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Homework: REITs and RE Investment Performance Assignment

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Appraisal X

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Problem 23-3

$52 million

$502 million

$22 million

$384 million

annotate x LU Homewo X

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

Cash

Market value of props

Other Investments

Fund debt

TOSHIBA

During Quarter

NOI from operations

Paid management fees

Distributions to investors

Investor contributions

Property acquisitions

Property dispositions

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.

Required:

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

Required B

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Required C Required D

$10 million

$2 million

$25 million

$202 million

$177 million

$27

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(Required E

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Required E Required F

Istribution

(Investor

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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