A commercial real estate investment fund must report its quarterly investment performance to investors. A summary of
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Question:
A commercial real estate investment fund must report its quarterly investment performance to investors. A summary of its beginning and endofquarter assets and equity and cash inflows and outflows during the quarter are as follows:
Beginning of Quarter During Quarter
$ million Cash $ million NOI from operations
$ million Market value of props $ million Paid management fees
$ million Other Investments $ million Distributions to investors
$ million Fund debt $ million Investor contributions
$ million Property acquisitions
$ Property dispositions
Other investments will earn interest per quarter and property debt will be at a rate per quarter
The properties were appraised at the end of the quarter for $ million.
Assume any interest on shortterm investments is offset by interest paid on shortterm debt.
Required:
a What would be the beginning equity value?
b What would be the ending equity value MVEE
c Assuming that all cash flows from operations, equity contributions, acquisitions, and distributions occurred at the end of the quarter, what would be the quarterly return IRR
d Assume that all cash distributions to investors occurred equally in 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?
e Assume that all cash distributions to investors occurred equally in day intervals during the quarter. What would the return be before fees? Investor contributions still occur at the end of the quarter.
f Assume that all cash distributions to investors occurred equally in day intervals during the quarter. What would be return at the property level? Investor contributions still occur at the end of the quarter.
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