Help with Real Estate Investment Interview
I was at a superday for a real estate capital group and they asked me one technical question that I caught me off guard. I recently became interested in real estate and was able to get through previous interviews through my social skills, so I really didn't have a grasp on the technical aspect of the interviews. What would have been the best answer for this?:
For the first time since the financial crisis, the benchmark 10 year Treasury yield fell below that of the 2 year Treasury yield, a pricing anomaly known as a “yield curve inversion”. How do you think this anomaly has affected the clients of ORIX Real Estate Capital, namely owners of properties in the multifamily, senior living, and healthcare sectors?
EDIT: Going forward, if I do not know the answer to a technical question, what is the best way to respond?
I would have talked about how low rates make real estate a more attractive destination for capital. Property values are inflated and cap rates are compressing. Owners will think about selling assets with the inflated values or look to refinance at lower rates - look at cash-out refis over the last 5 yrs. ORIX does some lending, so you could talk about lenders looking to make bigger spreads by going up the capital stack; think mezz/pref equity.
I don't think there is a 'best answer' for the question - they are looking to see how you think about it. I recommend reading NREI's daily '10 Must Reads' to prep for questions like this. Worst-case scenario you'll have something to talk about and you'll show you know what's going on.
Good luck!
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