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Real estate finance

Unit: Advanced Financial Management

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August 2025

 1 Questions
Question 2b
​​Securitisation has become an important tool in modern financial markets, enabling financial institutions to transform illiquid assets into tradeable assets. 

Required: 
In relation to the above statement, evaluate FIVE advantages of securitisation as a vehicle of financing real estate development in your country.


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December 2024

 1 Questions
Question 3a
Examine THREE instruments that could be used in financing real estate. ​​


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August 2024

 1 Questions
Question 1a
​​In relation to real estate finance, highlight FOUR differences between a “residential property” and a “commercial property”.


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April 2024

 1 Questions
Question 4a
​​Explain FOUR advantages of real estate investments.


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December 2023

 1 Questions
Question 4a
Discuss FOUR real estate financing options available to real estate investors in your country.


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August 2023

 1 Questions
Question 3b
​ ​​The following information relates to an office complex:

Sh.“000”
Gross potential rental income
1,050,000
Insurance and taxes 
78,000
Utilities
54,000
Repairs and maintenance 
69,000
Depreciation
120,000
Interest on proposed financing 
54,000

Additional information:
1.
Vacancy and collection losses are estimated at 6%.
2.
Recently, two buildings have been sold in the same locality:
  • The first building had a net operating income of Sh.1,500,000 and was sold for Sh.12 million.
  • The second building had a net operating income of Sh.675,000 and was sold for Sh.4.8 million.
Required: 
(i) The net operating income (NOI) for the office complex.

(ii) The appraised price of the office complex using the income approach.


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April 2023

 1 Questions
Question 3b
​​One of the instruments of real estate financing is mortgages. 

 Highlight FOUR methods by which the interest on a mortgage may be charged.


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December 2022

 1 Questions
Question 2c
​​Describe five forms of debt financing in regards to real estate.


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August 2022

 1 Questions
Question 2c
​ ​​Discuss Modigliani and Miller’s proposition in a real estate finance context clearly stating the assumptions of the theory.


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April 2022

 1 Questions
Question 4b
​​Propose three reasons why residential real estate investment trusts (REITs) are not popular with investors.


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Pilot December 2021

 1 Questions
Question 5b
​​Explain four advantages of investing in Real Estate Investment Trusts.


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September 2021

 1 Questions
Question 2a
​​Your country is considering establishing a mortgage refinancing company to support an affordable housing project for its citizens. The company's mandate will be to provide secure, long-term finance to primary mortgage lenders who will then advance the same to individual borrowers. 

Required: 
In the context of the above statement: 

(i) Identify three types of primary mortgage lenders that are likely to benefit from the mortgage refinancing facility in your country.

(ii) Summarise three objectives of a mortgage refinancing company in an economy. 

(iii) Highlight three minimum requirements that one must fulfil in order to qualify for a mortgage in real estate financing.


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May 2021

 1 Questions
Question 5b
​​Examine four advantages of investing in real estate.


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November 2020

 1 Questions
Question 3a
​​Explain the difference between the following terms as applied in mortgage and financial markets:

(i). "Primary mortgage market" and "secondary mortgage market".

(ii). "Fixed-rate mortgage" and "adjustable-rate mortgage

(iii) "Lien" and "recourse"


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November 2019

 1 Questions
Question 4b
​​Property A and property B are categorised under the real estate category. Property A is' all equity financed while property B is financed partly using debt and partly by equity finance. 

Both properties generated operating profit (EBIT) of Sh.41,245,900 annually. This is expected to remain constant each year in perpetuity. Unlike property A which is wholly equity financed, property B is financed partly by equity and partly by 10% debt of Sh.215,000,000. 

The cost of equity is 12% for both properties and there are no corporation taxes. Each unit of debt is trading at par. 

Required: 
The current value of each property using the Net Income (NI) approach.


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May 2019

 1 Questions
Question 3a
​​Discuss four types of risks associated with investment in real estate investment trust (REITs) securities.


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November 2018

 1 Questions
Question 5a
​​Analyse three assumptions ofthe income approach of valuing real estates business in your country.


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