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Exam (elaborations)

UGA REAL 4000 EXAM 4 QUESTIONS AND ASNWERS (100% PASS)

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©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 3 -no liquidity -as size of investor's portfolio increase, its easier to diversify risk, create liquidity across assets, retain in-house experts or hire consultants What is the estimated market v...

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  • August 29, 2024
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©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM



UNIVERSITY OF NORTH TEXAS AT DALLAS


UGA REAL 4000 EXAM 4 QUESTIONS AND ASNWERS (100% PASS)


What is EQUITY and some examples? - Answer✔️✔️--OWNERSHIP

ex: sponsor equity, common equity

What is DEBT and some examples? - Answer✔️✔️--LOAN TO
OWNERSHIP

ex: junior debt, senior debt

Due to the large size of typical RE investments, investors almost
always..... - Answer✔️✔️-pool their equity capital

What are some ways to pool equity? - Answer✔️✔️--General
partnership

-Limited partnership

-C corporation

-S corporation

-Limited liability company (LLC)

-Tenancy-in-common

-REIT

What are the advantages of pooling equity? - Answer✔️✔️--allows
investors to purchase an interest in larger properties


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, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM



UNIVERSITY OF NORTH TEXAS AT DALLAS


-diversification of portfolio

-economies of sale in acquisitions, management and disposition

-access to cheaper debt capital

-expertise of management team hired by syndicator/ organizer

What are disadvantages of pooling equity - Answer✔️✔️--often must
relinquish management control to active manager

-must compensate sponsor with fees, salary, and/or
disproportionate share of equity ownership

What drives Choice of Ownership Form? - Answer✔️✔️-1. Federal
income tax issues/rules

2. Desire of investors for limited liability

3. Management control issues

4. Ability to access debt & additional equity capital

5. Ability to share risk with other investors

6. Ability of investors to dispose of their interests

Direct Investment - Answer✔️✔️--gives the individual & institutional
investors complete control

-but...investor must supply the expertise




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, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM



UNIVERSITY OF NORTH TEXAS AT DALLAS


-no liquidity

-as size of investor's portfolio increase, its easier to diversify risk,
create liquidity across assets, retain in-house experts or hire
consultants

What is the estimated market value of investable commercial real
estate? - Answer✔️✔️-12.6 trillion

General Partnership - Answer✔️✔️--treated as conduits for tax
purposes (don't face "double taxation")

-easily created

-partners make all operating decisions

- all partners have unlimited liability (which makes it uncommon)

Limited Partnership (LP) - Answer✔️✔️--must have at least one
general and one limited partner

-treated as conduits for tax purposes

-limited partners can cap their liability to their investment amount,
while general partners face unlimited liability

-rely on the general partner to make all decisions

C Corporation - Answer✔️✔️--most common type of corporation




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