BOMA Asset Management & Property Valuation 2

Question 1

The sales comparison approach to property valuation works by:

Accepted Answer

Analyzing recent sales of comparable properties to derive market value

Answer

Capitalizing projected future income to determine present value

Answer

Estimating the cost to replace the building structure minus accrued depreciation

Answer

Calculating the discounted cash flows over a projected hold period

Question 2

Commercial real estate due diligence prior to acquisition typically encompasses:

Accepted Answer

Physical inspection, financial review, legal analysis, and environmental assessment

Answer

Title review and purchase price negotiation only

Answer

Tenant interviews and market rent surveys only

Answer

Insurance procurement and mortgage lender approvals only

Question 3

A 'going-in' capitalization rate refers to:

Accepted Answer

The cap rate applied to current NOI to determine the acquisition purchase price

Answer

The projected exit cap rate estimated at the time of future property disposition

Answer

The cap rate derived from stabilized year-two projected NOI

Answer

The internal rate of return target set by the investment committee

Question 4

Portfolio diversification in real estate asset management is best achieved by:

Accepted Answer

Spreading investments across property types, geographic markets, and tenant industries to reduce risk

Answer

Concentrating all investments in a single high-performing market

Answer

Maximizing leverage across all assets to boost equity returns

Answer

Acquiring only Class A trophy assets in gateway cities

Question 5

The Internal Rate of Return (IRR) is primarily used in asset management to:

Accepted Answer

Measure the total return on an investment over the entire projected hold period

Answer

Calculate the annual income yield from a stabilized property

Answer

Determine the ratio of outstanding debt to current property value

Answer

Compare gross rents among competing properties in the same submarket

Question 6

'Economic vacancy' differs from 'physical vacancy' in that it additionally accounts for:

Accepted Answer

Income lost due to free rent concessions, below-market leases, and credit losses

Answer

Space that is physically unoccupied by any tenant

Answer

Government-mandated rent controls that reduce allowable income

Answer

The number of lease expirations expected in the next 12 months

Question 7

Under BOMA measurement standards, 'rentable area' typically includes:

Accepted Answer

Usable area plus a proportionate share of common areas on the floor and in the building

Answer

Only the square footage within a tenant's demising walls (usable area)

Answer

Total floor plate area including all mechanical and structural spaces

Answer

Gross building area minus all vertical penetrations and exterior walls