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Question
Adjustments to NOI: Recurring Capital Expenditures
Science City Industrial Park has 2,000,000 square feet of flex space. NOI for the asset has averaged $20,000,000 per annum. In each of the next five years management expects to spend $0.50 per square foot on non-revenue generating capital expenditures. What is our forecast for adjusted NOI.
Answer
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Related questions
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Valuation: NPV The owners of the Centre at New Hope purchased the property at the end of 2002. Adjusted NOI for 2003 was projected at $4 million and expected to rise at 5% per annum over a seven year hold period. The property was purchased at a 9% cap rate based on 2003 adjusted NOI. The owners expect that they will be able to sell it at the end of the holding period at an 8% cap rate. Can the owners achieve a 10% return? (Assume the owners are tax exempt)
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Under GAAP accounting commercial properties are depreciated over a 39 year life. Do you agree with this accounting treatment? Explain the basis for your answer. Can you suggest an alternative method?
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General
An office building has 10,000 square feet. Average rent is $20 per foot. Average operating expenses are $10 per foot. The average expense stop is $6 per foot. Every fifth year a 5,000 square foot tenant comes up for renewal and it costs $25 per foot to replace the tenant (leasing commissions and tenant allowance). Non revenue generating capital expenditures is $1 per foot per year. What is the stabilized pre tax cash flow?
a) $105,000
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Depreciation
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Adjustments to NOI: Vacancy Loss
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a) Base Rent.
b) Minimum Rent.
c) Average Rent.
d) Effective Rent.
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One of the following was not a result of the financial crisis: a) Interest-only loans b) Increased amortization c) Higher credit spreads d) Lower LTV limits
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If LTV increases and debt service coverage decreases what is the impact on the cost of debt? a) decreases b) remains the same c) increases d) no impact
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You believe your property is reaching peak cash flow potential. You can sell an equity joint venture interest to a pension fund or increase the amount of the first mortgage outstanding. What are the implications of each of these choices? You read an article in the local paper about a new development that threatens the market dominance of your property. Does this change your choice of financing?
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Which of the following is not a reason to sell an asset in a sale-leaseback transaction? a) because the property owner does not want to use the space b) to transfer depreciation expense to an investor c) as an alternative to refinancing the property d) to provide financing for a new acquisition
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Characteristics of Reg D offerings generally include all of the following except:
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a) pro rata allocations
b) allocations that are reflected in capital accounts
c) liquidations in accord with capital accounts
d) restoration of deficit capital accounts
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i) market transparency
ii) first mover advantage
iii) technology transfer
a) i,iii
b) i,ii
c) ii,iii
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True or False
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ii) access to lower cost capital
iii) moving allowance
iv) tenant allowance
v) lease buy-out
a) i,ii,iii
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b) sufficient utilities
c) availability of skilled labor
d) availability of greenhouse gasses
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a) sale-leaseback
b) industrial development bond
c) historic tax credit
d) enterprise zone
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Put the stages of the land development process in the proper order: a) Contact Broker, Option, Development, Sales b) Contact Broker, Development, Option, Sales c) Development, Contact Broker, Sales, Option d) Option, Contact Broker, Sales, Development
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Which tranche takes the greatest risk in CMBS?
a) Residual
b) Senior
c) Subordinated
d) PSA
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Five years ago you invested in a brand new 100,000 square foot office building. The building was fully leased to great tenants with 10 year leases. You financed your purchase with a ten year mortgage at a rate that would be considered high in todays market. You can refinance today and get a new ten year loan at a lower rate. You will however be required to pay your current lender a steep prepayment penalty. You can also wait until the loan comes to term and repay the loan without any penalty. This was your plan until you recently read about a brand new office park being discussed for the old farm just a mile down the road. Coincidentally, this development, if built, could open just as your tenant leases are coming up for renewal. What are your thoughts?