Financial Analysis & Reporting Flashcards

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?

Answer: $1,714,286

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

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

Answer: Rent concessions and loss-to-lease

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

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

Answer: Balance Sheet

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

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

Answer: Loss-to-lease

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

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

Answer: Debt Service Coverage Ratio

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

When preparing a leasing budget, 'turns' or 'turnover costs' typically include:

Answer: Cleaning, repairs, and make-ready costs between tenancies

Turn costs include cleaning, repairs, painting, and all make-ready expenses incurred to prepare a unit for a new tenant.

A property's Operating Expense Ratio (OER) is 45%. If EGI is $800,000, what are total operating expenses?

Answer: $360,000

Operating Expenses = OER × EGI = 0.45 × $800,000 = $360,000.