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Homework: REITs and RE Investment Performance Assignment
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A commercial real estate investment fund must report its quarterly investment performance to investors. A summary of its (1) beginning
and end-of-quarter assets and equity and (2) cash inflows and outflows during the quarter are as follows:
Beginning of Quarter
Market value of props
NOI from operations
Paid management fees
Distributions to investors
Other investments will earn 4% interest (1% per quarter) and property debt will be at a 6% rate (1.5% per quarter).
The properties were appraised at the end of the quarter for $657 million.
Assume any interest on short-term investments is offset by interest paid on short-term debt.
a. What would be the beginning equity value?
b. What would be the ending equity value (MVEE)?
what would be the quarterly return (IRR)?
c. Assuming that all cash flows from operations, equity contributions, acquisitions, and distributions occurred at the end of the quarter.
d. Assume that all cash distributions to investors occurred equally in 30-day intervals during the quarter. (Investor contributions still
occur at the end of the quarter.) What would be an approximation to the IRR using the Modified Dietz approach?
before fees? (Investor contributions still occur at the end of the quarter.)
e. Assume that all cash distributions to investors occurred equally in 30-day intervals during the quarter. What would the return be
property level? (Investor contributions still occur at the end of the quarter.)
1. Assume that all cash distributions to investors occurred equally in 30-day intervals during the quarter. What would be return at the
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Real answer to 2 decimal places.)
to investors occurred equally in 30-day intervals during the quarter. What would be return
ibutions still occur at the end of the quarter) (Do not round intermediate calculations.
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