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CAIA > CAIA - 17 - Listed vs. Unlisted Real Estate > Flashcards

CAIA - 17 - Listed vs. Unlisted Real Estate Flashcards

1
Q

___-___ real estate funds are funds with an indefinite life that do not limit the number of shares they offer investors.

A

Open-end real estate funds are funds with an indefinite life that do not limit the number of shares they offer investors.

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2
Q

In the ___, open-end funds typically redeem on a first come, first serve basis. In ___, investors do not typically have to wait.

A

In the U.S., open-end funds typically redeem on a first come, first serve basis. In Europe, investors do not typically have to wait.

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3
Q

In the UK, the primary unlisted open-end investment vehicle is a ___ ___ ___ .

A

In the UK, the primary unlisted open-end investment vehicle is a property unit trust.

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4
Q

Property unit trust prices are based on ___ ___.

A

Property unit trust prices are based on appraised values.

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5
Q

In the UK ___ ___are unregulated property unit trusts open only to institutional investors that are exempt from capital gains tax or corporation tax.

A

In the UK unauthorized PUTs are unregulated property unit trusts open only to institutional investors that are exempt from capital gains tax or corporation tax.

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6
Q

___ ___ are designed to provide UK retail investors exposure to RE properties.

A

Authorized PUTs are designed to provide UK retail investors exposure to RE properties.

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7
Q

Authorized puts (are/are not) exempt from capital gains tax

A

Authorized puts are exempt from capital gains tax

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8
Q

There are three types of property unit trusts (PUTs) for UK RE exposure:

  1. ___ PUTs
  2. ___ PUTs
  3. ___ PUTs
A

There are three types of property unit trusts (PUTs) for UK RE exposure:

  1. Unauthorized PUTs
  2. Authorized PUTs
  3. Offshore PUTs
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9
Q

___ ___ ___ ___ are investment vehicles that can invest in RE directly or indirectly (primarily via UK REITs)

A

Property authorized investment funds are investment vehicles that can invest in RE directly or indirectly (primarily via UK REITs)

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10
Q

___-___real estate funds are funds with a finite life that issue a fixed number of shares before making any RE investments.

A

Closed-end real estate funds are funds with a finite life that issue a fixed number of shares before making any RE investments.

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11
Q

Most closed-end RE funds are established as ___ ___, a key advantage of which is their ___-___status.

A

Most closed-end RE funds are established as limited partnerships, a key advantage of which is their tax-neutral status.

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12
Q

Real estate fund of funds are typically ___-end in the U.S. and U.K and ___-end in the rest of Europe.

A

Real estate fund of funds are typically open-end in the U.S. and U.K and closed-end in the rest of Europe.

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13
Q

The advantage of a fund of funds is that it provides ___.

A

The advantage of a fund of funds is that it provides diversification.

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14
Q

The disadvantage of a fund of funds is that it has ___ ___.

A

The disadvantage of a fund of funds is that it has extra fees.

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15
Q

There are four advantages of unlisted RE funds:

  1. ___ of ___
  2. ___ ___ provides potentially higher returns and less risk
  3. ___ ___ for certain regions or subsectors
  4. ___-___income.
A

There are four advantages of unlisted RE funds:

  1. Diversification of risk
  2. Skilled managers provides potentially higher returns and less risk
  3. Targeted investments for certain regions or subsectors
  4. Tax-exempt income.
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16
Q

There are 3 main disadvantages of fund of funds:

  1. ___ ___ can reduce returns
  2. ___can be significant
  3. ___and ___-___effect
A

There are 3 main disadvantages of fund of funds:

  1. Cash drag can reduce returns
  2. Fees can be significant
  3. Leverage and J-curve effect
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17
Q

___ ___are vertically integrated firms involved in land acquisition, development, ownership, operation and tenant services.

A

Large REITs are vertically integrated firms involved in land acquisition, development, ownership, operation and tenant services.

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18
Q

___ are professionally managed, and have the tax advantage of not paying corporate income tax on taxable profits provided they distribute a large portion of their income to shareholders in the form of dividends.

A

REITs are professionally managed, and have the tax advantage of not paying corporate income tax on taxable profits provided they distribute a large portion of their income to shareholders in the form of dividends.

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19
Q

___ ___ ___ ___ are similar to REITs except they search for capital gains and are more flexible.

A

Real Estate Operating Companies are similar to REITs except they search for capital gains and are more flexible.

20
Q

Real Estate ETFs offer the following advantages:

  1. ___ ___
  2. ___ ___
  3. ___-___features.
A

Real Estate ETFs offer the following advantages:

  1. Low cost
  2. Tax efficent
  3. Stock-like features.
21
Q

There are 6 advantages of listed RE funds:

  1. ___ of ___
  2. ___and ___
  3. ___ ___ to RE
  4. ___ for investors
  5. ___ investments
  6. ___-___ income
A

There are 6 advantages of listed RE funds:

  1. Diversification of risk
  2. Liquidity and divisibility
  3. Instant exposure to RE
  4. Information for investors
  5. Targeted investments
  6. Tax-exempt income
22
Q

There are 2 disadvantages of RE funds:

  1. Trade at ___/___to ___
  2. ___ ___ with stocks.
A

There are 2 disadvantages of RE funds:

  1. Trade at discount/premium to NAV
  2. Highly correlated with stocks.
23
Q

Non-US REITs (do/do not) pay corporate taxes

A

Non-US REITs do not pay corporate taxes

24
Q

Global REITs differ from US REITs on rules related to ___ and ___of ___

A

Global REITs differ from US REITs on rules related to management and use of leverage

25
Q

Many non-US REITs have ___ managers

A

Many non-US REITs have external managers

26
Q

Many non-US REITs have limits on ___ ___

A

Many non-US REITs have limits on debt financing

27
Q

Most REITs adopt an ___, ___-___style

A

Most REITs adopt an active, top-down style

28
Q

REITs typically apply a (growth/value) style

A

REITs typically apply a growth style

29
Q

___-___ ___ are illiquid investments that are available to retail investors through registered investment advisors.

A

Non-Traded REITs are illiquid investments that are available to retail investors through registered investment advisors.

30
Q

Non-Traded REITs typically have a life span of ___-___years.

A

Non-Traded REITs typically have a life span of 7-10 years.

31
Q

Non-traded REITs have up front fees of ___-___%

A

Non-traded REITs have up front fees of 12-15%

32
Q

A major challenge for Non-Traded REITs occurs in the ___-___ phase, when investors expect ___ but the REIT needs to ___ ___.

A

A major challenge occurs in the ramp-up phase, when investors expect dividends but the REIT needs to cover fees.

33
Q

Non-Traded REITs must pay out ___% of taxable income as dividends

A

Non-Traded REITs must pay out 90% of taxable income as dividends

34
Q

Non-Traded REITs are classified as ___, ___or ___.

A

Non-Traded REITs are classified as equity, mortgage or hybrid.

35
Q

The life cycle of non-traded REITs has 4 phases:

  1. ___ ___
  2. ___ ___
  3. ___ ___
  4. ___
A

The life cycle of non-traded REITs has 4 phases:

1. Capital raising

2. Property purchase

3. Asset management

4. Disposition

36
Q

Non-Traded REITs can adopt two strategies or a combination of:

  1. ___ ___
  2. ___ ___
A

Non-Traded REITs can adopt two strategies or a combination of:

1. Current income

2. Price appreciation

37
Q

Non-Traded REITs receive 3 key criticisms:

  1. ___ presents misleadingly ___ ___
  2. ___ ___that entail ___of ___
  3. Use ___to fund ___ ___
A

Non-Traded REITs receive 3 key criticisms:

  1. Illiquidity presents misleadingly low volatility
  2. High fees that entail conflicts of interest
  3. Use leverage to fund dividend payments
38
Q

There are 4 potential reasons why publicly traded REITs have wider return dispersions:

  1. Prices are ___ ___
  2. Underlying properties have ___ ___
  3. REITs use ___
  4. Volatility due to equity market ___ ___
A

There are 4 potential reasons why publicly traded REITs have wider return dispersions:

  1. Prices are not smoothed
  2. Underlying properties have different risks
  3. REITs use leverage
  4. Volatility due to equity market liquidity shifts
39
Q

The importance of acurate pricing and risk estimation can be considered at the ___ level and ___level.

A

The importance of acurate pricing and risk estimation can be considered at the investor level and macroeconomic level.

40
Q

The macroeconomic level of mispricing risk is that RE projects will be ___ relative to the ___to ___.

A

The macroeconomic level of mispricing risk is that RE projects will be overfunded relative to the benefit to society.

41
Q

The ___ of ___ involves any collection of securities in a single entity.

A

The pooling of securities involves any collection of securities in a single entity.

42
Q

___ is the pooling of non-publicly traded assets into publicly traded securities.

A

Securitization is the pooling of non-publicly traded assets into publicly traded securities.

43
Q

A benefit of ETFs is that their underlying securities can be ___ when an ETF’s market price deviates from the NAV.

A

A benefit of ETFs is that their underlying securities can be arbitraged when an ETF’s market price deviates from the NAV.

44
Q

Financial market ___ refers to differences in pricing of similar assets trading in separate markets, which is attributable to differences in the markets due to different market clientele.

A

Financial market segmentation refers to differences in pricing of similar assets trading in separate markets, which is attributable to differences in the markets due to different market clientele.

45
Q

The ___ ___ specify that REITs that trade a particular percentage of properties in a specific time period have their capital gains fully taxed.

A

The dealer rules specify that REITs that trade a particular percentage of properties in a specific time period have their capital gains fully taxed.

46
Q

REIT indexes have ___ autocorrelation.

A

REIT indexes have low autocorrelation.

CAIA (39 decks)

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