Reading 32

Investments in Real Estate Through Publicly Traded Securities

1 modules 17 min
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Exam Focus

For the exam, be able to describe the different types of publicly traded real estate securities and understand the advantages and disadvantages of investing in real estate through publicly traded securities. Understand the three approaches to valuation of real estate property. Familiarize yourself with the process and inputs for the direct capitalization method.

Be able to explain the types of REITs, as well as their economic value determinants, investment characteristics, principal risks, and due diligence considerations. Know the various approaches to REIT valuation and be able to calculate the value of a REIT share.

Modules

  1. Module 32.1Investments in Real Estate Through Publicly Traded SecuritiesDiscuss types of publicly traded real estate securities. · Justify the use of net asset value per share (NAVPS) in valuation of publicly traded real estate securities and estimate NAVPS based on forecasted cash net operating income. · Describe the use of funds from operations (FFO) and adjusted funds from operations (AFFO) in REIT valuation. · Calculate and interpret the value of a REIT share using the net asset value, relative value (price to FFO and price to AFFO), and discounted cash flow approaches. · Explain advantages and disadvantages of investing in real estate through publicly traded securities compared to private vehicles.17 min · 5 LOS
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