CRECI Commercial Real Estate Finance 2

Question 1

What does the term 'amortization' refer to in a commercial real estate loan?

Accepted Answer

The process of gradually paying down the loan principal over time

Answer

The lender's fee for originating the loan

Answer

The penalty charged for early loan payoff

Answer

The annual adjustment of the interest rate

Question 2

A commercial property has a NOI of $200,000 and the market cap rate is 6.5%. What is the estimated property value?

Accepted Answer

$3,076,923

Answer

$1,300,000

Answer

$1,538,462

Answer

$2,600,000

Question 3

What is a 'balloon payment' in commercial real estate financing?

Accepted Answer

A large lump-sum payment due at the end of the loan term

Answer

A prepayment penalty assessed at loan closing

Answer

Monthly interest-only payments during the loan term

Answer

An adjustable rate tied to a market index

Question 4

Which ratio measures a borrower's ability to service debt from property income?

Accepted Answer

Debt Service Coverage Ratio (DSCR)

Answer

Loan-to-Value Ratio (LTV)

Answer

Operating Expense Ratio (OER)

Answer

Equity Yield Rate

Question 5

In commercial real estate, what is 'mezzanine financing'?

Accepted Answer

A hybrid debt/equity instrument subordinate to senior debt but senior to equity

Answer

A first mortgage secured by the property

Answer

A government-backed loan for affordable housing

Answer

A line of credit used for operating expenses

Question 6

What is a 'recourse loan' in commercial real estate?

Accepted Answer

A loan that allows the lender to pursue the borrower's personal assets if the property collateral is insufficient

Answer

A loan that can be assumed by a future buyer

Answer

A loan with no prepayment penalty

Answer

A government-guaranteed commercial mortgage

Question 7

Which of the following best describes a 'participating mortgage'?

Accepted Answer

A loan where the lender receives a portion of income or appreciation in addition to interest

Answer

A mortgage shared equally between two lenders

Answer

A government-insured commercial mortgage

Answer

A mortgage that adjusts based on a benchmark rate