1.According to NAREIT, REIT stocks correlation with the S&P 500 during the period from 1980 through 2010 was 0.55. If the S&P 500 gained 10% during this period, what is the expected gain in REIT stocks?
1. 
5.5% 

2. 
5.0% 

3. 
4.5% 

4. 
10% 
2.
By law, REITs are required to distribute 90% of their pretax income to shareholders. REITs are not taxable but shareholders are. If a REIT pays out a dividend of $1,000 and the shareholder has a tax rate of 40%, what is the after tax return to the shareholder?
1. 
$400 

2. 
$600 

3. 
$1,000 

4. 
$950 
3.
REITs are required to have at least what % of its assets invested in real estate, mortgage loans and shares in other REITs?
1. 
70% 

2. 
75% 

3. 
80% 

4. 
90% 
4.REITs are required to derive at least what % of gross income from rents, mortgage interest, or gains from the sale of property?
1. 
65% 

2. 
75% 

3. 
95% 

4. 
100% 
5.If the value of a property is $10M, and the NOI is $450K, what is the implied cap rate?
1. 
3.5% 

2. 
4.0% 

3. 
4.5% 

4. 
5.0% 
6.If a property has an NOI of $600K, and a comparable property traded at a 5% cap rate, what is a reasonable estimate of the property's value?
1. 
$12M 

2. 
$10M 

3. 
$8M 

4. 
$14M 
7.The REIT Modernization Act enabled REITs to own a taxable subsidiary. This enabled the REIT's to engage in what forprofit activities?
1. 
Merchant property development 

2. 
Fee brokerage 

3. 
Telecom and broadband 

4. 
All of the above. 
1.
Correlation = 0.55
S&P 500 gained by 10%
REIT gain = 0.55(10)
REIT Gain = 5.5%
2.
Dividend = $1000
After tax dividend = (1  0.40)1000
After tax dividend = $600
3.
Option B is correct
75%
Explanation:
REIT needs to invest atleast 75% of its assets invested in real estate, mortgage loans and shares in other REIT.
4.
Option B is correct
75%
Explanation:
REIT needs to have 75% of gross income from rents, mortgage interest, or gains from the sale of property
5.
Cap Rate = 450000/10000000
Cap Rate = 4.5%
Option C is correct
6.
Value of Property = 600,000/0.05
Value of Property = $12M
7.
Option A is correct
Merchant property development
Get Answers For Free
Most questions answered within 1 hours.