Portfolio Roles and Economic Value Determinants of Real Estate Investment
Economic Drivers The following economic factors affect the demand for major property types: GDP: This is by far the most important economic factor as it affects all property types. As the GDP grows, the demand for real estate investment…
Real Estate Investment Indexes
Private equity real estate investment indexes allow investors to analyze property investment performance using either appraisal-based or transaction-based index methods. To determine the best index method to employ, the investor needs to clearly understand the modalities of how the…
Due Diligence in Real Estate Investments
Real estate investment requires more extensive due diligence compared to public debt or equities due to its lack of transparency, standardization, and the significant impact of a property’s physical characteristics and location. Unlike other assets where investment decisions rely…
Direct Capitalization and Discounted Cash Flow Valuation Methods
Direct capitalization method, the stabilized net operating income (NOI) is divided by the market capitalization rate. In contrast, for the DCF method, the NOI for each year during the holding period plus the salvage value at the end of…
Value of a Property
The direct capitalization method estimates the value of a property by capitalizing the first-year NOI at a market-derived cap rate. The discounted cash flow method projects income after the first year and discounts the income at a yield rate…
Inputs of Direct Capitalization and Discounted Cash Flow Valuation Methods
Net Operating Income The net operating income (NOI) is calculated when using the income approach to evaluate properties. The number of revenues collected from a commercial property net of operating expenses before interest and taxes. However, NOI is guided…
Valuation of Real Estate Properties
Valuation of Real Estate Properties Valuation of any commercial property is intrinsically valuable as it determines the worth of any particular real estate property. Income Valuation Approach In this scenario, a comparison is created where an investors’ acquisition price is…
Commercial Property Types
Given the real estate cycle and its impact on portfolios, we now examine specific demand and supply factors influencing the risk and return of commercial real estate subsegments, including residential and non-residential properties like office, industrial, retail, and hospitality…
Study Notes for CFA® Level II – Alternative Investments – offered by AnalystPrep
Reading 35: Introduction to Commodities and Commodity Derivatives -a. Compare characteristics of commodity sectors; -b. Compare the life cycle of commodity sectors from production through trading or consumption; -c. Contrast the valuation of commodities with the valuation of equities and…
Real-time Surveillance of Markets
Several markets use real-time surveillance to detect market malpractices and give quick remedies. The market malpractices that can be detected by real-time monitoring are: Front running: This is also known as forward trading. It is a situation where a trader…
