CAIA - 17 - Listed vs. Unlisted Real Estate Flashcards
___-___ real estate funds are funds with an indefinite life that do not limit the number of shares they offer investors.
Open-end real estate funds are funds with an indefinite life that do not limit the number of shares they offer investors.
In the ___, open-end funds typically redeem on a first come, first serve basis. In ___, investors do not typically have to wait.
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.
In the UK, the primary unlisted open-end investment vehicle is a ___ ___ ___ .
In the UK, the primary unlisted open-end investment vehicle is a property unit trust.
Property unit trust prices are based on ___ ___.
Property unit trust prices are based on appraised values.
In the UK ___ ___are unregulated property unit trusts open only to institutional investors that are exempt from capital gains tax or corporation tax.
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.
___ ___ are designed to provide UK retail investors exposure to RE properties.
Authorized PUTs are designed to provide UK retail investors exposure to RE properties.
Authorized puts (are/are not) exempt from capital gains tax
Authorized puts are exempt from capital gains tax
There are three types of property unit trusts (PUTs) for UK RE exposure:
- ___ PUTs
- ___ PUTs
- ___ PUTs
There are three types of property unit trusts (PUTs) for UK RE exposure:
- Unauthorized PUTs
- Authorized PUTs
- Offshore PUTs
___ ___ ___ ___ are investment vehicles that can invest in RE directly or indirectly (primarily via UK REITs)
Property authorized investment funds are investment vehicles that can invest in RE directly or indirectly (primarily via UK REITs)
___-___real estate funds are funds with a finite life that issue a fixed number of shares before making any RE investments.
Closed-end real estate funds are funds with a finite life that issue a fixed number of shares before making any RE investments.
Most closed-end RE funds are established as ___ ___, a key advantage of which is their ___-___status.
Most closed-end RE funds are established as limited partnerships, a key advantage of which is their tax-neutral status.
Real estate fund of funds are typically ___-end in the U.S. and U.K and ___-end in the rest of Europe.
Real estate fund of funds are typically open-end in the U.S. and U.K and closed-end in the rest of Europe.
The advantage of a fund of funds is that it provides ___.
The advantage of a fund of funds is that it provides diversification.
The disadvantage of a fund of funds is that it has ___ ___.
The disadvantage of a fund of funds is that it has extra fees.
There are four advantages of unlisted RE funds:
- ___ of ___
- ___ ___ provides potentially higher returns and less risk
- ___ ___ for certain regions or subsectors
- ___-___income.
There are four advantages of unlisted RE funds:
- Diversification of risk
- Skilled managers provides potentially higher returns and less risk
- Targeted investments for certain regions or subsectors
- Tax-exempt income.
There are 3 main disadvantages of fund of funds:
- ___ ___ can reduce returns
- ___can be significant
- ___and ___-___effect
There are 3 main disadvantages of fund of funds:
- Cash drag can reduce returns
- Fees can be significant
- Leverage and J-curve effect
___ ___are vertically integrated firms involved in land acquisition, development, ownership, operation and tenant services.
Large REITs are vertically integrated firms involved in land acquisition, development, ownership, operation and tenant services.
___ 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.
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.
___ ___ ___ ___ are similar to REITs except they search for capital gains and are more flexible.
Real Estate Operating Companies are similar to REITs except they search for capital gains and are more flexible.
Real Estate ETFs offer the following advantages:
- ___ ___
- ___ ___
- ___-___features.
Real Estate ETFs offer the following advantages:
- Low cost
- Tax efficent
- Stock-like features.
There are 6 advantages of listed RE funds:
- ___ of ___
- ___and ___
- ___ ___ to RE
- ___ for investors
- ___ investments
- ___-___ income
There are 6 advantages of listed RE funds:
- Diversification of risk
- Liquidity and divisibility
- Instant exposure to RE
- Information for investors
- Targeted investments
- Tax-exempt income
There are 2 disadvantages of RE funds:
- Trade at ___/___to ___
- ___ ___ with stocks.
There are 2 disadvantages of RE funds:
- Trade at discount/premium to NAV
- Highly correlated with stocks.
Non-US REITs (do/do not) pay corporate taxes
Non-US REITs do not pay corporate taxes
Global REITs differ from US REITs on rules related to ___ and ___of ___
Global REITs differ from US REITs on rules related to management and use of leverage
Many non-US REITs have ___ managers
Many non-US REITs have external managers
Many non-US REITs have limits on ___ ___
Many non-US REITs have limits on debt financing
Most REITs adopt an ___, ___-___style
Most REITs adopt an active, top-down style
REITs typically apply a (growth/value) style
REITs typically apply a growth style
___-___ ___ are illiquid investments that are available to retail investors through registered investment advisors.
Non-Traded REITs are illiquid investments that are available to retail investors through registered investment advisors.
Non-Traded REITs typically have a life span of ___-___years.
Non-Traded REITs typically have a life span of 7-10 years.
Non-traded REITs have up front fees of ___-___%
Non-traded REITs have up front fees of 12-15%
A major challenge for Non-Traded REITs occurs in the ___-___ phase, when investors expect ___ but the REIT needs to ___ ___.
A major challenge occurs in the ramp-up phase, when investors expect dividends but the REIT needs to cover fees.
Non-Traded REITs must pay out ___% of taxable income as dividends
Non-Traded REITs must pay out 90% of taxable income as dividends
Non-Traded REITs are classified as ___, ___or ___.
Non-Traded REITs are classified as equity, mortgage or hybrid.
The life cycle of non-traded REITs has 4 phases:
- ___ ___
- ___ ___
- ___ ___
- ___
The life cycle of non-traded REITs has 4 phases:
1. Capital raising
2. Property purchase
3. Asset management
4. Disposition
Non-Traded REITs can adopt two strategies or a combination of:
- ___ ___
- ___ ___
Non-Traded REITs can adopt two strategies or a combination of:
1. Current income
2. Price appreciation
Non-Traded REITs receive 3 key criticisms:
- ___ presents misleadingly ___ ___
- ___ ___that entail ___of ___
- Use ___to fund ___ ___
Non-Traded REITs receive 3 key criticisms:
- Illiquidity presents misleadingly low volatility
- High fees that entail conflicts of interest
- Use leverage to fund dividend payments
There are 4 potential reasons why publicly traded REITs have wider return dispersions:
- Prices are ___ ___
- Underlying properties have ___ ___
- REITs use ___
- Volatility due to equity market ___ ___
There are 4 potential reasons why publicly traded REITs have wider return dispersions:
- Prices are not smoothed
- Underlying properties have different risks
- REITs use leverage
- Volatility due to equity market liquidity shifts
The importance of acurate pricing and risk estimation can be considered at the ___ level and ___level.
The importance of acurate pricing and risk estimation can be considered at the investor level and macroeconomic level.
The macroeconomic level of mispricing risk is that RE projects will be ___ relative to the ___to ___.
The macroeconomic level of mispricing risk is that RE projects will be overfunded relative to the benefit to society.
The ___ of ___ involves any collection of securities in a single entity.
The pooling of securities involves any collection of securities in a single entity.
___ is the pooling of non-publicly traded assets into publicly traded securities.
Securitization is the pooling of non-publicly traded assets into publicly traded securities.
A benefit of ETFs is that their underlying securities can be ___ when an ETF’s market price deviates from the NAV.
A benefit of ETFs is that their underlying securities can be arbitraged when an ETF’s market price deviates from the NAV.
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.
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.
The ___ ___ specify that REITs that trade a particular percentage of properties in a specific time period have their capital gains fully taxed.
The dealer rules specify that REITs that trade a particular percentage of properties in a specific time period have their capital gains fully taxed.
REIT indexes have ___ autocorrelation.
REIT indexes have low autocorrelation.
