CLP Financial Analysis & Reporting 3

Question 1

A property has an NOI of $120,000 and was purchased for $1,500,000. Comparable properties sell at a 7% cap rate. What is the property's estimated market value?

Accepted Answer

$1,714,286

Answer

Market Value = NOI / Cap Rate = $120,000 / 0.07 = $1,714,286.

Question 2

In leasing financial analysis, 'economic vacancy' differs from 'physical vacancy' because it also accounts for:

Accepted Answer

Rent concessions and loss-to-lease

Answer

Economic vacancy includes physical vacancy plus rent concessions, loss-to-lease, and other income reductions beyond simply empty units.

Question 3

Which document provides a snapshot of a property's assets, liabilities, and owner's equity at a specific point in time?

Accepted Answer

Balance Sheet

Answer

A balance sheet presents assets, liabilities, and equity at a specific date, providing a financial snapshot of the property.

Question 4

A leasing manager reviews a property where actual rents collected are lower than market rents for identical units. This difference is called:

Accepted Answer

Loss-to-lease

Answer

Loss-to-lease represents the difference between market rents and the actual rents currently being collected under existing leases.

Question 5

Which financial ratio is used to evaluate whether a property generates sufficient income to cover its debt obligations?

Accepted Answer

Debt Service Coverage Ratio

Answer

The Debt Service Coverage Ratio (DSCR) = NOI / Annual Debt Service, and lenders use it to assess loan repayment capacity.

(CLP) Certified Leasing Professional Practice Test

(CLP) Certified Leasing Professional Practice Test

CLP Financial Analysis & Reporting 3