Investment Strategies

Question 1

What are reasons to invest in real estate outside of your home country?

Answer 1

1. Opportunities for Higher Returns (emerging markets vs. developed)
2. Diversification
3. Managerial Considerations (apply skills where no-one has your skills)

Question 2

What are two portfolio-level considerations?

Answer 2

1. Allocation Decisions
2. Selection Decisions

Question 3

What are the 10 Macro-Level Investment strategies?

Answer 3

Property Sector Investing Contrarian Investing Market Timing Growth Investing Value Investing Strategy as to Size of Property Strategy as to Tenants Arbitrage Investing Turnaround/Special Situation/Value-Add or Opportunistic Investing in Trophy properties

Question 4

What are some advantages of investing in a REIT?

Answer 4

1. Actively managed by professional organizations
2. Pass-Through Entities that distribute of its earnings and capital gains
3. Provide small investors means to a diversified portfolio
4. Are a way for investors to stay liquid

Question 5

How do you value a REIT?

Answer 5

Net Asset Value (NAV) = Value of Assets - Liabilities Market Capitalization (Market CAP) = REIT Share price x outstanding shares

Question 6

Why has the Market Cap of Real Estate Investments increased in value so much?

Answer 6

The advent of pass-through property investment structure.

Question 7

What are the 2 factors that can lead to higher returns abroad?

Answer 7

1. Structurally Return Opportunities (mature markets vs. emerging markets)
2. Demographics

Question 8

What are obstacles of investing abroad?

Answer 8

1. Transaction Costs (taxes, regulatory)
2. Information Costs
3. Political Risk
4. Economic Risk
5. Currency Risk
6. Liquidity Risk

Question 9

What are the 10 Macro-Level Investment strategies?

Answer 9

1. Property Sector Investing
2. Contrarian Investing
3. Market Timing
4. Growth Investing
5. Value Investing
6. Strategy as to Size of Property
7. Strategy as to Tenants
8. Arbitrage Investing
9. Turnaround/Special Situation/Value-Add or Opportunistic
10. Investing in Trophy properties

Question 10

How do you value a REIT?

Answer 10

1. Net Asset Value (NAV) = Value of Assets - Liabilities
2. Market Capitalization (Market CAP) = REIT Share price x outstanding shares

Question 11

What are the seven factors which determine whether or not a REIT should trade at a premium?

Answer 11

1. Enterprise Value
2. Focus
3. Inside Ownership
4. Potential Conflicts of Interest
5. Liquidity
6. Balance-Sheet Strength
7. Overhead Costs

Question 12

Whyhas the Market Cap of Real Estate Investments increased in value so much?

Answer 12

The advent of pass-through property investment structure.