Portfolio Management & Asset Strategy Flashcards
6 cards from real REA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Portfolio Management & Asset Strategy flashcards as text
What does 'same-store NOI growth' measure in a REIT's operating performance?
Answer: NOI growth from properties owned throughout both the current and prior comparison period
Same-store NOI growth isolates organic operating performance by comparing properties held for the full comparison period, excluding acquisitions and dispositions.
Which disposition strategy minimizes tax impact for a real estate investor in the US?
Answer: 1031 exchange to defer capital gains by reinvesting in like-kind property
A Section 1031 exchange allows investors to defer capital gains taxes by rolling proceeds into a qualifying replacement property of equal or greater value.
What is 'recapitalization' in the context of real estate asset management?
Answer: Restructuring ownership or debt on an asset, often by bringing in new equity or refinancing
Recapitalization typically involves selling a partial interest, refinancing, or restructuring the capital stack to return equity to investors or extend the hold period.
An analyst benchmarks a portfolio against the NCREIF Property Index (NPI). What does outperforming the NPI indicate?
Answer: The portfolio generated higher risk-adjusted returns than the broad unleveraged institutional property universe
The NPI tracks unleveraged total returns of institutional-quality properties; outperformance shows the portfolio exceeded the broad market benchmark.
In real estate portfolio management, what is the 'J-curve effect'?
Answer: Early negative returns in a closed-end fund due to fees and unrealized assets, followed by positive returns as assets mature
The J-curve describes how early capital calls, management fees, and unrealized assets create negative IRR in a fund's initial years before returns turn positive.
What is the primary function of a 'capital expenditure reserve' (cap-ex reserve) in property management?
Answer: Setting aside funds annually to cover future major repairs and replacements
A cap-ex reserve accumulates annual contributions to fund predictable long-term capital expenditures such as roof replacement, HVAC, and parking lot resurfacing.