This quiz provides a quick snapshot analysis of your knowledge of basic real estate private equity terminology. The quiz provides terms used in proper context of a real estate private equity interview or conversation and assesses the users’ understanding of these terms.
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“We’ve been working on an acquisition of a grocery-anchored retail center in Queens for our Core-Plus fund. It’s about 7 years old, we’d put about 40% cash into it. Do you think it would be a good fit for a CMBS pool?” What is the interviewer talking about?CorrectIncorrect
“There’s a REIT buyer sniffing around our second hospitality fund, but we’re not sure we’re ready for an exit. How would you model a fund sale versus selling the assets piecemeal?” There’s a what looking at our fund?CorrectIncorrect
“…so based on these cash flows, what is the impact of changing the first hurdle rate from 9% to 10%?” What is a hurdle rate?CorrectIncorrect
“In your pro forma for this apartment complex make sure you reserve $250 per door per year for capex.” What does this mean?CorrectIncorrect
“We’ve been in talks with a big-name REIT to form a JV with our Op Fund (opportunistic) to develop these assets. The issue is, we’re more interested in a merchant build scenario than the REIT. We may have to convince investment committee to go it alone.” Why wouldn’t the REIT be aligned with the Op fund?CorrectIncorrect
“We really need bench strength in our underwriting group because right now our Core fund it raising money twice as fast as we can place it.” Which of the following are characteristics of a Core fund?CorrectIncorrect
“Our last three deals for our Op fund (opportunistic) have gotten outbid by two different Value-Add funds across town. I’ve never seen anything like it.” Why would a Value-Add fund be buying assets that are also of interest to an Opportunistic fund?CorrectIncorrect
“We’re ambivalent as to whether we use CMBS or commercial banks, but it is easier to prepay a bank with yield maintenance than to defease a CMBS deal.” Which of the following is not true with regard to defeasance and yield maintenance?CorrectIncorrect
“We’ve been tracking XYZ REIT’s NAV (net asset value) for a while, and we think they’re in a position where they will have to sell some assets. We need someone to dissect their portfolio and help us cherry-pick the best deals.” Which of the following are true about Net Asset Value?CorrectIncorrect
“We don’t mess around raising money from individual investors, we go straight to the pension funds and life companies.” Rank the sources of investment capital from the typical largest check writers to the smallest.
- Sovereign wealth funds
- Family offices
- Endowments and Pension Funds
- Life insurance companies
- High net worth individuals