Real Estate Feasibility Quiz 3 Set 1

Front 1

As the cost of a given site increases, the building improvements will be of

Back 1

higher quality and will cost more to develop

Front 2

as the price of land increases, the site is likely to be more

Back 2

densely developed

Front 3

In phase I the developer may use ------- or combine ----- with ----- ----- to acquire the land

Back 3

equity, combine equity, debt financing

Front 4

the loan used for funds to construct the building and other site improvement. This loan usually comes from a commercial bank, a mortgage banking company, or, in some cases, a savings and loan association.

Back 4

construction or interim loan

Front 5

materials and labor for site improvements

Back 5

hard costs

Front 6

leasing costs, planning costs, and management

Back 6

soft costs

Front 7

too much ------ and ----------------------- in a local market may result in significant overbuilding or an excess supply of space, which in turn may result in more vacancies and a reduction in rents.

Back 7

speculative and open-ended construction lending

Front 8

may be obtained occasionally from a standby lender when the developer cannot or does not want to pay fees to obtain a permanent loan commitment, because the borroer expects to find a permanent loan commitment elsewhere after construction is under way, because the developer is planning to seel the project upon completion

Back 8

standby commitments

Front 9

like the permanent loan, standby commitment funds are used to repay the

Back 9

construction loan

Front 10

when a developer obtains a permanent loan commitment prior to actual development and prior to obtaining a construction loan, the permanent lender usually includes --------- in the commitment

Back 10

contingenceis

Front 11

when a construction lender is unwilling to accept a pro rata funding take out, however, the developer may have to find a third party lender to stand by and provide a ----------- ----------- commitment.

Back 11

gap financing

Front 12

this commitment provides that the ---- between any partial funding advanced by the permanent lender (because a rental achievement hast not been met by the developer as of the date the permanent loan is scheduled to close) and the funds needed to repay the construction lender will be provided by a

Back 12

gap, gap lender

Front 13

the gap lenderusually takes a---------------- and earns interest at a higher rate than both the interim and permanent lenders

Back 13

second lien position

Front 14

a developer may obtain a single loan from an interim lender and use it to finance construction and operations for a year or two beyond the lease up state. this variation, used in place of obtaining both a construction loan and a permanent loan is the so called

Back 14

mini perm loan

Front 15

the most commonly used method to disburse funds for commercial development is the-----------------------. Used extensively in the construction of larger scale projects requiring sizable loans.

Back 15

monthly draw method

Front 16

more formal agreement in which 1, the permanent lender agrees to buy the construction mortgage loan directly from the construction lender on the completion date, assuming all contingencies are met, and 2, the two lenders agree about their duties and responsibilities

Back 16

tri party buy sell agreement

Front 17

limits the liability of borrowers by restricting the claim of lenders to proceeds from the sale of the real estate in the event of default.

Back 17

exculpation or non recourse, clause

Front 18

when project developers contract with various building contractors to perform work, developers -------------- a percentage (10%) of each progress payment made to such contractors until all work is satisfactorily completed

Back 18

holdbacks

Front 19

permanent loan terms are ----------before construction begins

Back 19

predetermined

Front 20

in retail operation, rent is usually divided into what two components?

Back 20

minimum rent per square foot and percentage rent