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RECA Commercial Unit 2 Exam Guide Top Rated 2024 CORRECT QUESTIONS AND ANSWERS GRADE A.
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RECA Commercial Unit 2 Exam Guide Top Rated 2024 CORRECT QUESTIONS AND ANSWERS GRADE A.
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RECA Commercial Unit 2 Exam Guide TopRated 2024 CORRECT QUESTIONS AND
ANSWERS GRADE A.
Commercial real estate assets have a number of attributes that make
them unique relative to other types of investments. These attributes
include the following: (x10) - ANSWER >>> 1. They involve land
2.Transaction time frames are long
3. Transaction costs are high
4. they are expensive
5. They are long lasting
6. Highly regulated
7. have a long production cycle
8. are management intensive
9. are heterogeneous
10. Involve measuring return on investment
1. Long-lasting, Durable Goods
2. Expensive, High-valued (left for well capitalized investors)
3. Transaction Costs: Due diligence and commissions alone comprise
about three to five percent of transaction costs.
4. Transaction Time Frame
5. Land
6. Heterogeneous: every parcel of land is unique so every commercial
real estate asset is unique. However, improvements are rarely
identical as unique site characteristics, land use regulations, and the
market often require different solutions from developers.
7. Return Measures
8. Management Intensive
9. Long Production Cycle: it takes time to develop and construct new
commercial real estate assets to meet the needs of the expanding
,population. This results in the real estate supply being relatively slow
to respond to changes in demand (i.e. inelastic supply).
10. Highly Regulated
Inelastic supply - ANSWER >>> there is a limited supply. To illustrate,
many cities are geographically constrained and have a Land Use
Bylaw that limits the ability to change the use of a parcel of land. This
results in a relatively inelastic supply of land for commercial purposes.
Inelastic supply means the supply cannot readily adjust to changes in
demand or price.
four major commercial real estate asset product types according to
Real Capital Analytics - ANSWER >>> Office: Refers to real estate
primarily used for office space
Retail: Refers to retail properties, such as strip centres or
neighbourhood, community, regional and super-regional shopping
malls
Industrial: Refers to real estate for industrial use, such as distribution,
manufacturing, or warehouse facilities and data centres
Apartment: Refers to multi-family rental properties.
Other miscellaneous product types include hotels, leisure (e.g golf
courses), and special use (e.g. casinos)
3 miscellaneous product types - ANSWER >>> hotel, leisure (e.g. golf
courses), and special use (e.g. casinos).
Categorization by Building Class - ANSWER >>> For example, office
properties are often categorized as Class A, B, or C.
Categorization by Number of Storeys - ANSWER >>> For example,
apartment properties are classified as either garden complexes (one
or more low-rise buildings consisting of four storeys or less) or
,mid/high-rise projects (one or more buildings consisting of four storeys
or greater).
Categorization by building's Property Location - ANSWER >>> For
example, in addition to building class, office properties are often
categorized based on their location as either central business district
(CBD) or suburban.
Categorization by building's Type - ANSWER >>> For example, the
International Council of Shopping Centres (ICSC) defines different
types of shopping centres according to size (gross leasable area and
land area), types of tenants, and trade area.
The length of time for the Commercial Real Estate Asset Life Cycle
process varies considerably depending on a number of factors,
including the following: (x5) - ANSWER >>> The real estate asset's
product type
The size and complexity of the project
The regulatory environment
The need for related infrastructure
The financial and operational capability of the investor(s)
A typical commercial real estate asset undergoes three phases during
its life cycle: - ANSWER >>> Phase I: Land Acquisition and
Development
Phase II: Building Construction
Phase III: Operations and Asset Management
Phase I: Land Acquisition and Development
, During Phase I, the developer acquires the land and undertakes the
necessary development and pre-construction work. This involves the
following: (x3) - ANSWER >>> Completing a feasibility analysis
Enlisting the professional services of planning specialists, architects,
engineers and contractors, and marketing experts
Soliciting capital providers (e.g. investors, lenders)
True or False - With the exception of a multi-family project, usually
some pre-leasing must be in place. - ANSWER >>> True - Capital
providers often require pre-leasing, which involves obtaining lease
commitments in advance of construction. In fact, a construction lender
may not commit construction funds until there are leasing
commitments for a certain percentage of the space. With the
exception of a multi-family project, usually some pre-leasing must be
in place. Once lease up of the rest of the asset is complete (i.e. full
occupancy), most of the risk associated with the development is
eliminated.
Four professional organizations that represent both property
management and asset management professionals. - ANSWER >>>
Building Owners and Managers Association (BOMA)
Institute of Real Estate Management (IREM)
National Council of Real Estate Investment Fiduciaries (NCREIF)
Real Property Association of Canada (REALpac)
True or False - In the process of operating and maintaining a real
estate asset, the property manager is responsible first to the tenant -
ANSWER >>> False - In the process of operating and maintaining a
real estate asset, the property manager is responsible first to the
investor and second to the tenants. The property manager is expected
to follow the investor's lawful instructions.
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