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ALTERNATIVE INVESTMENTS AND PORTFOLIO MANAGEMENT
CFA® Program Curriculum 2020 • LEVEL II • VOLUME 6
© CFA Institute. For candidate use only. Not for distribution.
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© CFA Institute. For candidate use only. Not for distribution.
CONTENTS How to Use the CFA Program Curriculum Background on the CBOK Organization of the Curriculum Features of the Curriculum Designing Your Personal Study Program Feedback
vii vii viii viii x xi
Alternative Investments Study Session 15
Alternative Investments
Reading 39
Private Real Estate Investments Introduction Real Estate Investment: Basic Forms Real Estate: Characteristics and Classifications Characteristics Classifications Private Market Real Estate Equity Investments Risk Factors Real Estate Risk and Return Relative to Stocks and Bonds Commercial Real Estate Overview of the Valuation of Commercial Real Estate Appraisals Introduction to Valuation Approaches The Income Approach to Valuation General Approach and Net Operating Income The Direct Capitalization Method The Discounted Cash Flow (DCF) Method Advanced DCF: Lease-by-Lease Analysis Advantages and Disadvantages of the Income Approach Common Errors The Cost and Sales Comparison Approaches to Valuation The Cost Approach The Sales Comparison Approach Advantages and Disadvantages of the Cost and Sales Comparison Approaches Reconciliation Due Diligence Valuation in an International Context Indexes Appraisal-Based Indexes Transaction-Based Indexes Advantages and Disadvantages of Appraisal-Based and TransactionBased Indexes Private Market Real Estate Debt indicates an optional segment
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© CFA Institute. For candidate use only. Not for distribution. ii
Contents
Summary Practice Problems Solutions Reading 40
Reading 41
64 67 74
Publicly Traded Real Estate Securities Introduction Types of Publicly Traded Real Estate Securities Publicly Traded Equity REITs Market Background REIT Structure Investment Characteristics Considerations in Analysis and Due Diligence Equity REITs: Property Subtypes Economic Drivers Real Estate Operating Companies Valuation: Net Asset Value Approach Accounting for Investm