Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2014. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 57-59). / This thesis introduces probabilistic valuation techniques and encourages their usage in the real estate industry. Including uncertainty and real options into real estate financial models is worthwhile, especially when there is an elevated level of unpredictability surrounding the investment decision. Incorporating uncertainty into real estate pro formas not only provides different results over deterministic models, it changes the angle of attack to real estate valuation problems. When uncertainty is taken into account, the focus shifts from simply maximizing financial returns, to modeling and managing uncertainty to make better ex ante finance and design decisions. The ability to add optionality in probabilistic financial modeling can enhance returns by curtailing losses during downturns and taking advantage of upside conditions. A step-by-step example is carefully crafted to demonstrate the simplicity with which uncertainty, Monte Carlo Simulations and Real Options may be included into real estate pro formas. The example is entirely Excel based and is separated into three parts with each progressively increasing in complexity. SimpleCo Tower establishes the familiar Discounted Cash Flow pro forma as a starting point. ModerateCo Tower describes how uncertainty and Monte Carlo simulations can be incorporated into a pro forma while illustrating the effect of non-linearity on financial models. ChallengeCo Tower reveals how real options can add value to an investment and how it should not be overlooked. The case study illustrates how the techniques outlined in this thesis can add significant value to real estate decisions without much added effort or investment in expensive software. The case study also shows how the use of real world data to model uncertainty can be put into practice. / by Keith Chin-Kee Leung. / S.M. in Real Estate Development

This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2020 / Cataloged from student-submitted PDF of thesis. / Includes bibliographical references (pages 39-40). / This paper examines the housing market in Beirut between the beginning of 2005 to the end of 2018, focusing in particular on the slowdown in the early to late 2010s. It will be shown that this slowdown is partly attributable to a mismatch in the supply that private developers have introduced to the market and the actual demand from potential homeowners. The analysis reveals that the most at-risk assets are opportunistic developments targeting high-income buyers and that despite political and economic instability, property owners have continued to realize returns on real estate. At the time of writing this paper, there are no formal metrics to track the movement of real estate prices in Beirut. Two indices are constructed using transaction data to address this using the hedonic and repeat sales models. Finally, the different factors that have affected the real estate market are explored, including slow wage growth that has prevented homeowners from keeping up with housing prices, massive public debt that has paralyzed subsidization programs, and a high cost of debt that has made it difficult and unattractive to finance both new construction and homeownership. / by Abdulrahman Hammoud. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: M. Arch., Massachusetts Institute of Technology, Department of Architecture, May, 2020 / Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, May, 2020 / Cataloged from PDF version of thesis. / Includes bibliographical references (page 120). / The history of cultivating cannabis can be traced back to at least the 3rd millennium BCE, as evidence suggests it was consumed for psychoactive effects at least 2,500 years ago in the Pamir Mountains in central Asia. Viewed quite negative in recent centuries though, cannabis is currently illegal in most of the countries in the world, including the United States at the federal level. Started as early as in the 1970s, cannabis was first legalized in few states in the US for medical use. Later, as more states adopted lenient policies on the substance, the voice for the decriminalization of recreational cannabis increased. Now, as 12 states already legalized recreational cannabis and more than 30 states permit medical cannabis, the cannabis industry presents not only core business opportunities but also an arena for related building and facility design and development. Excited about this landscape, this thesis aims to explore unique building prototypes for cannabis operators and examine innovative investment opportunities through real estate investment trust (REIT) in the cannabis industry. / by F. Finn Xu. / M. Arch. / S.M. in Real Estate Development / M.Arch. Massachusetts Institute of Technology, Department of Architecture / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2020 / Cataloged from the official PDF of thesis. / Includes bibliographical references. / This paper searches for the property value component due to existence of a redevelopment option. We do an empirical study based on over 6,600 industrial property transactions across United States from 2000 to 2018. This can be seen as a discovery journey of improving the methodology in identifying and evaluating the redevelopment option value embedded in the transaction price of such property traded among investors in the private property market. Starting from simple OLS regression, we observed a reverse causality phenomenon between property sales price and a dummy variable of the intention to redevelop the property, in which the redevelopment flag was associated with lower priced properties. The journey then ended up verifying the improvement in the most advanced methodology that academics on the frontier apply in studying the value of the redevelopment option. This advanced methodology by Buechler et al (2020)1 deploys an empirical analysis strategy using a probit model to develop a redevelopment propensity metric, instead of the dummy variable of redevelopment intention. We apply this methodology to solve the endogeneity problem with the original simple OLS regression, and we find that industrial properties have an average redevelopment probability of 0.22, which generates option value of $5.8/sqft (land), or 19% of the average property price per square foot of land ($30.2/sqft(land)). Comparing our study findings for industrial property with that of the Buechler et al study (2020) which is on all property types, the implication is that on average redevelopment option value tends to be a greater percentage of industrial property value than for the other types of commercial properties. The option value is not necessarily greater in absolute terms, but relative to the value of the property. These results apply on average to all industrial properties, not just to those sold specifically to be redeveloped. / by Yuling She. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2020 / Cataloged from the official PDF of thesis. / Includes bibliographical references (pages 71-74). / Much has been written concerning the positive socio-economic values of urban manufacturing and the need for cities to advocate for the protection of existing middle-income wage jobs in the industrial sector. However, there lie governing factors as to why a use, that has always been essential to communities, has become very hard to grow or even sustain in the present time. Urban growth models were usually developed around the idea that industrial uses are a negative externality. Unlike numerous cities that witnessed complete deindustrialization after World War II, New York City has over the years transformed the identity of its Manufacturing districts. The revival of urban manufacturing in the heart of NYC, where the highest and best use is not in favor of industrial use, has pushed for re-visiting the outdated industrial zoning framework for the first time since the 1961 zoning resolution. / The North Brooklyn Industrial Business Zone, a protected manufacturing district spanning across 1,066 acres and the third-largest industrial hub in the city by employment, is set out to become the blueprint for a proposed rezoning framework by NYC's Department of City Planning. The rezoning was initiated as part of the industrial action plan launched in 2015 and aims to create new models for innovative and diverse neighborhoods through mixed-use commercial and industrial uses. In 2018, The Department of City Planning released a draft rezoning framework outlining an additional density to support commercial investment in a growing of a mixed-use market. However, the plan does not define a clear strategy that aims to maintain net-zero losses in industrial jobs. In effect, a simple up-zoning applied to industrial land will not hold back competing uses from outbidding industrial tenants and creating further industrial displacement. / By shedding light on New York City's industrial land use policies and the mechanisms that helped maintain and grow its manufacturing ecosystem thus far, this thesis will demonstrate the feasibility and challenges facing industrial space development within the newly proposed North Brooklyn Re-Zoning Framework and under current market conditions. As part of the feasibility study, several deal structures will be explored from private development, public-private partnership, and industrial community land trusts which improve both the feasibility as well as the retention of businesses. / by Salma Abdelgawad. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2004 [first author]; and, (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, Center for Real Estate, 2004 [second author]. / 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. 85-87). / This study examines the methodological opportunities of index construction for the Pan-European property index, whose release is planned by the company Investment Property Databank (IPD). To address the question of temporal aggregation in appraisal indices, three index construction methods, namely "Stale Appraisal", "Linear Interpolation", and "Repeated Measures Regression", are tested for their accuracy in dealing with infrequent appraisals. Our model is based on a simulation approach, calculating appraised indices from a simulated "true index" of randomly generated returns, and directly comparing the statistical characteristics of these index returns to the true return. As broader context, this paper also gives an overview of the current theories in respect to general valuation issues on a disaggregate, aggregate and international level. We also investigate the European real estate market regarding currently applied market size measuring, structure and country performance. In particular, we explore crucial valuation issues that are relevant for the planned Pan-European property index to obtain the respect of the international investment community. / by Friederike Helfer and Markus Witta. / 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 [first author]; and, (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, Center for Real Estate, 2008 [second author]. / Includes bibliographical references (leaves 70-72). / As international property investors increasingly understand and appreciate the benefits of diversification and look to achieve higher returns, cross-border real estate investment has increased. In this context, the issue of the country risk premium is crucial as these types of investments present a wide range of risk and return opportunities that need to be understood and, ideally, quantified. Naturally, the decision of whether or not to invest begins with an assessment of how much additional return is required to compensate for the additional risk associated with a particular country. Establishing these risk premiums is particularly difficult since cross-border investors often lack local market knowledge and encounter transparency issues when trying to gain an understanding of the market. These questions matter particularly to institutional investors looking to make allocation decisions across geographically diversified holdings. Given the problem of appropriate pricing in emerging markets, this study will attempt to forecast capitalization rates for these markets using widely available macroeconomic data and property-related market ratings. This cross-sectional study will employ univariate and multivariate regressions. We will initially identify various factors with a significant relationship to cap rates in markets where real estate pricing data is available. Office cap rate data from Real Capital Analytics (RCA), Jones Lang LaSalle-LaSalle Investment Management and Investment Property Databank (IPD) for sets of 23 to 25 overlapping countries will be used as dependent variables in the analysis. Once the significant factors have been established, we will extrapolate the model out to markets that have the necessary background data, but lack usable cap rate information. In other words, we will forecast cap rates for countries that lack data - as is typical for emerging markets. / (cont.) Using this forecast, we can then estimate a "risk factor" by subtracting an appropriate risk-free rate and by adding a income growth proxy - the country's GDP growth. This study hopes to reveal key factors that will help institutional investors looking to invest in countries other than their own. It will attempt to provide a basic guideline of cap rates and risk-factors for office properties in emerging markets. Understanding the drivers behind pricing differences can help us better predict how cap rates would change with underlying changes in local macroeconomic, political, and property market factors. / by Vipasha Dasgupta and Alexander Ward Nathaniel Knapp. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, Center for Real Estate, 2008 [first author]; and, (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2008 [second author]. / Includes bibliographical references (leaf 52). / The commercial mortgage-backed securities (CMBS) market has vastly evolved over the last decade, but it remains a very private and proprietary market in comparison to other bond markets such as corporate or municipal bonds. The formation of CMBS data source providers such as Trepp and Intex in recent years has added transparency to the market, but large gaps still remain in available information for CMBS investors, particularly in the secondary trading market. This thesis examines pricing of CMBS at origination, when it is sold by the issuer, and after origination, when it is traded in the secondary market. Using a sample of AAA rated CMBS this thesis seeks to determine which factors influence price at origination and after. This thesis is essentially split into two separate studies, one examining pricing at origination and the other pricing after origination. For both parts, regression analyses were performed on fifty AAA rated securities issued from June of 2001 to December of 2006. All deal level information was provided by Trepp, while JP Morgan Chase provided historical AAA rated CMBS market information as a comparison. Secondary pricing data, based on a proprietary pricing model was also provided by Trepp. A small sample of data from actual closed transactions in the secondary market was supplied by Morgan Stanley for comparison. The results of the first part of this thesis are very similar to previous works done on the topic and show that Debt Service Coverage Ratios, geographic concentration, and property type are all important factors in determining the initial price of a CMBS issuance. The results of the price at origination study show that investors preferred seasoned CMBS deals over new issues even though the fact that overall market spreads decreased during the studies time frame. / (cont.) This preference suggests that investors were more attracted to seasoned CMBS than they were to newer issuances. The second part of this thesis illustrated a similar inclination by investors to more seasoned CMBS in the secondary trading market. The authors conclude that variations do exist in the pricing of CMBS in the secondary trading market and that overall the market has significant enough transparency to incorporate different factors into investment decisions. / by Emily R. Schwartz & Matthew Warner. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Architecture, Center for Real Estate, 2004 [first author]; and, (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, Center for Real Estate, 2004 [second author]. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references. / by Christopher B. Helsaback & David B. Ritchey. / S.M.in Real Estate Development

Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering; and, (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, Center for Real Estate, 2006. / 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 267-268). / This thesis is divided into two distinct parts. Part 1 relates to the requirements of the S.M.C.E.E. degree, and Part 2 relates to the M.S.R.E.D. degree. Part 1: The Influence of Boundary Conditions and Higher Mode Shapes on First-Crack Prediction for Blast-Resistant Glazing Systems: This study reviews the extent to which two commonly used assumptions in the design of blast-resistant glazing systems influence modeling results. Blast-resistant glazing designers typically model glazing by assuming that glass plates are simply supported on four edges, and that they can be represented by a single degree of freedom model that assumes one mode of vibration. In reality, glazing sealants provide elastic support, and the dynamic response of plates to blast loads consists of the superposition of several modes of vibration. This study investigates the inaccuracy caused by these assumptions by comparing conventional results to those of more sophisticated finite element analyses. / (cont.) Part 2: A Survey of Incentive Programs and Strategies for Large-Scale, "Smart Growth" Developments in Massachusetts: Chapter 40R/40S, TIFIDIF/UCH-TIF, Special Development Districts, Affordable Housing Programs & Grant Programs: Politicians and legislators have placed a significant amount of emphasis on high-density, transit-oriented development as a method of dealing with the "housing crisis" in Massachusetts. However, the type of infill redevelopment projects that the state wishes to encourage often face feasibility problems related to high infrastructure costs associated with redevelopment, rising construction costs, high affordability requirements, and/or the cost of creating structured parking. This study examines the extent to which several newly created and existing programs are capable of helping large-scale smart growth projects attain feasibility and it provides strategies for using them. The surveyed programs include Chapter 40R/40S, TIF/DIF/UCH-TIF and special development districts, Affordable Housing Programs and other Grants. / by Abraham Menzin. / S.M.in Real Estate Development / S.M.