REA Portfolio Management & Asset Strategy 2

Question 1

Which asset management strategy involves acquiring underperforming properties, improving them, and selling at a higher valuation?

Accepted Answer

Value-add strategy

Answer

Value-add strategies target properties with below-market rents, deferred maintenance, or high vacancy that can be repositioned to increase NOI and value.

Question 2

What is the purpose of a 'hold-sell analysis' in real estate portfolio management?

Accepted Answer

Comparing the NPV of holding a property against the net proceeds from selling it

Answer

A hold-sell analysis compares the risk-adjusted returns from continued ownership against redeployment of sale proceeds into alternative investments.

Question 3

An asset manager implements a 'lease-up' strategy on a recently acquired office building. What is the primary goal?

Accepted Answer

Filling vacant space with creditworthy tenants to stabilize income and increase value

Answer

A lease-up strategy focuses on attracting tenants to vacant space, stabilizing occupancy, and thereby converting a value-add asset to a core-like investment.

Question 4

What does 'net asset value' (NAV) represent in a non-traded real estate investment trust (REIT)?

Accepted Answer

The estimated per-share value based on the appraised value of the underlying real estate

Answer

NAV per share reflects independent appraisals of the REIT's properties minus liabilities, providing an estimated fair value for non-traded shares.

Question 5

In real estate portfolio construction, what does a 'strategic asset allocation' determine?

Accepted Answer

Target weightings to property types and geographies based on long-term return and risk objectives

Answer

Strategic asset allocation sets the long-term target mix across sectors, geographies, and strategies to achieve the investor's risk-return goals.

(REA) Real Estate Analyst Certification Practice Test

(REA) Real Estate Analyst Certification Practice Test

REA Portfolio Management & Asset Strategy 2