Question 2

It is your business to advice wealthy clients on portfolio choice. A new client approaches you with the following task:

Our family has invested for generations in stocks and bonds, but I thought that we should also put some money in commercial real estate. We have, however, no interest in managing a building and we also do not want to be exposed to single-address risk, because this cannot be diversified.

(a) Explain three real estate investment vehicles that could be relevant for the client. Ensure that the vehicles differ as much as possible regarding their characteristics.

(60 marks)

(b) Given the information provided by the client, discuss critically which of the three

vehicles presented under question A is most suited.

(40 marks)