FAIR VALUE MEASUREMENTS (Tables)
|
12 Months Ended |
Dec. 31, 2013
|
FAIR VALUE MEASUREMENTS |
|
Schedule of investments and other financial instruments measured at fair value |
Assets, at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level I) |
|
Significant Other
Observable Inputs
(Level II) |
|
Significant
Unobservable Inputs
(Level III) |
|
Total |
|
Private Equity |
|
$ |
7,244,643 |
|
$ |
548,545 |
|
$ |
29,646,471 |
|
$ |
37,439,659 |
|
Credit |
|
|
— |
|
|
3,078,789 |
|
|
1,944,464 |
|
|
5,023,253 |
|
Real Assets |
|
|
52,931 |
|
|
— |
|
|
2,736,708 |
|
|
2,789,639 |
|
Other |
|
|
943,976 |
|
|
292,262 |
|
|
348,486 |
|
|
1,584,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
8,241,550 |
|
|
3,919,596 |
|
|
34,676,129 |
|
|
46,837,275 |
|
Foreign Exchange Forward Contracts |
|
|
— |
|
|
85,750 |
|
|
— |
|
|
85,750 |
|
Foreign Currency Options |
|
|
— |
|
|
3,340 |
|
|
— |
|
|
3,340 |
|
Other Derivatives |
|
|
— |
|
|
5,080 |
|
|
— |
|
|
5,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
8,241,550 |
|
$ |
4,013,766 |
|
$ |
34,676,129 |
|
$ |
46,931,445 |
|
|
|
|
|
|
|
|
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|
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|
|
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|
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|
|
|
|
|
December 31, 2012 |
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level I) |
|
Significant Other
Observable Inputs
(Level II) |
|
Significant
Unobservable Inputs
(Level III) |
|
Total |
|
Private Equity |
|
$ |
8,015,680 |
|
$ |
364,543 |
|
$ |
25,734,400 |
|
$ |
34,114,623 |
|
Credit |
|
|
— |
|
|
1,809,021 |
|
|
1,587,046 |
|
|
3,396,067 |
|
Real Assets |
|
|
— |
|
|
— |
|
|
1,775,683 |
|
|
1,775,683 |
|
Other |
|
|
648,108 |
|
|
323,306 |
|
|
239,230 |
|
|
1,210,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
8,663,788 |
|
|
2,496,870 |
|
|
29,336,359 |
|
|
40,497,017 |
|
Foreign Exchange Forward Contracts |
|
|
— |
|
|
137,786 |
|
|
— |
|
|
137,786 |
|
Foreign Currency Options |
|
|
— |
|
|
4,992 |
|
|
— |
|
|
4,992 |
|
Other Derivatives |
|
|
— |
|
|
882 |
|
|
— |
|
|
882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
8,663,788 |
|
$ |
2,640,530 |
|
$ |
29,336,359 |
|
$ |
40,640,677 |
|
|
|
|
|
|
|
|
|
|
|
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|
Liabilities, at fair value:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level I) |
|
Significant Other
Observable Inputs
(Level II) |
|
Significant
Unobservable
Inputs
(Level III) |
|
Total |
|
Securities Sold Short |
|
$ |
624,653 |
|
$ |
51,491 |
|
$ |
— |
|
$ |
676,144 |
|
Foreign Currency Options |
|
|
— |
|
|
4,591 |
|
|
— |
|
|
4,591 |
|
Foreign Exchange Forward Contracts |
|
|
— |
|
|
410,191 |
|
|
— |
|
|
410,191 |
|
Unfunded Revolver Commitments |
|
|
— |
|
|
1,902 |
|
|
— |
|
|
1,902 |
|
Other Derivatives |
|
|
— |
|
|
14,177 |
|
|
— |
|
|
14,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
$ |
624,653 |
|
$ |
482,352 |
|
$ |
— |
|
$ |
1,107,005 |
|
|
|
|
|
|
|
|
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|
|
|
|
|
December 31, 2012 |
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level I) |
|
Significant Other
Observable Inputs
(Level II) |
|
Significant
Unobservable
Inputs
(Level III) |
|
Total |
|
Securities Sold Short |
|
$ |
321,977 |
|
$ |
28,376 |
|
$ |
— |
|
$ |
350,353 |
|
Foreign Currency Options |
|
|
— |
|
|
3,362 |
|
|
— |
|
|
3,362 |
|
Foreign Exchange Forward Contracts |
|
|
— |
|
|
229,314 |
|
|
— |
|
|
229,314 |
|
Unfunded Revolver Commitments |
|
|
— |
|
|
2,568 |
|
|
— |
|
|
2,568 |
|
Other Derivatives |
|
|
— |
|
|
3,751 |
|
|
— |
|
|
3,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
$ |
321,977 |
|
$ |
267,371 |
|
$ |
— |
|
$ |
589,348 |
|
|
|
|
|
|
|
|
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|
Schedule of changes in private equity, credit, real assets and other investments measured and reported at fair value for which Level III inputs have been used to determine fair value |
|
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|
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|
|
|
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|
|
For the Year Ended December 31, 2013 |
|
|
|
Private
Equity |
|
Credit |
|
Real Assets |
|
Other |
|
Total Level III Investments |
|
Balance, Beginning of Period |
|
$ |
25,734,400 |
|
$ |
1,587,046 |
|
$ |
1,775,683 |
|
$ |
239,230 |
|
$ |
29,336,359 |
|
Transfers In(1) |
|
|
— |
|
|
109,568 |
|
|
— |
|
|
34,978 |
|
|
144,546 |
|
Transfers Out(2) |
|
|
(2,817,295 |
) |
|
(272,819 |
) |
|
— |
|
|
(23,304 |
) |
|
(3,113,418 |
) |
Purchases |
|
|
4,016,510 |
|
|
1,189,531 |
|
|
1,083,682 |
|
|
144,884 |
|
|
6,434,607 |
|
Sales |
|
|
(1,100,900 |
) |
|
(791,278 |
) |
|
(65,545 |
) |
|
(69,866 |
) |
|
(2,027,589 |
) |
Settlements |
|
|
— |
|
|
90,095 |
|
|
— |
|
|
— |
|
|
90,095 |
|
Net Realized Gains (Losses) |
|
|
683,636 |
|
|
34,320 |
|
|
14,930 |
|
|
(6,835 |
) |
|
726,051 |
|
Net Unrealized Gains (Losses) |
|
|
3,130,120 |
|
|
(1,999 |
) |
|
(72,042 |
) |
|
29,399 |
|
|
3,085,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period |
|
$ |
29,646,471 |
|
$ |
1,944,464 |
|
$ |
2,736,708 |
|
$ |
348,486 |
|
$ |
34,676,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Changes in Net Unrealized Gains (Losses) Included in Net Gains (Losses) from Investment Activities (including foreign exchange gains and losses attributable to foreign- denominated investments) related to Investments still held at Reporting Date |
|
$ |
3,738,140 |
|
$ |
71,355 |
|
$ |
(36,676 |
) |
$ |
23,915 |
|
$ |
3,796,734 |
|
|
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|
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|
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|
For the Year Ended December 31, 2012 |
|
|
|
Private
Equity |
|
Credit |
|
Real Assets |
|
Other |
|
Total Level III Investments |
|
Balance, Beginning of Period |
|
$ |
20,384,253 |
|
$ |
1,016,759 |
|
$ |
1,526,732 |
|
$ |
96,179 |
|
$ |
23,023,923 |
|
Transfers In(1) |
|
|
— |
|
|
37,157 |
|
|
— |
|
|
1,061 |
|
|
38,218 |
|
Transfers Out(2) |
|
|
(219,462 |
) |
|
(68,099 |
) |
|
— |
|
|
(613 |
) |
|
(288,174 |
) |
Purchases |
|
|
2,100,217 |
|
|
686,032 |
|
|
558,246 |
|
|
154,468 |
|
|
3,498,963 |
|
Sales |
|
|
(2,671,329 |
) |
|
(155,788 |
) |
|
(54,419 |
) |
|
(61,428 |
) |
|
(2,942,964 |
) |
Settlements |
|
|
— |
|
|
23,164 |
|
|
— |
|
|
— |
|
|
23,164 |
|
Net Realized Gains (Losses) |
|
|
1,353,002 |
|
|
10,437 |
|
|
54,419 |
|
|
28,581 |
|
|
1,446,439 |
|
Net Unrealized Gains (Losses) |
|
|
4,787,719 |
|
|
37,384 |
|
|
(309,295 |
) |
|
20,982 |
|
|
4,536,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period |
|
$ |
25,734,400 |
|
$ |
1,587,046 |
|
$ |
1,775,683 |
|
$ |
239,230 |
|
$ |
29,336,359 |
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
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|
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|
|
|
|
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|
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|
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|
|
|
Changes in Net Unrealized Gains (Losses) Included in Net Gains (Losses) from Investment Activities (including foreign exchange gains and losses attributable to foreign- denominated investments) related to Investments still held at Reporting Date |
|
$ |
5,895,269 |
|
$ |
43,421 |
|
$ |
(268,179 |
) |
$ |
43,485 |
|
$ |
5,713,996 |
|
|
|
|
|
|
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- (1)
- The Transfers In noted in the tables above for credit and other investments are principally attributable to certain investments that experienced an insignificant level of market activity during the period and thus were valued in the absence of observable inputs.
- (2)
- The Transfers Out noted in the tables above for private equity investments are attributable to portfolio companies that are now valued using their publicly traded market price. The Transfers Out noted above for credit and other investments are principally attributable to certain investments that experienced a higher level of market activity during the period and thus were valued using observable inputs.
|
Summary of valuation methodologies used for assets, measured at fair value and categorized within Level III |
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|
Fair Value
December 31,
2013 |
|
Valuation
Methodologies |
|
Unobservable Input(s)(1) |
|
Weighted
Average(2) |
|
Range |
|
Impact to
Valuation
from an
Increase in
Input(3) |
|
Private Equity Investments |
|
$ |
29,646,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare |
|
$ |
6,555,714 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
7 |
% |
5% - 15% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
50 |
% |
50% - 50% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
50 |
% |
50% - 50% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
11x |
|
10x - 13x |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
11x |
|
9x - 12x |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
9 |
% |
8% - 13% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
11x |
|
9x - 12x |
|
|
Increase |
|
Retail |
|
$ |
4,539,841 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
8 |
% |
5% - 20% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
50 |
% |
0% - 50% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
50 |
% |
50% - 100% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
11x |
|
8x - 13x(6) |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
10x |
|
8x - 11x(6) |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
11 |
% |
8% - 23% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
8x |
|
6x - 9x |
|
|
Increase |
|
Technology |
|
$ |
4,047,332 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
11 |
% |
5% - 15% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
50 |
% |
50% - 50% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
50 |
% |
50% - 50% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
12x |
|
6x - 15x |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
12x |
|
7x - 14x |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
11 |
% |
8% - 14% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
9x |
|
6x - 11x |
|
|
Increase |
|
Consumer Products |
|
$ |
3,707,020 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
11 |
% |
10% - 15% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
59 |
% |
50% - 67% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
41 |
% |
33% - 50% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
11x |
|
8x - 17x |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
10x |
|
8x - 14x |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
10 |
% |
8% - 20% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
9x |
|
6x - 11x |
|
|
Increase |
|
Financial Services |
|
$ |
3,200,813 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
10 |
% |
5% - 15% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
52 |
% |
50% - 100% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
48 |
% |
0% - 50% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
12x |
|
11x - 13x |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
11x |
|
10x - 11x |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
9 |
% |
9% - 10% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
10x |
|
10x - 11x |
|
|
Increase |
|
Other |
|
$ |
7,595,751 |
|
Inputs to both market comparable |
|
Illiquidity Discount |
|
|
11 |
% |
10% - 20% |
|
|
Decrease |
|
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Market Comparables |
|
|
47 |
% |
0% - 67% |
|
|
|
(4) |
|
|
|
|
|
|
|
Weight Ascribed to Discounted Cash Flow |
|
|
53 |
% |
33% - 100% |
|
|
|
(5) |
|
|
|
|
|
Market comparables |
|
Enterprise Value/LTM EBITDA Multiple |
|
|
12x |
|
6x - 17x |
|
|
Increase |
|
|
|
|
|
|
|
|
Enterprise Value/Forward EBITDA Multiple |
|
|
10x |
|
5x - 14x |
|
|
Increase |
|
|
|
|
|
|
|
|
Control Premium |
|
|
3 |
% |
0% - 20%(7) |
|
|
Increase |
|
|
|
|
|
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
12 |
% |
9% - 20% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
9x |
|
5x - 12x |
|
|
Increase |
|
Real Assets |
|
$ |
2,736,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy/Infrastructure |
|
$ |
2,037,673 |
|
Discounted cash flow |
|
Weighted Average Cost of Capital |
|
|
11 |
% |
6% - 27% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Enterprise Value/LTM EBITDA Exit Multiple |
|
|
7x |
|
7x - 11x |
|
|
Increase |
|
Real Estate |
|
$ |
699,035 |
|
Inputs to direct income capitalization |
|
Weight Ascribed to Direct Income Capitalization |
|
|
19 |
% |
0% - 100% |
|
|
|
(9) |
|
|
|
|
|
and discounted cash flow |
|
Weight Ascribed to Discounted Cash Flow |
|
|
81 |
% |
0% - 100% |
|
|
|
(5) |
|
|
|
|
|
Direct Income Capitalization |
|
Current Capitalization Rate |
|
|
7 |
% |
6% - 9% |
|
|
Decrease |
|
|
|
|
|
|
Discounted cash flow |
|
Unlevered Discount Rate |
|
|
11 |
% |
9% - 24% |
|
|
Decrease |
|
Credit Investments |
|
$ |
1,944,464 |
(8) |
Yield Analysis |
|
Yield |
|
|
11 |
% |
6% - 25% |
|
|
Decrease |
|
|
|
|
|
|
|
|
Net Leverage |
|
|
5x |
|
1x - 12x |
|
|
Decrease |
|
|
|
|
|
|
|
|
EBITDA Multiple |
|
|
9x |
|
5x - 13x |
|
|
Increase |
|
In the table above, other investments, within private equity investments, represents the following industries: Education, Forestry, Media, Services, Telecommunications, Transportation, Manufacturing and Recycling. None of these industries represents more than 10% of total Level III private equity investments as of December 31, 2013.
- (1)
- In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. Management has determined that market participants would take these inputs into account when valuing the investments. LTM means Last Twelve Months and EBITDA means Earnings Before Interest Taxes Depreciation and Amortization.
- (2)
- Inputs were weighted based on the fair value of the investments included in the range.
- (3)
- Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.
- (4)
- The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach.
- (5)
- The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach.
- (6)
- Ranges shown exclude inputs relating to a single portfolio company that was determined to lack comparability with other investments in KKR's private equity portfolio. This portfolio company had a fair value representing less than 0.5% of the total fair value of Private Equity Investments and had an Enterprise Value/LTM EBITDA Multiple and Enterprise Value/Forward EBITDA Multiple of 24.7x and 18.2x, respectively. The exclusion of this investment does not impact the weighted average.
- (7)
- Level III private equity investments whose valuations include a control premium represent less than 5% of total Level III private equity investments. The valuations for the remaining investments do not include a control premium.
- (8)
- Amounts include $24.1 million of investments that were valued using dealer quotes or third party valuation firms.
- (9)
- The directional change from an increase in the weight ascribed to the direct income capitalization approach would increase the fair value of the Level III investments if the direct income capitalization approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the direct income capitalization approach results in a lower valuation than the discounted cash flow approach.
|