lec 3

    Master this deck with 29 terms through effective study methods.

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    Created by @oli

    What is Risk?

    It measures the likelihood of an adverse outcome differing from expectations.

    How do Risks differ from Issues?

    Risks are potential problems, while Issues are actual problems.

    What is the relationship between Risk and Returns?

    Higher risk typically demands a higher expected return.

    What defines Systematic Risk?

    It affects all assets and cannot be diversified away.

    What is Unsystematic Risk?

    It is specific to an asset or firm and can be mitigated through diversification.

    What are Market Risks?

    They include factors like demand drops and unexpected inflation.

    What are Financial Risks?

    They involve interest rates, renewal terms, and insolvency issues.

    What constitutes Property Risk?

    It affects property investments without impacting the overall market.

    How does location impact Property Risk?

    It can affect rental and capital values due to accessibility issues.

    What is a key factor in assessing tenant risk?

    Evaluating the financial stability of a tenant before property purchase.

    What is Business Risk?

    Fluctuations in economic activity affect income variability.

    What defines Financial Risk?

    Increased debt magnifies business risk.

    What is Liquidity Risk?

    Difficulty in liquidating an investment increases price concessions.

    What is Management Risk?

    Investment returns depend on management competency.

    What is Interest Rate Risk?

    Changes in rates affect security prices and returns.

    What is Legislative Risk?

    Regulatory changes can impact investment profitability.

    What is Environmental Risk?

    Hazardous conditions can lead to significant cleanup costs.

    What is Inflation Risk?

    Unexpected inflation can reduce expected returns.

    How do Wholesale Investors differ from Retail Investors?

    Wholesale investors have higher asset thresholds and experience.

    What characterizes Syndicates?

    Closed-end funds targeting high net-worth individuals.

    What is a Core Fund Strategy?

    Invests in stabilized properties with low risk.

    What distinguishes Opportunistic Funds?

    Involves high risk with ground-up development projects.

    What are the key components of Funds from Operations (FFO)?

    Income growth from existing properties and acquisitions.

    What is the difference between Yield and Return?

    Yield reflects current income; return includes capital changes.

    What is the purpose of Due Diligence in acquisitions?

    Detailed analysis of financial, technical, and legal aspects.

    What triggers the need for Divestment?

    Repositioning funds or capital requirements may necessitate sales.

    What is the role of Management Fees?

    Charged for managing the fund over its term.

    What defines A-REITs?

    Investment vehicles for diversified real estate portfolios.

    What are Stapled Securities?

    Hybrid structures linking trust units with management shares.