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37 Cards in this Set
- Front
- Back
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Allocation of value
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dividing total value into component parts
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"As is" value
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the value of a property as of a given date under its & the market existing conditions
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Business enterprise value
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value enhancement from intangibles in a business
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Contract rent
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the rent paid or owed by a contract
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Discounted cash flow (DCF) analysis
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a valuation tool that expresses patterned cash flow discounted to a present value (minimum information: income, changes in income, reversion, discount rate); a yield capitalization method where anticipated future cash flows are discounted to PV
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Economic feasibility analysis
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analysis to see if a project will meet specific investor requirements or criteria
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Excess rent
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rent paid over market
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Feasibility analysis
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same as economic feasibility
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Financial feasibility analysis
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same as economic feasibility
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Forecasting
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prediction or conclusion of the future used in e.g. DCF analysis inputs
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Four agents of production
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land, labor, capital, coordination
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Gross sellout
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the money received in a subdivision DCF before net out expenses & costs
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Internal rate of return (IRR)
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the rate (yield) that results in a net present value (NPV) = 0. The rate that satisifies PV of inflows to an investment minus the PV of investment = 0
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Leased fee interest
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owner's interest in leased property
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Leasehold interest
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tenant's interest in leased property
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Marketability study
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study of market for a particular property
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Market rent
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the rent that should be charge if the property were available in the open market
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Market value
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an objective value; a value that meets the definition requirements of a market value definition
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Net present value (NPV)
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PV of investment - PV of inflows
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Partial interest
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part of the whole value
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Problem property
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a property that has not attained the use it was designed for; partially completed property; one with high risk because of size or complexity
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Proposed property
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one not yet built
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Prospective value
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a future value
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Real Estate Investment Trust (REIT)
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pools funds of small investors to buy or lend in real estate; generally a trust organized in Massachusetts
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Sandwich leasehold interest
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a tenant's interest where the tenant leases to another tenant but pays to another tenant or the owner
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Securitization
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converting ownership of real property interests in the form of securities or investment vehicles that issue securities
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Subleasehold position
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a position where the tenant is leasing from another tenant
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Syndication
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a private or public partnership that pools funds to invest in real estate
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Tranche
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layering real property rights to sell off each right individually
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Value "as is"
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the value of the property as it exists under its current or the actual market conditions
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Value upon achievement of stabilized occupancy/condition
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the value as if the occupancy of the property is stable
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Value upon completion of construction
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value as if the improvements are completed
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Limitations & Pitfalls - IRR
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1. more than 1 IRR if negative cash flow in series
2.negative NPV - IRR not meaninful 3. negative IRR 4. little or not equity 5. reinvestment concept 6. IRR before & after taxes = |
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IRR
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rate where NPV = 0
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Other measures of investment performance
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1. IRR with reinvestment (MIRR)
2. IRR with specific borrowing rate (FMRR) |
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Business enterprise value
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1. NOI to business / R to business = value of business (including real estate & business enterprise)
2. NOI to real estate / R to real estate = value of real estate 3. Subtract: NOIs & Values to derive R to business enterprise |
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Subdivision development cost-timeline
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1. Start - land value
2. Completion - Costs, taxes, overhead, profit 3. Sell-out- marketing, taxes, overhead, profit |
