Real Assets: Timberland, farmland, intellectual property

Question 1

Infrastructure investments

Answer 1

are claims on the income of real assets such as toll roads, airports, and regulated utilities.

Question 2

Intellectual Property (IP)

Answer 2

is an intangible asset that can be owned, such as copyrighted artwork.

Question 3

Blue top lots

Answer 3

are at an interim stage of lot completion. In this case, the owner has completed the rough grading of the property and the lots, including the undercutting of the street section, interim drainage, and erosion control facilities, and has paid all applicable fees required.

Question 4

Timberland investment management organizations (TIMOs)

Answer 4

provide management services for a fee that facilitate timber ownership by pension funds, endowments, and foundations. Many institutional investors rely on a TIMO for advice about investments in forestlands.

Question 5

Expropriation

Answer 5

is where a government takes ownership and/or control of assets belonging to foreign investors, either by direct action (nationalization or forced asset transfer) or indirect action, such as discriminatory taxation or predatory regulation.

Question 6

Cap rate (capitalization rate) or yield

Answer 6

is a common term for the return on assets.

NOI (net operational income)/price=cap rate%

Question 7

Institutional quality investment

Answer 7

is the type of investment that financial institutions such as pension funds or endowments might include in their holdings because they are expected to deliver reasonable returns at an acceptable level of risk.

Question 8

Privatization

Answer 8

is when a governmental entity sells a public asset to a private operator.

Question 9

Regulatory risk

Answer 9

is the economic dispersion to an investor from uncertainty regarding governmental regulatory actions.

Question 10

Secondary market

Answer 10

is a market which facilitates trading among investors of previously existing securities.

Question 11

Early stage

Answer 11

is split into seed stage and start-up stage.

Question 12

Hammer prices

Answer 12

are final auction prices that do not include commissions to the auction house.

Question 13

Land investment,

Answer 13

or land banking, is the practice of buying lots for the purpose of development at some future date.

Question 14

land’s lot types

Answer 14

1) Paper lots - vacant and approved for development but without any construction activity.
2) blue top lots - exist in some interim stage of completion
3) finished lots -fully completed and ready for occupancy with all entitlements, fees, and permits having been filed and paid.

Question 15

pulp mill saw mill

Answer 15

целлюлозный завод, лесопилка

Question 16

firewood, pulpwood, or lumber

Answer 16

дрова целлюлоза пиломатериалы

Question 17

drought obsolescence

Answer 17

засуха износ

Question 18

timberland types of investment

Answer 18

1. direct
   2) exchange-traded funds (ETFs)
   3) real estate investment trusts (REITs).

Question 19

fringe area

Answer 19

периферия

Question 20

infrastructure investments

Answer 20

• assets that are created, owned, managed, or heavily regulated by government.
• typically offer monopolistic power in that the services are offered by a single provider who can set prices relatively free from competition.
• essential goods or services (e.g., electricity distribution) with stable cash flows that offer goods and services accessed by a large segment of the population often serving the general welfare of a society.

Question 21

greenfield projects

Answer 21

• require investors to build an asset, or make substantial improvements to an asset.
• brand new and yet to be constructed infrastructure projects

Question 22

brownfield project

Answer 22

mature and pre-existing assets, which have a long history of stable cash flows in developed markets.

Question 23

investment risk of greenfield vs brownfield projects

Answer 23

green-fields are riskier as they require investors to build an asset, or make substantial improvements to an asset.
investors do not know the exact costs and do not have a good estimate of future cash flows, both of which make greenfield investments substantially riskier than brownfield investments.

Question 24

exit strategies for infrastructure funds are

Answer 24

1) to sell assets on the secondary market to other investors,
2) seek co- investors,
3) float an initial public offering (IPO),
4) seek a sale to a strategic buyer,
5) securitize the cash flows.

Question 25

parameter that that greatly effects risks and returns of infrastructure assets

Answer 25

exit strategy,

Question 26

risks

Answer 26

regulatory

currency

Question 27

Intangible assets (IP)

Answer 27

• are economic resources without physical form.
• excludable goods, defined as goods that others can be prevented from enjoyment by a patent or by a copyright.
• Ex: art, music, media, brands, and of course, film