CFA Level I · CFA Level I Exam · Real Estate and Infrastructure
A government grants a private consortium the right to build, operate and collect fees from a new airport terminal for 30 years, after which ownership reverts to the government. This arrangement is best described as a:
The arrangement is best described as a public-private partnership concession. A private party finances, builds and operates a public asset for a fixed period, earning fees, and then returns ownership to the government at the end of the term.
- Apublic-private partnership concessionCorrect
- Bregulated asset base utility
- Creal estate investment trust
Explanation
A time-limited right to build and operate a public asset, then transfer it back to the government, is a concession under a public-private partnership. A regulated asset base model concerns utility pricing, and a REIT is a property-owning vehicle.
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