Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaf 81). / This thesis investigates the factors, related to urban stadium development, that act as a catalyst for subsequent local urban renewal. Over the recent decades there has been substantial debate related to stadium or arena development. "The stadium debate intersects with cultural studies, economics, law, urban studies, civic planning, sports administration, mass communications, and sociology."' The center of this debate is over the economic and social "net benefit" to a city that undertakes a stadium development. Many argue that the economic and social costs created by urban stadium development outweigh the public good, especially in the case of publicly funded or subsidized stadiums. This thesis concentrates on the renewal of the surrounding real estate markets rather than broader economic renewal. When this thesis refers to "urban renewal" it is meant in the context of the renewal of the physical infrastructure and real property. The thesis examines the range of costs and benefits resulting from stadium induced urban real estate renewal. The benefits analyzed are derived from the changes in the local real estate markets that may be connected to the arena or stadium construction. The subject case study illustrates some of the broader economic benefits related to urban real estate renewal. Washington, DC provides a recent example of urban arena development that led to significant local investment in the development of the surrounding area. Construction of the Verizon Center led to development of residential, office, and retail product in the immediate area. The case study explores the factors (specific to the site, team owners, local developers, and city officials) that create a fertile environment for urban real estate renewal. / (cont.) It also ascertains, by way of interviews and public record, the concerns of these parties while making the critical decisions that can spark this type of urban rebirth. Using the Verizon Center case study, this thesis examines the factors that had a positive impact on urban renewal. / by James W. Rizzo. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (p. 89-92). / Knowledge-based industries tend to cluster. The nature of activities illustrate the importance of networks and virtual and proximity aspects of clustering. Review of existing literature brings out the advantages of clustering for such industries. The purpose of the study is to comprehend the current status of development, both economic and real estate, in the knowledge-based industries in India. A stylized model is used as a reference to understand the status of economic development. Current body of literature and interview results from this study suggests transitioning nature of India's knowledge-based industry from being a services provider to becoming a knowledge provider. However, there are challenges in the transition process related to infrastructure and human resource. This study suggests that a large scale mixed use project may in fact be able to address some of the ongoing issues in the economic domain. The proposed development may lead to clustering of business and universities thus, giving rise to a knowledge-based cluster in India. / by Chandan Dev Singla. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaves 69-74). / Real estate investment is becoming increasingly international. Deregulation and integration of global capital markets, growth of emerging market economies, demographic trends in developed economies, and geopolitical and sociocultural changes the world over are presenting opportunities for international real estate investors in a fascinating, complex and interconnected market place. Latin America seems to be one of the last frontiers still unexplored by international real estate investors. Colombia in particular is making quiet and steady efforts to internationalize its economy and welcome Foreign Direct Investment (FDI). Among the policy-makers' long-term goals, Colombia aspires to become one of the three most competitive countries in Latin America by the year 2032. International real estate investors need to adapt their tools and techniques to underwrite new and uncharted markets that present investment opportunities. This thesis proposes a comprehensive strategic framework for international real estate investments, by adapting from selected business academic literature and real estate industry practice different decision-making approaches. The purpose of the thesis is twofold. First, by proposing a strategic framework, the work intends to contribute to the development of strategic decision-making literature in international real estate investment. Second, by utilizing the strategic framework to study selected issues and variables that are deemed relevant or pertinent to the commercial real estate market in Bogota, it attempts to serve as a resource to international real estate investors interested in the market. / by José Camilo Otálora Castro. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaves 88-89). / Globalization has created a dynamic and rapidly changing marketplace. A business must move quickly to capitalize on the changing environment. For example, many global biotechnology firms are seeking new geographical locations as part of their strategy to expand their business. Korea's biotechnology reputation and prospects as a potential site for biotech businesses is attracting increase attention. The Yeongjong Project is one choice. For the ongoing development of Korean bioclusters, this study will demonstrate potential and the attractiveness of Korea's biocluster sites, which may help international biotechnology firms relocate and reposition in Korea. Biotechnology is an umbrella term so this study identifies what the biotechnology and biotechnology industry are, as well as its characteristics and risks. Secondly, the biotechnology market will be analyzed both globally and domestically to understand the industry trend. This paper compares successful international bioclusters such as Tuas Medical Park in Singapore and University Park at MIT in the U.S, along with Korea's Wonju Medical Valley and Daedeok Techno Valley. This study explains different innovations and success factors, and characteristics of each cluster and whether the success factors are applicable to the Yeongjong Project. Finally, this thesis will identify the area and its characteristics suitable for a biocluster and propose appropriate product types through market feasibility. / by Junghun Choi. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaves 88-90). / On the eve of the fifty-year anniversary of the Cuban Revolution, change finally appears to be on the horizon for Cuba. In February 2008, Raul Castro succeeded his older brother Fidel as President of the Republic of Cuba. In the United States, a newly elected President and a Congress presumably controlled by the Democratic Party will assume power in 2009. These political developments bring with them the potential for change in U.S. - Cuba relations. Opportunities are available even today for U.S. investment in the Cuban real estate market. This thesis identifies why now is the right time for Americans to move forward with their investment plans. It explains how real estate transactions are currently being conducted on the island and the challenges of investing in Cuban real estate according to Cubans and foreign investors. Presented as well are strategies for overcoming these hurdles. / by Damien Bronsdon Chaviano. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaves 44-47). / Sustainable development for stadiums and arenas is a recent topic gaining interest throughout professional sports ownership groups worldwide. Stadiums have lagged behind in understanding the best practices surrounding the analysis and implementation of green building techniques due to their unique nature, while other more conventional building types have developed and implemented a standard system of practices with regards to sustainable design. Abnormal usage patterns, variable climate conditions, and slow changing operational structures with longstanding policies are all hurdles facing organizations as they attempt to make their stadiums greener. This thesis investigates and lists current examples of green friendly design and operations that exist in stadiums worldwide. It then considers an analysis of the LEED certification process, supply chain management, transportation infrastructure, recycling programs, and innovative design measures. The thesis also investigates the organizational and technical hurdles that many teams face in implementing these green features despite apparent widespread demand to adopt them. Many facets of greening stadiums have been implemented throughout the world, mostly using the existing framework that has been designed towards conventional buildings during recent years. Teams that have had the greatest success have shown a willingness to learn and understand the greening options available to them. This includes how these options fit into the physical confines of the stadium, its surrounding environment, and the overall business and social objectives of the organization. Successful adopters also strive to adapt their existing organizational and operational framework to position themselves to benefit from new techniques that could further enhance their stadium's overall green characteristics. / (cont.) Greening the current and future stadiums of the world is a continuous process. Teams that begin to implement sustainable practices generally find the process infectious, where more ideas and programs are soon born from previous initiatives. Organizational and technical leadership are keys to driving innovation and change. / by Peter Vanderweil. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (p. 74-75). / In the modern real estate industry, mega-scale developments have been a notable feature. The distinctiveness of these projects is that they are enormous in scale and thus require many years to develop. Unlike regular sized projects, they have greater opportunities to alter strategies, plans or designs during the multiple years of development. This provides the developer with alternative options to mitigate potential risks or seize upside opportunities. The "Real options" theory is especially applicable for valuation and decisionmaking of mega-scale real estate development projects. Relying on the dynamic decisions of the developer, for example, the project can proceed, be delayed or be abandoned. Either way, the developer can avoid downside risks and attain a more optimal value for the project. The New Songdo City (NSC) project in South Korea is an archetype of the mega-scale development phenomenon. "New Songdo City" is a massive city development project on 1,415 acres of reclaimed land in Incheon, near Seoul. The project features innovative and valuable aspects that are milestones for the real estate industry. Not only is NSC of megascale and multi-phase, but it is highly international in nature (foreign lead developer and architect, much foreign capital, and aimed at international world-class occupants). It also features imaginative conceptual planning, local and international developer partnership and sophisticated investment and financing techniques. The project highlights the importance of the interaction of local circumstances and other participants, helping to avoid risks and enhance the future values of the project. New Songdo City thus provides an excellent laboratory to explore both the broader strategic and historical development of a Mega-Project and also the applicability of modern, cutting- edge analytical tools for valuing flexibility in project design and implementation. / (cont.) This thesis seeks to explore both of these aspects, including an in-depth review of the history and strategic prospects for the project as well as a specific quantitative model focusing on the value of phasing in the project. The quantitative model is innovative in that, while previous literature has developed classical economics-based real options models of NSC, this is the first application of the "engineering-based approach" advocated by Professor de Neufville and the MIT Engineering Systems Division. This approach allows the model to be more transparent and user-friendly to decision-makers, assisting the valuation of flexibility in the project in a manner more supportive for practitioners. / by Junho Lee and Jeehyun Oh. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (p. 49-50). / What is the relationship between the structure of leases in the Boston office rental market and how much landlords invest in energy efficient building systems for their existing buildings? I am drawn to this question because it seems to me that there is technology available that would allow the operation of for-rent office buildings to be more efficient in their consumption of energy than they currently are. I investigate this question with the hope that by characterizing the problem, we can start to solve it. To this end, I interview 35 players in the real estate market in Boston in order to determine the relationship between leases and landlord investment in energy efficiency, and if there is any way to increase such investment. The most significant finding of this study is that the lease does not determine the way the market works, rather the market determines the way the leases are written. The result at this time for the Boston market is that leases simply do not incentivize the landlords to make investments in energy efficiency because the tenants do not want to pay for the landlords to do it. The landlords are unable to make significant profit from these upgrades due to existing recapture clauses and operating expense allocation in existing leases, and the payback period on many of these investments does not satisfy the investment horizon of many commercial landlords. They lack pressure and motivation from their tenants, as evidenced by the tenants' refusal to pay higher rents for more efficient buildings. Finally, there is no perception of a premium, in the form of a lower cap rate, paid by the capital markets at the time of sale. / (cont.) This is a very complex issue, with no single, clear resolution. There have been many suggestions as to how this problem may be solved, ranging from a complete change in lease structure, to government intervention through efficiency mandates or taxes, to a laissez faire stance that will allow the market to take care of the problem. I think that none of these in isolation will solve the problem, but that a combination of them all may ameliorate many of the issues. Perhaps the best combination would be to mandate performance or to tax excessive consumption while at the same time developing leases that better address how to share costs and benefits. By doing this, we will set appropriate minimum goals, and provide suitable tools to achieve them. Without both of those pieces, it seems unlikely that much progress will be made. / by Brian S. Meyer, Jr. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (leaves 66-68). / Market forces continually change the landscape of the real estate private equity ("REPE") industry. In the current market, robust capital raising and the emergence of new funds in REPE suggest increasing competition to place capital while the credit crisis has marked the end of an era for cheap debt that was previously used by opportunity funds to enhance returns. Under these changing market conditions, opportunity funds seek to continually deliver above market returns through various investment strategies and composition allocations which have major implications on the risk levels of the funds. This thesis seeks to understand if and how recent market changes have influenced the REPE industry. It identifies the kinds of investment strategies currently being used by opportunistic funds, and in particular, whether the investment compositions of the opportunity fund portfolios are changing in terms of geographic allocation or asset type allocation. The study finds that opportunity funds have been notably impacted by forces of the credit crisis, but not necessarily by increasing competition. While it is not readily apparent whether investment compositions of opportunity funds have changed due to the credit crisis, several global funds are increasing geographic allocations to emerging markets, such as Asia, to enhance returns. The interviewees generally believe that they will continue to deliver the proposed returns without necessarily increasing portfolio risks due to their flexible investment mandate, which allows them to invest in opportunities that are inline with their expertise and experience. / (cont.) In the short term, most funds expect opportunities to arise from distressed sellers. This thesis attempts to shed light on some issues involving REPE investing and represents a first attempt to scratch the surface of opportunistic investment portfolio compositions and strategies. Hopefully, readers will gain insight into the workings of this growing and highly proprietary asset class. / by Alex Lin. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Vita. / Includes bibliographical references (leaves 116-119). / The private capital business for public REITs was started by Kimco Realty, Developer Diversified, AMB and ProLogis during the years 1998-2000, at the time when the public equity was not easily available. Over the past decade, public REITs have used their private capital funds to take out REITs' existing portfolios and newly completed projects, to finance land purchases and development pipelines, and to diversify their rental income into a fee income business. Given the limited disclosure of public REITs in their private capital funds and a lack of standardized industry terms and practice applicable to this field, this research can be described a fact-finding study. By studying each of the private capital funds managed by 7 leading REIT managers, I categorize these funds in terms of fund type, inception year, fund life, fund style strategy, investment target, geographical focus, fund terms, target leverage, key investors, parent REIT's ownership, gross fund assets, distribution frequent and incentive design. In addition, I argue that the private capital business of public REITs would not have grown successfully without fuel of the merchant development activities under the public REIT's framework. This is particularly true with respect to the industrial REIT sector. I carefully examine the case of ProLogis' business model, comprised of three indispensable pillars - merchant building, fund management and core portfolio, to substantiate this claim. By creating a new structure diagram of "public REIT-sponsored private capital fund", I demonstrate the "co-opetition" phenomenon among pension funds, real estate investment managers ("REIMs") and public REIT private capital funds in the value chain of the institutional real estate investment. / (cont.) The concept can be described by the fact that two primary investors (pension funds and REIMs) of this field could themselves replicate what public REIT private capital funds are doing. I also relate this observation to the real estate M&A deals that occurred in 2007, where REIMs were observed to "arbitrage" between public REIT and private real estate markets by taking the public REITs private. Moving forward, public REIT-sponsored private capital fund is well positioned to grow as it complements a niche market for pension funds and REIMs to add private real estate exposure in a predictable and sizeable format. However, concerns on above 75% FFO coming from merchant development and private capital for leading REITs (such as ProLogis) may trigger regulatory scrutiny from Internal Revenue Service, as this represents a huge deviation from original purpose of being a REIT - to act as passive investor for core portfolio holding and pay out as dividends most of its net income. In an extreme scenario, REITs like ProLogis may voluntarily or involuntarily spin off their private capital business. Under current capital market conditions, this might actually unlock public REITs' shareholder value. Referencing from mid-cap asset managers' comparable (such as Eaton Vance and Janus Capital), REITs' private capital business can be valued from the 4x price-earnings multiple to a likely 20-30x range. / by Cervantes Lee. / S.M.in Real Estate Development