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You are modeling an acquisition of a large industrial warehouse facility. You have the P&L for the prior three years and notice that annual Repairs and Maintenance (R&M) expenses were roughly $75k, $205k, and $197k, respectively. Which of the following should you do?CorrectIncorrect
You receive the detailed general ledger for R&M expense for each of the prior three years for an industrial acquisition and you notice in Year 2 “Replace RooftopUnit 3” for $51k, “Dock Leveler” for $42k, and in Year 3 “Zone 2 Roof” for $77k. What should you do next?CorrectIncorrect
A single-tenant office property is leased on a gross lease. Property taxes are $2.05 psf, insurance is $0.25 psf, utilities are $1.00 psf, and common area expenses are $0.55 psf. What is the total tenant reimbursement?
You are modeling the acquisition of a multi-tenant office property. Your manager points out that part of the purchase negotiation includes an allowance for a new roof. The roof bid is $4.00 psf, and that is the amount of the allowance. After reading the leases, you notice that two tenants totaling 27% of the rentable space have leases that require them to reimburse the Landlord for roof replacement. How will you allocate the cost of the roof in your model?CorrectIncorrect
A multifamily property was built as condominiums, but half of the units are rentals and half are owned by the residents. Property taxes are paid by the unit owners. The City awarded the developer/owner an annual property tax rebate equal to half of the property taxes collected. If Property Taxes are $2.00 psf, what is the net property tax liability to the developer/owner?CorrectIncorrect
A retail strip center with five tenants receives six utility bills each month. Five each identify the specific suite they are associated with, while the sixth just says “Lot.” How would you treat these utility bills in your model? Arrange the options below from best practice to worst.
Since you aren’t entirely sure what “Lot” means, include all six bills in expense, but only include the five suite-specific bills in your reimbursement.
Lump all six bills in Utility Expense, and include all six in Tenant Reimbursement Income.
Read the leases to verify that tenants are responsible for reimbursing the landlord for utilities for their suite, as well as their share of common areas.
You are building a model for your firm’s new Core Fund. The sales team needs to be able to address the before-tax and after-tax anticipated yields of the Fund. As you add a property acquisition of $23,500,000, assuming that land represents 10% of the purchase price and the building and improvements represent 90% of the purchase price, what amount will you include as the annual depreciation expense?CorrectIncorrect
You are modeling a large multi-family project for your Core-Plus fund. Your acquisition team indicates that the property will need approximately $250,000 in cosmetic improvements. The improvements include paint and new furnishings in the common areas, repairs to the parking lot, new plants and shrubs in the landscaped areas, and a new pump for the pool. Where should this expense be included in your model?CorrectIncorrect
A new warehouse facility on a long-term gross lease was just completed, and your firm is considering acquiring it. Because the property was just completed, the County Assessor’s office has not determined its market value for tax purposes. How should you determine the assumed property tax expense you will build into your model?CorrectIncorrect
A senior housing facility is managed and operated by an independent company specializing in senior care (operating company, or “Opco”). The Opco leases the facility from the property owner (“PropCo”). Your firm is considering purchasing the PropCo. If the lease is a triple-net lease, which type of insurance should you assume your firm will be responsible for purchasing, and paying for without passing along to the OpCo?CorrectIncorrect