What characterizes an unleveraged DCF analysis?

An unleveraged discounted cash flow (DCF) analysis is characterized by its exclusion of debt financing from the evaluation of an investment’s cash flows. This type of analysis provides a view of the asset's performance solely based on its operational cash flows generated by the investment itself, rather than factoring in how those cash flows are affected by financing decisions, such as loans or other indebtedness.

By focusing exclusively on the property’s unleveraged cash flows, an investor or analyst can better understand the core performance of the asset without the influence of how it was financed. This method allows for a more straightforward comparison of properties on an equal basis, as it eliminates discrepancies that arise purely from different financing structures.

In contrast, analyses that include debt financing would account for the costs associated with servicing that debt, which could distort an understanding of the underlying value and profitability of the property itself. Some arguments regarding external market factors or detailed appraisals may be relevant in a broader investment analysis context but do not specifically define the characteristics of an unleveraged DCF analysis. Thus, focusing on cash flows without the impact of debt is the indicating feature of an unleveraged approach.