7. Alternative Investments

Question 1

Leasing Types

Answer 1

1. Net Lease: Inquilino paga Operational Expenses
2. Gross Lease: Proprietário paga Operational Expenses
3. Tripple Net: Inquilino paga reparos, IPTU e seguros

Question 2

Leasing Types (examples)

Answer 2

1. Net Lease: Office and Industrial Warehouse

3. Tripple Net: Small shoppings

Question 3

Appraisal Index (formula)

Answer 3

Return Appraisal = (NOI - Capex + Δ Mkt Value)/ MVo

Income Return = NOI / MVo
Capital = Resto / MVo
Cash Return = NOI - capex / MVo

Question 4

Income Return (Formula)

Answer 4

Income Return = NOI /MVo

Capotal

Question 5

Transactions Based Index

Answer 5

• Mais volátil
• Geometric Return
• Leads appraisal index

Question 6

Valuation Types for AI (List)

Answer 6

1. Income Approach: discount cashflow
2. Cost Approach: Replicate how much the property would cost
3. Sales Comparison Approach

Question 7

Highest and Best Use (Concept)

Answer 7

Foco no uso que inputa o maior valor à terra, mesmo que já exista um edifício construído ali

Question 8

Direct Capitalization Valuation (Formula)

Answer 8

Market Value = NOI / k - g

Going-in cap rate: NOI in 1st year of ownership
Terminal Cap Rate: NOI 1st year after sale

Question 9

DCF Valuation (Formula)

Answer 9

V dcf = Explicit Forecast + Terminal Value (t)

Terminal Value (t): NOI t+1 / Terminal Value Cap Rate

Question 10

LTV (Formula)

Answer 10

LTV = Loan Exposure / Valor do Ativo

Question 11

Debt Service Coverage Ratio (Formula)

Answer 11

DSCR = NOI / Debt Service

Debt Service = (Juros + Principal)

Question 12

Cash on Cash Return (Formula)

Answer 12

Cash / Eqt = (NOI - Serviço da Dívida)/Eqt

Question 13

Levered IRR (Concept)

Answer 13

• Tomar dívida sempre aumenta a TIR desde que

[(1-t)*kd] < k equity

Question 14

REIT (Concept)

Answer 14

• FIIs:
• May be tax free
• Dividend Yield is high
• 75% do Equity in Real Estate assets
• Low reinvestment

Question 15

REOCs (Concept)

Answer 15

• Holding de família rica p/ gerenciar Real Estate
• Capital Appreciation focused
• Used if FII is not tax free
• Cashflow: sale of properties

Question 16

Funds from Operations (FFO) x AFFO

Answer 16

FFO = (NI + Dep + Amort + Losses - Gains + Impairments - Writeoffs)

AFFO = FFO - capex - non-cash rent

Difference: FFO ignores capex. AFFO is better for REITs, but many REITs do not publish

Question 17

Private Equity Valuation (List)

Answer 17

1. Income Approach (Growing firm or already stable) ~ Nubank
2. Relative Value ~ Late Expansion to Maturity
3. Real Option: Call/Put mediante cumprimento de metas
4. Replacement Cost: “Se eu construísse isso do zero, custaria quanto?”

Factors impacting valuation: control premium, lack of liquidity, country risk

Question 18

VC stages (List)

Answer 18

1. Seed (pre-sales)
2. Startup (pre-sales?)
3. Expansion
4. Replacement

Question 19

Exit Routs for PE/VC (List)

Answer 19

1. IPO
2. Secondary Sale
3. Leveraged Buyout (Alavanca a Empresa p/ dar saída aos sócios)
4. Liquidation

Question 20

Private Equity Fee Structure (List)

Answer 20

1. Management Fee (% Capital Committed or Paid In)
2. Transaction Fees (to General Partners)
3. Carried Interest (% of Profit = Performance Fee)
4. Ratchet (Target Company Earn-out; Management da AmigoEdu ganha coisas se cumprir targets, permite + shares ao mgmt)

Question 21

Vintage Year (Concept)

Answer 21

O ano de início do fundo impacta a medida de performance (ex: Abr/2020 as start date)

Question 22

Term of PE funds

Answer 22

10 years

Question 23

Governance PE clauses (List)

Answer 23

1. Key Man Clause
2. Disclosure / Confidentiality
3. Clawback Provision
4. Waterfall Structure

Other: tag along, drag along, no fault divorce GP removed if there is a supermajoriy vote

Question 24

Paid In Capital (Formula)

Answer 24

PIC = Paid In / Committed Capital

Question 25

TVPI (Formula)

Answer 25

TVPI = RVPI (Residual) + DPI (Distributed)

Question 26

RVPI (Formula)

Answer 26

RVPI = Value Remaining Companies / Paid In Cumulative Capital RVPI = Δ NAV before fees Net of mgmt fees Em relação aos Limited Partners (LPs)

Question 27

DPI (Formula)

Answer 27

DPI = Cumulative Distr. to LP / Paid In Cumulative Capital Net of mgmt fees Em relação aos Limited Partners (LPs)

Question 28

Post Money Valuation (Formula)

Answer 28

Post Money = Pre-Money + Investment

Question 29

Return on Investment (Formula)

Answer 29

ROI = Value of Equity @ Exit / Post Money Valuation

Question 30

Carried Interest (Details)

Answer 30

CI = "20% do que exceder profits after management fees" - Pode ser deal by (i) deal basis ou (ii) after all

Question 31

Contango

Answer 31

Futuro Subindo ↗ Expected Future Spot = Low ``` Roll Yield (Compare c/ Flat Spot) = NEGATIVO Calendar Spread (Futuro Hj - Futuro Amanhã) = NEGATIVO ```

Question 32

Backwardation

Answer 32

Futuro Caindo ↘ ``` Roll Yield (Compare c/ Flat Spot) = POSITIVO Calendar Spread (Futuro Hj - Futuro Amanhã) = POSITIVO ```

Question 33

Roll Yield (Formula)

Answer 33

Roll Yield = (Future t0 - Future t1)/Future t1 Roll Yield = [F near - F farther / F near] - 1 Roll Yield = Actual - Future Conceito: Futuro vai convergir pro Spot e gerar retornos positivos ou negativos?

Question 34

Total Return Swap (Concept)

Answer 34

TRS = Pay Fixed x Receive Δ Index

Question 35

Basis Swap (Concept)

Answer 35

Basis Swap = Δ Commodity 1 x Δ Commodity 2

Question 36

Future Returns Theories (Keynes)

Answer 36

1) Keynes: Produtores querem hedgear (vender futuro) por medo de backwardation, logo a. Preço Fwd CAI b. ↑ Basis = (Spot - Fwd) c. ↑ Basis = ↑ Spread. Logo, investidor precisa ser remunerado pelo risco adicional

Question 37

Future Returns Theories (Hedging Pressure)

Answer 37

a. Produtores querem hedgear (vender futuro) b. Usuário Final quer comprar futuro Resultante determina estrutura de preços Produtor vende (+) > Usuario Compra (-) = Backwardation pois Futuro vai cair Usuário Compra (+) > Produtor Vende (-) = Contango pois Futuro vai subir

Question 38

Total Commodity Return (Formula)

Answer 38

Total Return = Price Return + Roll Yield + Collateral Return

Question 39

Theory of Storage (Concept)

Answer 39

Se storage costs are minimal, demand dominates supply. Logo, Current Prices > Futures Prices + Minimal Costs

Question 40

Basis Spread (Formula)

Answer 40

Basis Spread = (Spot Price - Near Term Future)

Question 41

Check Status if Contango/Backwardation

Answer 41

- Compare Spot v. Near Term Future e veja se o Spot Acima do Futuro: Contango (Futuro precisa SUBIR) Abaixo do Futuro: Backwardation (Futuro precisa CAIR)

Question 42

Calendar Spread (Formula)

Answer 42

Calendar Spread = (Future Near - Future far)

Question 43

NOI (Formula)

Answer 43

``` Rental Income Full Occupied + Other Income = Potential Gross Income - Vacancy Loss - Operating Expenses = NOI ```