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Transactions Flashcards

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1
Q

Q: What is liquidity in real estate?

A

A: The ease and speed with which an asset can be bought or sold without affecting its price.

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2
Q

Q: What are key dimensions of liquidity?

A

A: Turnover rate, time to transact, transaction costs, price impact, and return uncertainty.

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3
Q

Q: Why is ‘time to transact’ important?

A

A: It increases uncertainty about when and how much cash will be received, increasing expected return volatility.

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4
Q

Q: Why might a real estate asset be sold

A

A: Projected poor performance, strategic allocation, unsolicited offers, redemptions in open-ended funds.

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5
Q

Q: What are “non-conforming” assets?

A

A: Assets that don’t fit an organization’s focus on region, sector, or lot size.

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6
Q

Q: What are the phases in selling a property?

A

Phase 1 (Pre-marketing):

General decision to sell

Sub-sector decision

Specific asset decision

Instruction of agents and solicitors

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7
Q

Q: What are the main stages in asset acquisition?

A

A: Search → Evaluation → Financial analysis → Bidding → Legal due diligence → Exchange → Completion.

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8
Q

Q: Who is involved in the acquisition process?

A

A: Asset managers, agents, fund managers, researchers, clients.

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9
Q

Front: Name five types of surveys included in due diligence.

A

back: Topographical, structural, contamination, air quality, and asbestos surveys.

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10
Q

Front: What legal/title checks are part of due diligence?

A

Back: Ownership, boundary disputes, easements, planning permissions, and government restrictions.

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11
Q

Front: What are key risks during real estate transactions?

A

Back: Market shifts, buyer funding issues, tenant insolvency, legal/title problems, or physical issues with the asset.

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12
Q

Front: What are possible outcomes of transaction risk?

A

Back: Abortive transaction, delay, or price renegotiation.

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13
Q

Front: What is the most common sale method for institutional-grade UK property?

A

Back: Non-binding informal tender (best bids).

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14
Q

Front: What are the “three Rs” that help reduce broker misconduct?

A

Back: Repeat business, reputation, and risk of revelation.

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15
Q

Front: What is ‘ramping’ in brokerage?

A

Back: Inflating the price to increase commission due to ad valorem fee structure.

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16
Q

Front: What is meant by ‘last call’ in brokerage?

A

Back: Informing a buyer about other bids received, potentially limiting their bid.

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17
Q

Front: Give an example of potentially unethical broker behavior.

A

Back: Providing private information about bids after the deadline.

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18
Q

In the UK commercial real estate market, which of the following does not
seem to be a common practice among brokers representing the seller of a
real estate asset?
a) Providing early or not yet public information to one or more agents that
the asset that the selling agent has been instructed to sell will be on the
market imminently.
b) Providing ‘introductions’ to potential buyers about the availability of the
asset for purchase.
c) Providing private information to the agent of a potential buyer after the
bid deadline about the bids already received from other bidders.
d) Providing advice to the seller about potential execution risks associated
with potential buyers

A

B

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19
Q

A purchaser’s legal due diligence on an acquisition tends to follow price agreement.
True/False

A

true

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20
Q

Most institutional grade real estate assets in the UK are sold ‘off-market’.

A

false

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21
Q

In the UK’s CRE market, typically only the seller is represented by an agent

A

false

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22
Q

In the UK’s CRE market, there is often one month between exchange of contracts and
completion. True/False

A

true

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23
Q

In most mature CRE markets, transactions typically and approximately take (please circle)
− 0-10 weeks
− 10-20 weeks
− 20-30 weeks
− 30-40 weeks
− 40-50 weeks

A

10-20

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24
Q

In UK CRE markets, a bid made at an informal tender is usually binding True/False

A

false

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25
In UK CRE markets, it is common for expert and experienced institutional investors to buy a commercial property principal-to-principal without agents. True/False
False
25
Sale by auction is a common method of sale in many global commercial real estate markets. True/False
False
26
Front: How do third-party property managers make money?
Fees per tenancy from landlords Management fees via service charges Additional landlord/tenant service fees Cross-selling and supplier commissions
27
Front: What are controversial income sources for PM firms?
Back: Hidden profits like supplier commissions or admin fees not proportional to service provided.
28
Front: What are the three broad operational models for property management?
Fully insource PM, AM, and FM Hybrid (outsourced PM, in-house AM/FM) Fully outsource PM, AM, and FM
29
What is outsourcing in the context of property management?
Shifting internal functions to an external supplier via a long-term contract (Quelin & Duhamel, 2003).
30
Who are common third-party property management providers? (multi service, specalist, business processing outsource) example of each
Multi-service firms (e.g., CBRE, JLL) Specialist PM firms (e.g., Mapp, Workman) Business process outsourcing firms (e.g., Capita)
31
What type of tasks are most suitable for outsourcing?
Tasks that are routine, rule-based, commoditised, non-core, and easy to replicate.
32
What are the main motivations for outsourcing property management?
Flexibility and risk transfer Accountability and quality control Focus on core competencies Economies of scale
33
What type of firms tend to outsource property management? Back:
Multi-asset investors Diversified portfolios Organisations where PM is non-core
34
What are risks of outsourcing?
Loss of control and tenant relationships Monitoring and principal-agent problems Lock-in and supplier risk Information leakage
35
What type of firms tend to insource property management?
Real estate location/sector specialists REITs and traditional estates Firms with stable, focused portfolios
36
What does property management influence in terms of performance?
Tenant satisfaction through cost and service quality; affects operational efficiency and alpha generation.
37
How do third party PM providers make money?
- cash fees - management fees - additional fees from tenants for processing licences - additional fees from landlords for additional services eg health and saefty, lettings, rent reviews etc - cross selling commissions from suppliers
38
What are "conflicts and capture" risks in outsourcing?
Third-party goals may misalign with principal’s goals, leading to dependency, inefficiency, or higher costs.
38
Name five key considerations in the in/outsourcing decision.
Criticality of function Internal competency and capability Culture and coordination Cost and flexibility Control and competitive advantage
39
What are benefits of using a single PM supplier?
Streamlined communication Cost efficiency Single point of responsibility Simpler system integration
40
What are the downsides of using one supplier?
Lock-in risk Complacency or underperformance Loss of market specialization
40
What are benefits of using multiple PM suppliers?
Competitive tension Flexibility Access to specialist expertise Easier replacement of poor performers
41
Outsourcing tends to work better when
Asset are not specialised – The tasks can be clearly defined – The tasks are not sources of competitive advantage – The functions being outsourced are relatively easy to replicate
42
insources AM and FM but outsources PM examples
Insurance cos Fund houses Specialist real estate IM Pension funds Investment banks Private equity
43
outsource all examples
SWFs Family offices Endowments Foundations Charities
44
is property managment a critical source of comp advantage?
basically yes for any REIT no for anything thats a global mutli asset investment managment firm, same applies with real estate investment managment eg La salle, aberdeen etc
45
Which of the following statements is false? a) Real estate investment firms specialising in specific locations or submarkets are likely to have deep networks of local occupier relationships, granular understanding of micro-location dynamics and intimate knowledge of the local planning and regulatory environment b) Real estate investment firms specialising in shopping malls are likely to have a sophisticated understanding of retailer operations and needs, expertise in optimising tenant mix and placement, strong relationships with key retail tenants and specialised marketing and events management capabilities. c) Real estate investment firms specialising in specific locations or sectors are likely to outsource the delivery of property management services in order to benefit from the economies of scale that the global, multi-service real estate advisory firms can potentially achieve. d) Multi-asset investment firms with diversified real estate portfolios are likely to outsource the delivery of property management services.
C
46
47
What are the key questions for contaminated assets?
Is the asset contaminated? Has a risk assessment been carried out? Who is responsible for remediation and third-party damages?
47
Front: What are types of environmental exposure in real estate?
Back: Historic pollution Current usage Warranties and indemnities liabilities
48
What is the statutory test for contaminated land in the UK?
More than just the presence of contaminants—must involve significant harm or risk, pollution of controlled waters, and identification of an "appropriate person."
49
What are the financial performance risks associated with poor environmental performance?
Vacancy, higher management/operating costs, slower rental growth, and depreciation.
50
What are the key value determinants for real estate assets?
Location, market conditions, occupancy rate, spec, tenant/lease quality, age, costs, design, and environmental performance.
50
How does environmental performance affect operating costs?
It’s one of many interlinked factors; often difficult to isolate in statistical models.
51
What did Chegut, Eichholtz & Kok (2013) find about BREEAM-certified offices in London?
Rental premium: ~25% Price premium: 17–36%
52
What is the “operating expense puzzle”?
Some studies find Energy Star buildings have higher, not lower, operating expenses—possibly due to usage patterns and data issues.
53
What does GRESB data show about REITs?
GRESB performance correlates with higher risk-adjusted returns No link with abnormal stock returns Positive effect on ROA and ROE
54
What are the three broad types of environmental action in real estate management?
Modify the building (capex/retrofit) Modify building operations (opex) Influence user/operator behavior (organizational)
55
Name three typical environmental management practices.
Optimizing HVAC and lighting use Using green materials/service providers Enhancing waste and energy efficiency
55
What are some low/no-cost interventions?
Reducing overcooling Hot water scheduling Demand-based HVAC control
55
What are key barriers to improving real estate environmental performance?
Costs and financing Misaligned incentives Weak technical knowledge Lease limitations Policy instability Inertia and lack of awareness
56
What are emerging themes in environmental real estate management?
Resilience Social value Well-being and IEQ Embedded carbon IoT and smart building tech ESG backlash
56
What is a split incentive in real estate?
When the party who pays for the improvement (e.g. landlord) does not reap the financial benefits (e.g. tenant energy savings).
57
What are standard capex projects that can be reframed as environmental improvements?
Major repairs Refurbishments System upgrades These can align with sustainability goals and ESG compliance.
58
four stages of issue maturity
latent: aware of issue, weak evidence base emerging: political and media awareness of issue consolidating: emerging body of business practises and specialists professionals increasing acceptance of regulation instituionlised: embedded practises become a normal part of business excellence model
59
In their evaluation of MEES policy, which measures did the Department for Energy and Climate Change project would have the highest uptake in non-domestic buildings?
'improving' the lights
60
Which is the odd one out? a) MEES b) EPC c) DEC
MEES is a policy instrment, the rest and manadtory energy ceritifcats
61
definition of real estate asset management
the strategic oversight of property assets to maximise their value and return on investment
61
key functions of asset management
Strategic Planning: Developing long-term plans to enhance asset value. Financial Management: Budgeting, forecasting, and financial reporting. Lease Management: Negotiating and managing tenant leases to optimize occupancy and rental income. Capital Expenditure Oversight: Planning and supervising capital improvements. Risk Management: Identifying and mitigating risks associated with property ownership. Maximising Property Value: identifying opportunities for improvements/upgrades, efficient day-to-day operations, and strategic maintenance practices
61
what have long leases and the dominance of institutional ownership led to
culture of passive management
62
what is active REAM
significant asset class that needs to be managed creates costs and opportunities funds buy these assets as they are perceived as under managed and attempt to reposition them
62
key strategies for active management
- refurbishment and renovation - repoisitioning -operational efficiency - tenant engagement market anaylsis
62
what is a hurdle rate
minimum level of acceptable return on an investment
63
three types of investment projects
- core investment, cannot be altered by the manager in the future - value added or opportunistic, can be altered by the manager - strategic interactions, market participants might go for an option for low ROI eg two developers open a shopping centre but only the first will be profitable
64
what is the vulture approach (risks)
very high risk high reward
65
value lever: tenant mix, core value add
single tenant -> mutiple tenants
66
Value lever: lease re-gearing
long unexpired lease -> short unexpired lease terms
67
Value lever: lease terms
no onerous lease terms -> onerous lease terms
68
value lever: tenant credit
high credit risk -> low credit risk
68
Value lever: building quality
high quality building -> low qual building
69
Which of the following is true? Opportunities to add value to real estate assets will often be: Positively related with the age of the asset. As the age increases, there tends to be increased need and opportunity for improving buildings. Negatively related with the number of tenants. More tenants lead to more opportunities. So, it’s positively related. Positively related with the WAULT. The longer the WAULT, the lower the opportunity for lease regears. So, it’s negatively related. Positively related with quality of the tenant. The lower the quality of the tenant, the higher the benefit from replacing the tenant with a better one. So, it’s negatively related.
age you stupid boy
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asset managment (1 decks)

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