit.

False

For any institutional real estate investor, as long as the current market value is higher than initial purchase price, the investor should not have any reason to exit.

False

In a weak market, tenants are looking for rent concessions. Suppose a TI allowance is computed upfront as the present value of the rent discounts. Is the following statement true or false? Since the TI allowance is equivalent to the PV of rent concessions, the owner should be indifferent between providing TI allowance versus offering discounted rents to tenants. True False

False

In the retail lease contract, the economic terms are far more important than non-economic terms, because the monetary terms such as rents, marketing budgets, operational expenses, rent concessions are all economic terms. True False

False

Infill land is primarily in suburban areas, and is generally surrounded by undeveloped parcels of land. True False

False

Mall owners typically do not specify when the store and center must, or can, be open. Therefore, each store can decide what day and what time to operate. For example, a restaurant tenant may choose to open late at night, and a book store may choose to close at the Labor Day. True False

False

Tenants and the landlord of a shopping center normally have aligned preferences regarding the length of the leases. Both tenants and the landlord prefer long-term leases. True False

False

The hotel management contract term is about to expire when the Ritz-Carlton Kapalua hotel was sold in 2018. True False

False

To protect the landlord, it is common to ask tenants to put up a security deposit or letter of credit, which is only available to the landlord as recourse if the tenant fails to perform on the lease. Therefore, when a tenant goes bankrupt, the landlord will receive rents from the tenant on time. True False

False

Triple net lease (also called NNN lease) is a lease structure in which the tenant only pays the rent, and the landlord pays all operating costs including property taxes, insurance, and utilities. True False

False

Typically in a shopping center, the landlord provides a lot of freedom to their tenants regarding their signage. In other words, each tenant can decide where to put their logo, how big it is, and to put up promotion signs in order to maximize the store visibility. True False

False

Figure 2.23 from the textbook chapter 2 displays Brasfield Tower's stacking plan. At the point of acquisition, this 84,000 leasable square foot building had about 14,000 square feet vacant, for an approximate 17% vacancy rate. Most of this vacancy is from a single tenant that previously occupied 12,000 s.f. on floors 9 and 10. From the lease expiration structure presented in the stacking plan, which year has the highest potential vacancy rate? year 3 year 4 year 1 year 2

year 2

Tenant improvement refers to the interior space physical improvement necessary to make a tenant's space fully operational. Therefore tenants must pay the allowance and be responsible for completing the work. True False

False

Why do people want to exit real estate? (Select all that apply) -They have a fixed investment horizon they have to adhere to -They wish to take on more risk than managing stable profits -A group with managing advantages may be able to pay more for a property. -They need money -They prefer the lower risk of development to that of managing a property -None of the Options

-They have a fixed investment horizon they have to adhere to -They wish to take on more risk than managing stable profits -A group with managing advantages may be able to pay more for a property. -They need money

The hotel's FAR is 0.42, which is rounded to to two decimal points. If you round to four decimal points, what is the FAR?

0.4183

Suppose you buy a property for $100 million, and have been depreciating the building (not the land) for the past 3 years to shield income from ordinary taxes. The government (currently) requires that you pay a 25% tax rate on accumulated depreciation. Depreciate $70 Million (the value of the building) on a 39-year schedule. Based on this, how much must you pay in taxes for accumulated depreciation? (Type your answer as millions to 2 decimal points, e.g. if $1,250,000, type 1.25)

1.35

Assume you paid $100 million for a property and sold it for $112 million. This gain is currently taxed at 15%. How much must you pay for the capital gains taxes from appreciation? (Type your answer as millions to 2 decimal points, e.g. if $7,250,000, type 7.25) You Answered

1.8

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.2". The major inputs for this question: The Present Value of Money: $100.00; Growth Rate at Year 1 is assumed to be 4.5%; Growth Rate at Year 2 is assumed to be 4.5%. Using the completed "Fig PI.2" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate at Year 2 is 6% and other inputs unchanged, what is the Value at the End of Year 2? Please round to the nearest hundredths place.

110.77

Download Ch4_2NER" excel file located under "Modules/Quiz Files". There are three tabs in this file. Please read the tab "Instructions" carefully. Tab "Class Demo" shows the example we studied in class. Tab "Net Effective Rent" provides three rent scenarios. Using the completed "Ch4_2NER" as a template, change one of the inputs on the tab "Net Effective Rent" and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Annual Discount Rate at is 13% and other inputs unchanged, what is the Net Effective Rent for Scenario 1? Please write your answer to two decimal places, with no dollar sign. (e.g. 16.54, not $16.54).

14.4

Assume the lot size is 20,000 sf and there is no height limit and setback restrictions. What is average gross square footage of each floor for a 4-floor office building with FAR of 3? Please round the number to the nearest integer.

15,000

Please download the "Ch0_Pre2" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PII.1 part 2". The major inputs for this question: The Cash Flow at Year 1 is $4 million; The Cash Flow at Year 2 is $4.3 million; The Cash Flow at Year 3 is $4.6 million; The Cash Flow at Year 4 is $4.9 million; The Cash Flow at Year 5 is $5.2 million; The Cash Flow from Sale is $75,771,429; The Amount of Investment is $40 million. Using the completed "Fig PII.1 part 2" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Amount of Investment is 51 million and other inputs unchanged, what is the Internal Rate of Return (IRR)? Input answer as a percentage without the %. Please round to the nearest tenth of a percent, i.e. enter 3.1 instead of 0.031 or 3.1%.

15.9

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.11". The major inputs for this question: The Cash Flow at Year 1 is $300,000; The Cash Flow at Year 2 is $335,000; The Cash Flow at Year 3 is $350,000; The Cash Flow at Year 4 is $400,000; The Cash Flow at Year 5 is $2,100,000; Discount Rate at Year 1 is assumed to be 4.00%; Discount Rate at Year 2 is assumed to be 4.00%; Discount Rate at Year 3 is assumed to be 20.00%; Discount Rate at Year 4 is assumed to be 18.00%; Discount Rate at Year 5 is assumed to be 15.00%. Using the completed "Fig PI.11" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Discount Rate at Year 5 is 16% and other inputs unchanged, what is the Net Present Value (NPV)? Please round your answer to the nearest whole number.

2,311,062

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.10". The major inputs for this question: The Cash Flow at Year 1 is $300,000; The Cash Flow at Year 2 is $335,000; The Cash Flow at Year 3 is $350,000; The Cash Flow at Year 4 is $400,000; The Cash Flow at Year 5 is $2,100,000; Discount Rate is assumed to be 4.00%. Using the completed "Fig PI.10" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Discount Rate is 6% and other inputs unchanged, what is the Net Present Value (NPV)? Please round your answer to the nearest whole number.

2,761,114

Please download the "Ch0_Pre2" excel file located under "Modules/Quiz Files", then complete the sheet titled "Fig PII.1 part 1". The major inputs for this question: The Cash Flow at Year 1 is $3 million; The Cash Flow at Year 2 is $5 million; The Cash Flow at Year 3 is $6.5 million; The Cash Flow at Year 4 is $8.75 million; The Cash Flow at Year 5 is $9 million; The Cash Flow from Sale is $83,454,545; The Amount of Investment is $40 million. Using the completed "Fig PII.1 part 1" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Amount of Investment is 50 million and other inputs unchanged, what is the Internal Rate of Return (IRR)? Input answer as a percentage without the %. Please round to the nearest tenth of a percent, i.e. enter 3.1 instead of 0.031 or 3.1%.

20.6

What is the total square feet of meeting space of Ritz-Carlton Kapalua hotel at the acquisition in 2016, including indoor, outdoor, and prefunction spaces. 8,000 32,000 189,000 221,000 229,000

229,000

Please download the "Ch1" excel file located under Modules/Quiz Files", then complete the entire excel file. There are 4 sheets. Sheet1: generating the cash flows from year 1-6. Sheet 2-4: three different ways to compute present value at discount rates of 0%, 3%, 8%, 12% respectively. Page 5 and Figure 1.1 in the TEXT provide the calculation instructions and results. Using the instruction as a guide, please complete the tables, i.e., fill in the light blue shaded area in excel sheet 1 to 4. The major inputs for this question are: 1. The Annual Rental Income at year 1 is $3 million; 2. The sale value at year 6 is $36,497,061.21; 3. The Annual Rental Income Growth rate is assumed at 6%. Using the completed "Ch1" as a template, complete the calculations. Then changing one of the inputs, the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Annual Rental Income Growth rate is 8% and other inputs unchanged, what is the Present Value if the cash flows are discounted at 12%?

33,193,553

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.7". The major inputs for this question: The Value of Money at End of Year 3: $112.16; Growth Rate at Year 1 is assumed to be 3.90%; Growth Rate at Year 2 is assumed to be 3.90%; Growth Rate at Year 3 is assumed to be 3.90%. Using the completed "Fig PI.7" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate at Year 3 is 7% and other inputs unchanged, what is the Present Value of the Money? Please round to the nearest hundredths place.

97.1

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.5". The major inputs for this question: The Value at End of Year 1: $104.00; Growth Rate at Year 1 is assumed to be 4.0%. Using the completed "Fig PI.5" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate at Year 1 is 6% and other inputs unchanged, what is the Present Value of the Money? Please round to the nearest hundredths place.

98.11

Please download the "Ch0_Pre1" excel file located under Modules/Quiz Files", then complete the sheet titled "Fig PI.6". The major inputs for this question: The Value of Money at End of Year 2: $109.20; Growth Rate at Year 1 is assumed to be 4.50%; Growth Rate at Year 2 is assumed to be 4.50%. Using the completed "Fig PI.6" as a template, change one of the inputs and the results will automatically be generated in the blue cells. Please answer the following question. Question: Assuming now the Growth Rate at Year 2 is 6% and other inputs unchanged, what is the Present Value of the Money? Please round to the nearest hundredths place.

98.58

When considering real estate development, it is important to understand the tradeoff between land costs and building additional floors. What is the typical relationship between the cost of a three-story building and the cost of a one-story building in most U.S. cities? A three-story building will be less than three times as expensive to build as a one-story building. Cannot determine, it depends on the cost of land. A three-story building will be three times as expensive to build as a one-story building. A three-story building will be more than three times as expensive to build as a one-story building.

A three-story building will be more than three times as expensive to build as a one-story building.

A shopping center lease will typically regulate the following items regarding the tenant signage restriction. Select all the correct items: Format Location Size Colors Content

Format Location Size Colors Content

What is the difference between gross square footage (GSF) and net leasable square footage (LSF)? GSF is always less than or equal to LSF GSF is the total area of the building (including lobbies, elevators, etc...), while LSF only refers to the space that is available for lease. GSF matters more for determining income than LSF There is no difference

GSF is the total area of the building (including lobbies, elevators, etc...), while LSF only refers to the space that is available for lease.

Select all of the tenants that are likely to be anchors in a strip center: Grocery store 2,000 sf movie rental store Dry cleaner Local Chinese restaurant 50,000 sf national fitness chain Walmart

Grocery store 50,000 sf national fitness chain Walmart

From the SWOT analysis of Ritz-Carlton Kapalua hotel at the acquisition in 2016, pick the most important (to you) one for "Threats".

I believe the most noteworthy threat is planned improvements to competitive hotels such as the Marriott Wailea and Hyatt Regency Ka'anapali. If there improvements are significant enough, customers like look at their hotels more favorably compared to the Rizt Carlton. Therefore, managers should keep an eye out on what these hotels plan to do and respond accordingly so they don't gain a competitive advantage.

What methods the Ritz-Carlton Kapalua Hotel Management Contract has used to align the incentives between management company and the owner? (Select all that apply) In addition to base fee, there is a incentive fee that links to the hotel operating profit. Performance extermination provisions A certain percentage of gross revenue is required to hold under FF&E reserve. None of the options

In addition to base fee, there is a incentive fee that links to the hotel operating profit. Performance extermination provisions A certain percentage of gross revenue is required to hold under FF&E reserve.

A shopping mall owner typically maximizes the total rental revenue from a mix of tenants in the center, which include anchors (e.g., a department store) and in-line stores (smaller stores located between the anchors). Which type of store pays higher rents (in terms of per s. f. per year)? Anchor Store There is no major difference between anchor store and in-line stores in terms of rent payment, because the mall owner gives the space to any tenant who is willing to pay the highest rent. None of the Options In-line Store

In-line Store

Which of the following are in the Ritz-Carlton Kapalua hotel's Maui Resort Competitive set ? (Select all that apply) Ka'anapali Beach Hotel The St. Regis Princeville Resort Maui Prince Makena Grand Hyatt Kauai Resort and Spa Hyatt Regency Maui Grand Wailea Fairmont Kea Lani The Fairmont Orchid Four Seasons Resort Maui at Wailea Sheraton Maui Westin Maui

Ka'anapali Beach Hotel Maui Prince Makena Hyatt Regency Maui Grand Wailea Sheraton Maui Westin Maui

From the SWOT analysis of Ritz-Carlton Kapalua hotel at the acquisition in 2016, pick the most important (to you) one for "Weaknesses".

Like with all real estate the key is location, location, location. The most important weakness (or worst really) in my opinion is the distance from the OGG airport as well as weather conditions. These combine to make for a challenging location compared to other Maui destinations. Customers might look for better located properties and which means they might disregard the Ritz-Carlton source potentially taking their revenue elsewhere.

What are the three basic components of rent in a retail leasing agreement? Select three from the following items: Percentage Rent Expense Reimbursements Length of Lease Net Rent Ancillary income (e.g., rental from cell tower on the top of the building) Marketing Budget Base Rent Base Rent Escalations TI Allowance

Percentage Rent Base Rent Base Rent Escalations

If the 10-year Treasury rate is at 6% and an illiquidity premium of 1% is appropriate for realestate risk, what is the present value of a technology firm that does 90% of its work for thegovernment and has the following cash flows (assume we are at Time 0):Year 1: $75Year 2: $68Year 3: $71Year 4: $80Year 5: $89Year 6: $100Year 7: $1,200 $1,222.01 $1,125.87 None of the Options $1,189.33

None of the Options

Select all of the true statements: Recourse to a subsidiary of a major company is just as good as having recourse to the parent company. If a tenant goes dark he can occupy the property but is exempt from paying rent. This only occurs in retail properties where the landlord has not leased according to promises. None of the Options Going dark refers to a property that is free from segregation. Landlords do not care if a tenant sublets their space because they will get paid the same rent and will not suffer credit risk as the original tenant is still on the hook for rent. Landlords will never allow a going dark clause in their leases.

None of the Options

Around the time of Ritz-Carlton Kapalua hotel on the market for sale, there are 12 hotels (4,909keys) for sale in the state of Hawaii. Most of the available products are located on Big Island Kauai Lanai Maui Molokai Oahu

Oahu

Figure 1.11 of Chapter 1 in the Textbook shows the spectrum of real estate investment profiles, examples of transactions, general targeted returns and leverage levels employed. Please match the type of investment strategy with target levered IRR. Which of the following investment profiles contains the highest risk? Core Core-Plus Value-Add Opportunistic

Opportunistic

Imagine you are the owner of a convenience center and you signed a lease with an anchor grocery store tenant TOPS. TOPS also opens a new store across the street at a competing shopping center, potentially cannibalizing sales at your center. The lease with TOPS is unlikely to include: Tenant Mix Clause Non-compete Cause Co-tenancy Clause Radius Restriction

Radius Restriction

Which of the following real estate exit strategies defer capital gain taxes? (select all that apply) Fee simple disposition Refinancing 1031 exchange Exchange for public company shares None of the Options, all the exit strategies will have capital gain tax

Refinancing 1031 exchange Exchange for public company shares

Which of the following statement is true? It is important for a start-up developer to diversify in a variety of businesses to hedge his risks Generally, an investment that gives you a 25% IRR and doubles your money in 4 years is a good investment in terms of risk-reward parameters Research publications, driving around a city, talking to local residents, meeting brokers, and investigating aerial photography are all good ways to understand the market Once you have become an expert at residential development, leasing, marketing, etc. it is relatively easy to transition into office development

Research publications, driving around a city, talking to local residents, meeting brokers, and investigating aerial photography are all good ways to understand the market

What is CAM? (circle all that apply) Security costs associated with hallways in malls. None of the Options Are impossible to allocate to anchors. Can be allocated pro rata according to square footage of various tenants. Utility costs associated with lobby areas Core Asset Management Costs associated with maintaining common areas of a property

Security costs associated with hallways in malls. Can be allocated pro rata according to square footage of various tenants. Utility costs associated with lobby areas Costs associated with maintaining common areas of a property

What are the major differences between the two transactions on the CoStar reports? Related case materials: 1 Browse the official website of the hotel, including the video from its homepage. 2 Read the following case documents: 2.1 Press release 2.2 CoStar sales reports

Some major differences between the two transactions include the price for the 2018 deal being higher. This is likely due to inflation as well as the fact the sellers implemented $30 million in renovations to the rooms, lobby areas, and restaurants. This can increase the value of the hotel by a considerable amount. Additionally there were three buyers and two sellers in 2016 compared to one buyer and four sellers in 2018.

`Select all true statements outlining the differences between a regional mall and a strip center: Strip centers may be dependent on a single anchor tenant, while regional malls usually have several anchors such as department stores. Locations of the two are different. Shoppers normally are willing to drive a longer distance to the regional malls. Strip centers are bigger than regional malls Strip centers often have out parcels, and regional malls usually do not. Regional malls are, in general, significantly bigger than strip centers

Strip centers may be dependent on a single anchor tenant, while regional malls usually have several anchors such as department stores. Locations of the two are different. Shoppers normally are willing to drive a longer distance to the regional malls. Strip centers often have out parcels, and regional malls usually do not. Regional malls are, in general, significantly bigger than strip centers

An anchor store, who occupies 40% of your shopping center, pays little base rent. What happens if the anchor decides to close the store with a lease in effect for 15 more years in your shopping center and move to a competing center? Select all correct answers. The anchor's behavior described in the question is known as "going dark" The anchor store will continue making its minimal lease payments to you. The landlord will have a significant physical vacancy, but not economic vacancy The anchor store will not pay any rents, because the tenant has decided to stop operating in your center When the anchor leaves, your center will have dramatically-reduced traffic, destroying the performance of your in-line tenants, who are your primary sources of rental income.

The anchor's behavior described in the question is known as "going dark" The anchor store will continue making its minimal lease payments to you. The landlord will have a significant physical vacancy, but not economic vacancy When the anchor leaves, your center will have dramatically-reduced traffic, destroying the performance of your in-line tenants, who are your primary sources of rental income.

Which of the following statement is true? The appropriate discount rate for a 10-year lease with the US Government would be equal to approximately the 10-year Treasury plus an illiquidity premium. A market with 95% residential occupancy has strong demand for office buildings because people need a place to work You should rarely build residential in a city that has 15% office vacancy. A project that can double your money in 5 years and give you a 20% IRR is a good investment

The appropriate discount rate for a 10-year lease with the US Government would be equal to approximately the 10-year Treasury plus an illiquidity premium.

Briefly describe each buyer and seller for the 2016 transaction. Related case materials: 1 Browse the official website of the hotel, including the video from its homepage. 2 Read the following case documents: 2.1 Press release 2.2 CoStar sales reports

The buyers are Ares Real Estate Management Holdings LLC, Trinity Investment LLC, and SMW Holdings LLC. The sellers are Colony Capital Inc., Woodbridge Capital Partners LLC. According to the sales notes, the sellers reason for divesting the asset was not disclosed but according to the buyers' press release this transaction represents a significant opportunity to invest in one of Hawaii's most highly acclaimed resorts. The buyers were a join venture between the three companies. In addition, it is unknown whether or not the buyer or seller used external broker representation. Ares Real Estate Management Holdings LLC is a private equity company. Trinity Investment LLC is a private real estate investment firm. SMW Holdings LLC is a real estate fund. Colony Capital Inc is an American international investment firm. Woodbridge Capital Partners LLC is a real estate investment company based in Los Angeles.

From the SWOT analysis of Ritz-Carlton Kapalua hotel at the acquisition in 2016, pick the most important (to you) one for "Opportunities".

The most important to me in the opportunities is the potential to add 146 additional units. Although one would have to sacrifice some of the tennis courts. If there is extra demand the hotel will be able to capitalize on that. Since the tennis courts are not revenue generating space, the hotel will be in prime position to pick up extra customer traffic.

A single tenancy suburban office building has a 10-year commercial lease signed 5 years ago. The property's planned performance through the life of the lease is driven by: The terms of the existing lease, only if the current market would dictate the same lease term as what has signed 5 years ago, because the lessor can renegotiate with the lessee. None of the Options The terms of the existing lease, even if the current market would dictate a very different lease term that what has signed 5 years ago. The current lease term, because the economic condition has changed.

The terms of the existing lease, even if the current market would dictate a very different lease term that what has signed 5 years ago.

Bulk warehouses are large buildings, located near major transportation hubs for ease of truck access. True False

True

Full service hotels include urban CBD and resort properties, which may carry the flag of high-price point operators such as Four Seasons or Mandarin, or a mid-price point operator like Marriott. True False

True

A CBD office building is highrise in form, while suburban office buildings tend to be new midrise structures. True False

True

A commercial lease must be extremely precise in describing the kind of business activities the tenant can, and cannot, conduct in the space. True False

True

Larger tenants, particularly in office and warehouse properties, want the expansion rights to satisfy growth at the same location. Select all the descriptions that correctly reflect the expansion option practice. The office property landlord typically does not like to offer an expansion option to large tenant in the building, because the landlord has to keep the adjacent space vacant. When a large tenant with an expansion right wants to exercise his option to occupy additional space in a next-door space, which has been leased to another tenant, the next door tenant has to leave. Landlords often sell the expansion rights/option to additional future space near or adjacent to the tenant's current location. When providing expansion rights to a large tenant, the landlord does not have to keep the adjacent space vacant. Instead, the landlord can lease that space to another tenant.

When a large tenant with an expansion right wants to exercise his option to occupy additional space in a next-door space, which has been leased to another tenant, the next door tenant has to leave. Landlords often sell the expansion rights/option to additional future space near or adjacent to the tenant's current location. When providing expansion rights to a large tenant, the landlord does not have to keep the adjacent space vacant. Instead, the landlord can lease that space to another tenant.

Brownfield sites are parcels of land that had a(n) _______ use and may be environmentally impaired. [NOTE: For filling in blank questions, please use all low case letters (rather than upper case for the first letterboxing) and use singular nouns (rather than plural).]

industrial