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37 Cards in this Set

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