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
Which asset management strategy involves acquiring underperforming properties, improving them, and selling at a higher valuation?
Answer: Value-add strategy
Value-add strategies target properties with below-market rents, deferred maintenance, or high vacancy that can be repositioned to increase NOI and value.
What is the purpose of a 'hold-sell analysis' in real estate portfolio management?
Answer: Comparing the NPV of holding a property against the net proceeds from selling it
A hold-sell analysis compares the risk-adjusted returns from continued ownership against redeployment of sale proceeds into alternative investments.
An asset manager implements a 'lease-up' strategy on a recently acquired office building. What is the primary goal?
Answer: Filling vacant space with creditworthy tenants to stabilize income and increase value
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.
What does 'net asset value' (NAV) represent in a non-traded real estate investment trust (REIT)?
Answer: The estimated per-share value based on the appraised value of the underlying real estate
NAV per share reflects independent appraisals of the REIT's properties minus liabilities, providing an estimated fair value for non-traded shares.
In real estate portfolio construction, what does a 'strategic asset allocation' determine?
Answer: Target weightings to property types and geographies based on long-term return and risk objectives
Strategic asset allocation sets the long-term target mix across sectors, geographies, and strategies to achieve the investor's risk-return goals.
What is a 'preferred return' in a real estate limited partnership structure?
Answer: A minimum return threshold that LPs receive before the GP earns carried interest
The preferred return is a priority return (typically 6–8%) earned by LPs on invested capital before the GP participates in profits through carried interest.