Exam 17: Sources of Commercial Debt and Equity Capital

The choice of ownership form for pooled equity investments can also depend on the desire to avoid personal liability. Which of the following ownership structures suffers from the major disadvantage of unlimited liability for all investors?

Given the following information, calculate the price-FFO multiple for the following REIT. Funds from Operation: $4,000,000; Stock Price: $40; Shares Outstanding: 1,000,000

Most real estate investment trusts (REITs) are actively managed operating companies that typically focus their investments either by property type or geographic market. Which of the following commercial property types represents the largest proportion of REIT market value?

Of the $3.97 trillion in outstanding mortgage debt in the U.S., approximately $2.96 trillion is privately held by institutional and individual investors. Which of the following investor groups is the largest single source of private mortgage funds?

Given the following information, calculate the price-FFO multiple for the following REIT. Funds from Operation: $75,555,000; Stock Price: $17.80; Shares Outstanding: 185,000,000

There are two major types of REITs: Equity REITs and Mortgage REITs. Each differs in terms of what they invest in. Which of the following choices best describes the investment focus of an Equity REIT?

When investing in commercial real estate through an intermediary, it is important to consider whether the fund has a finite or infinite life. By having a finite life, the fund manager is forced to eventually dispose of the assets and return the investors' capital. With which of the following fund structures do you expect the issues associated with finite life to be least prevalent?

All of the following are responsibilities of the syndicator in the origination phase of a syndicate's life EXCEPT:

The syndication agreement generally creates a principal/agent relationship in which the syndicator (agent) is empowered to act on behalf of the investors (principals). In most principal/agent relationships, there is the concern that the agent will act in the agent's best interest, not in the best interests of the principal. This issue is more commonly referred to as:

Section 1031 of the Internal Revenue Code permits investors to defer some or all of the taxable gain that would ordinarily be due on the sale of a property if they exchange for "like-kind" property. In order to avoid income taxes, many investors attempted to make use of this tax code when disposing of commercial real estate assets. This led to the reemergence of which of the following forms of ownership in commercial real estate?

Given the following information, calculate the price-FFO multiple for the following REIT. Net income: $1,200,000; Gain/losses from infrequent and unusual events: $0, Amortization of tenant improvements: $120,000; Amortization of leasing expenses: $75,000; Depreciation (real property): $2,675,000; Stock Price: $40; Market Capitalization: $40,000,000

Which of the following types of real estate private equity funds would you expect to invest in properties that have some lease-up risk and/or the need for moderate renovation or repositioning?

Though difficult to accurately measure, the market value of U.S. real estate held by non-real estate corporations is estimated to exceed $12.5 trillion. All of the following are examples of noninvestible commercial real estate EXCEPT:

Given the following information, calculate the funds from operation (FFO). Net income: $1,200,000; Gain/losses from infrequent and unusual events: $0; Amortization of tenant improvements: $120,000; Amortization of leasing expenses: $75,000; Depreciation (real property): $2,675,000.

At the end of 2015, commercial banks and other financial institutions collectively owned $15 billion in commercial real estate equity. The vast majority of these holding are the result of which of the following types of investment by these institutions?

One measure of the importance of a publicly traded asset class in the U.S. economy can be calculated by multiplying the number of publicly traded shares by the current market price of the stock. The result of this calculation is more commonly referred to as:

In recent years, which of the following pooled ownership structures are used by private funds that are trying to attract capital from very high net worth and institutional investors?

Ownership forms for pooled equity investment can differ in terms of how the entity's cash flows are distributed to its investors. Which of the following ownership structures requires cash flows to be allocated to each shareholder in proportion to his or her ownership of the entity, thereby preventing special allocations to multiple classes of investors?

Given the following information, calculate the funds from operation (FFO). Net income: $44,245,000; Gain/losses from infrequent and unusual events: $50,000; Amortization of tenant improvements: $575,000; Amortization of leasing expenses: $133,000; Depreciation (real property): $30,906,000.

Direct investment in private commercial real estate markets is a preferred means of ownership for the largest institutional market participants. Which of the following types of institutions rely on stable income from commercial real estate properties to pay out retirement benefits?