You are making and designing investment portfolios for two unrelated investors. Each has $2,000,000 to invest and you can offer them shares in one or more of the four real estate investments shown in the table below. For each investor you may choose any amount to invest in any or all of the four investments, but your combined investment for all investors cannot exceed the indicated amounts available.

The first investor is a retired school teacher. The teacher has a fully funded pension, and all the proceeds will be used to fund the teacher's grandchild's college education, which starts more than 10 years from now. The second investor is a recently divorced single parent who is looking for current income to supplement spousal support payments until the children are old enough and the investor can return to the work force on a full-time basis. You demand diversification, so no more than 50% of on any of your clients' portfolios will be invested in a single asset.

Recommend a portfolio for the single parent and calculate the current yield (first year) for that portfolio.

Possible investments: Max Amount Available: Investment Type: Investment 1 $2,000,000 Rental Apartment Investment 2 Investment 3 Investment 4 $5,000,000 $3,000,000 $1,000,000 Office Building Senior CMBS Note Real Estate Private Equity Fund 7 4 9 5.00% 3.50% 2.00% 5 4.00% Holding Period (years): Current Return: Projected IRR: Projected Multiple: Leverage Employed: 12.00% 4.00% 16.00% 11.00% 1.64x 2.06x 1.16x 3.63x 50.00% 65.00% 0.00% 75.00%