Investment Management Flashcards
What is capital return?
Appreciation in property value over time, driven by market growth, inflation, and development.
What is rental return?
Regular rental income, impacted by lease terms, tenant covenant, and occupancy levels.
How is total return calculated?
Total return = Capital return + Income return, measured using IRR, NPV, and yield analysis.
What is the Comparable Method in property valuation?
Benchmarks against similar transactions.
What is the Income Approach in property valuation?
Values property based on future income potential.
What is the Residual Method in property valuation?
Used for development valuation.
What is the Cost Approach in property valuation?
Values property based on replacement cost.
What does portfolio management focus on?
Balances risk, diversification, liquidity, and return objectives across multiple assets.
What does asset management focus on?
Maximising value at an individual property level through lease structuring, rent reviews, and capex planning.
What are the key requirements of an investment portfolio?
Diversification, liquidity, risk profile, and return expectations.
What impacts portfolio performance?
Market trends, interest rates, inflation, tenant strength, regulatory changes.
What risks could affect portfolio performance?
Market downturns, tenant default, rising interest rates, legislative changes (MEES, EPC requirements).
How can you mitigate risks to portfolio performance?
Diversification, regular asset reviews, active lease management, hedging strategies.
How do you ensure proper portfolio management?
Regular performance reviews, risk assessments, strategic asset planning, and tenant engagement.
How could BIM be used in asset management?
Improves data-driven asset decisions, lifecycle cost planning, and predictive maintenance.
How do you manage risk for clients?
Tenant due diligence, lease structuring, diversification, hedging strategies, and active asset management.
How do you compare property investments to other classes?
Compared against bonds, equities, REITs, infrastructure, private equity based on risk profile, yield comparison, and volatility.
How do you assess a client’s property portfolio performance?
Net Yield, IRR, NPV, rental growth, occupancy levels, total return metrics.
How can you appraise capital investment?
Discounted Cash Flow (DCF) analysis to assess future value.
What is Net Present Value (NPV)?
Present value of future cash flows minus initial investment.
What is Internal Rate of Return (IRR)?
Discount rate that makes NPV zero.
What is the Payback Period?
Time taken to recover initial investment.
What are the tax rules related to property investment?
Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), VAT, Business Rates, Corporation Tax.
What are the ways to invest in property?
Direct investment: Purchasing physical assets. Indirect investment: REITs, property funds, joint ventures.