Key Takeaways
- Performance attribution decomposes total return into income (38%), appreciation (47%), and leverage effect (15%).
- Variance analysis (actual vs. underwritten) identifies where assumptions were accurate, conservative, or optimistic.
- Market vs. manager analysis separates beta (market movement) from alpha (manager skill) in total returns.
- Post-investment analysis improves future underwriting—insurance escalation in this case should be 10-12%, not 5%.
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Test Your Knowledge
1.What does performance attribution decompose?
2.What is variance analysis in post-investment review?
3.How does alpha differ from beta in real estate performance attribution?