Real Estate Investment Manage - Accounting and Finance Assignment Help

Assignment Task

You are a real estate investment manager at a state pension fund with a very large diversified portfolio. Your real estate allocation has fallen below the fund’s target portion of the overall portfolio because your stock market investment allocation gained value recently. Also, your managing director and you think there are some very interesting opportunities available at the moment due to market conditions. You are fortunate in that the fund will allow you to invest in debt, equity or real estate, but the volatile economy (US and overseas) provides no clear direction in the market. Despite this, you have found three distinct opportunities, each of which can consume the entire $50 million allocation you need to place within the next month. You may choose to invest the $50 million in one, two or all three opportunities- your choice, but provide your rationale. You are otherwise sufficiently diversified such that a $50 million acquisition of any of the following will not adversely impact the fund’s balance. The opportunities are:

300,000 SF office building in a CBD (pick one) that can be purchased at an unlevered 5% capitalization rate. You’re not sure if it’s a bit pricey, and you will have to finance it within six months and lever the return to meet your goals. You may assume that the due diligence has been done and you are satisfied that the property is appropriate for the fund. The property is “in transition” with one-third of the leases expiring within two years and another third in five years.

Portfolio of two CMBS bond deals issued in 2021 with the bonds maturing over various terms depending upon tranche --choose from the BANK 2021-BNK33 or BFLD 2021-FPM Mortgage Trust deals or both. Look at attached pages to see the Pricing information- amount available per tranche and the yield on the tranches to determine which tranches (if any) you want to buy.

Secondary stock offering for a large retail REIT (rated Moody’s Baa1/S&P BBB+)with a diversified portfolio by geography and tenant throughout the USA. I did not say here whether this is a mall, shopping center, outlet, or net lease REIT, so make whatever assumptions you want. The issuer plans to raise $500 million of new equity. The prospectus includes the typical statement that the money will be used for operations, to pay down debt and to make future opportunistic acquisitions. All metrics are at 1Q21(March 31, 2021):

1. Gross assets are $14.4 billion (note:Gross assets=total assets+accumulated depreciation and amortization).
2. REIT’s portfolio is levered at 46% (debt/gross assets).
3. Secured debt/gross assets is 2%.
4. Net debt/recurring EBITDA is 6.7x.
5. Dividend yield is 3.3%.
6. Fixed charge coverage (recurring EBITDA/interest expense + preferred dividends) is 3.5x.

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