Commercial Real Estate Analyst Interview Questions Flashcards

Commercial Real Estate Analyst Interview Questions Flashcards Explain how you analyzed your last project?1. Project description - location/size,2. In what capacity were you involved? - define role and responsibility clearly,3.Reporting Structure4. Biggest challenge faced during this project5. How you solved that challenge6. What is the current status of the project?

• 100 apartment Multifamily development in New York

City. 2. I underwrote the project, acted as an analyst. 3.Reported to the VPs of Investments directly. 4. Biggest challenge was the assumptions for market rates as COVID was hitting. Very difficult to accurately project how the market will look in the midst of a pandemic. 5. solved the problem by assuming lower occupancy/rent payments to account for worst case scenario. 6. Current status is that the deal was not followed up on by the company; it did not have enough of a return assuming COVID hit hard for the company to acquire and develop this plot.What is the difference between rental yield and cap rate?Rental Yield is the net amount of money a landlord receives in rent over one year (shown as a after deducting operating expenses), shown in a % of the amount of money invested in the property. Rental Yield = (Net annual income / Cost)100 Cap Rate is the ratio between Net Operating Income produced by an asset and its costs (current market value). Cap Rate = NOI/Value.*Rental yield calculates yield (return) of an asset; Cap rate finds the value (capitalized value) of an income generating Real estate asset.What do you look for in a possible Real Estate investment?What is a promote?Why real estate?What is levered IRR?Tell me how do you value a buildingWhat is the relationship between IRR, NPV, and the discount rate?Explain how you allocate the infra cost / land cost / service charge in mixed-use development.Walk me through a DCF Do we consider financing in IRR calculations? If you had to decide a project's merit on the basis of only one performance indicator, which indicator will you choose?How do you calculate the cost of equityUse CAPM (Capital Asset Pricing Model). Re = Rf + b (Rm-Rf) where Re = cost of equity, Rf = risk free rate of return, Rm = Historical Return of the stock market (equity market), b = beta (# describing correlated volatility of an asset in relation to the volatility of the benchmark the asset is compared to).What is a closed-end fund? How about an open-end? Tell me what are the best/worst performing asset classes in the current market situation? Why should one invest in these assets or why not?Tell me why would two Class A office buildings across the street sell for different prices?Explain your drivers of value you are looking for in Offices, Multi-fam, Hotel, Industrial, Retail, Self-Storage, Medical Office, and Senior Housing.

Favorite Excel formulaA project has a net present value of zero and a discount rate of 10%; what will be the project IRR?A DCF values a company based on the Present Value of its Cash Flows and the Present Value of its Terminal Value.First, you project out a company's financials using assumptions for revenue growth, expenses and Working Capital; then you get down to Free Cash Flow for each year, which you then sum up and discount to a Net Present Value, based on your discount rate - usually the Weighted Average Cost of Capital.Once you have the present value of the Cash Flows, you determine the company's Terminal Value, using either the Multiples Method or the Gordon Growth Method, and then also discount that back to its Net Present Value using WACC.Finally, you add the two together to determine the company's Enterprise Value.What do you think is the most important statement of a company?Walk me through your resumeTell me, with interest rates so high these days what do you see in store for real estate investing and more specifically, acquisition and disposition activity.