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Commercial Real Estate Test With Complete Solutions
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Commercial Real Estate Test With Complete SolutionsProperty Types - Answer Office, Retail, Warehouse, Apartments
Commercial Properties - Answer Office, Retail and Warehouse
2 leasing terms - Answer It's locked and must have capital
Tenant Improvements - Answer Owners negotiate a financial allowance with tenants
toward cost of making space ready for occupancy (lighting, flooring)
Leasing Commissions - Owners engage leasing agents or "brokers" to market and
provide tours of the properties and to identify and sign prospective tenants.
Compensation is typically computed as a percent of the lease income stream's value.
This is approximately 5%.
Apartments - 1 year leases. No capital costs. Shelter is a basic human need.
Asset Classes - Stocks (.45-.55), Bonds (.35-.45), Alternative Investments (high yield
.10-.20)
Hard Assets - Answer Real estate, timber, agriculture, energy, etc.
Class A Risk Segment - Answer Low risk, stable cash flow, high quality property and
location, low leverage (<50%), 7-9% IRR)
Class B Risk Segment - Answer Moderate risk, enhances existing cash flow, good
quality with renovation strategy, high leverage (75%-80%), 10-14% IRR
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