Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2018. / Cataloged from PDF version of thesis. / Includes bibliographical references (page 31). / In equity markets, dividend yields are highly correlated with future returns, largely through capital appreciation. Taking the same logic and applying it to the commercial real estate market -- could cap rates therefore predict future appreciation return? This paper finds that absolute cap rates are not significantly correlated with future appreciation or depreciation. However, regressions of first-differenced cap rates on future price appreciation find strong statistical significance at one, two, and three-quarter forecasts. The relation is strongest at a two quarter forecast, declining at four-quarter forecasts and thereafter. These findings support a case for momentum in commercial real estate pricing. Pricing movements, via cap rate changes, predict future appreciation or depreciation. The statistical results show that changes in cap rates are inversely correlated with future price appreciation or depreciation. When cap rates shift downward. properties tend to appreciate in future quarters, on average. And when cap rates shift upward, properties tend to depreciate in future quarters, on average. The analysis is bifurcated by asset type and market size. When analyzing this relation on an asset-class level, the predictive power of cap rate changes on future appreciation and depreciation is strongest in retail. Additionally, this relation is stronger in Primary CSAs than in Secondary CSAs. Astute investors should keep a close watch on the capital markets as they implement portfolio management strategies. While not to be utilized in isolation, these findings on momentum should be taken in context of a greater acquisition and disposition strategy. / by Frank Kettler. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2015. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 71-73). / The rising supply of both domestic and international capital pursuing yield in major U.S. real estate markets is staggering and has resulted in substantial unmet demand for quality, institutional assets. This thesis examines the pricing and yield arbitrage between institutional and sub-institutional grade assets, as defined by valuation parameters, alongside the feasibility of an investment model to capitalize on the aggregation of subinstitutional assets into portfolios attractive to institutional investment. The U.S. market was analyzed both quantitatively and qualitatively to determine the viability of the perceived arbitrage, the components comprising both institutional and noninstitutional markets, and where these have been successfully capitalized on with an aggregation investment model. In order to assess the viability and best practices of an aggregation strategy, interviews were conducted with firms invested in or executing this model. A repeat sales index was also created using data provided by Real Capital Analytics which comprised over 68,000 transactions of assets valued above $2.5 million which transacted between 2000 and 2014 across the United States. The interviews, regressions, and corresponding data analysis revealed distinguishable trends underlying institutional and sub-institutional assets within specific markets. These trends suggest that there is inefficiency in the real estate market regarding the pricing of certain sub-institutional assets in older, land-constrained cities making them target locations for an urban aggregation model. The largest disparities between sub-institutional and institutional investments were found in the yield and growth rates of specific assets based on underlying market criteria. By aggregating these two metrics for total return averages for non-institutional and institutional assets, and by analyzing the risk performance of each, we conclude the existence of a different pricing of risk, which generates the potential for arbitrage. Specifically, non-institutional properties exhibited better risk-adjusted returns relative to their larger counterparts for land constrained, older regions and cities, confirming our hypothesis. / by Bernardo A. Sacchini Bruzual. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2012. / This thesis was scanned as part of an electronic thesis pilot project. / Cataloged from PDF version of thesis. This thesis was scanned as part of an electronic thesis pilot project. / Includes bibliographical references (p. 115-123). / This thesis analyzes condominium and apartment development in the downtown Chicago residential market between 1997 and 2011. Specifically, it focuses on developments that converted from apartments to condominiums mainly during the boom years between 1997 and 2007 and developments that converted from condominiums to apartments during the bust years between 2008 and 2011. In the case of the latter, this thesis seeks to determine the reason or reasons that these developments had to convert from condominiums to apartments through a detailed analysis of four such developments. This analysis addresses development drivers including timing, pricing, and location. Additionally, this thesis considers the overall market conditions including supply, demand, economics, and demographics to determine what caused the boom and the ultimate bust of the market and these developments. / by Canan Ceylan Safar and Daniel Pollard. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2013. / 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 44-45). / This paper seeks to answer a question that real estate developers have wrestled with for years: apartment or condo? Given that the two types of residential units typically occupy similar buildings and structures, the goal of this research is to determine if condo prices follow rents. If a correlation is found it could have significant impact on the development of residential housing. To answer these questions historical housing prices from 1996 to 2012 for 44 of the largest metropolitan statistical areas in the U.S. will be studied. Linear regression analysis will be utilized at the metro level to understand how condo prices are influenced by apartment rents, single family home prices, the housing price index (HPI) and the yield on the 10-year U.S. treasury. The results of the analysis tell us that condo prices have followed and acted very much like single family home prices during the last 16 years. The easy credit and cheap lending that was available during the housing boom separated the single family and condo markets from the rental market by turning renters into owners. During this time rental prices remained relatively flat whereas condo and single family prices moved together and were correspondingly hit harder as a result of the financial crisis. The main implication of these findings is that it appears the type of tenure associated with a housing product has a measurable effect on the price. The physical similarity between condominium units and apartment units in large metropolitan markets does not necessarily signal a relationship in price and thus, apartment rents typically do not represent the present discounted value of condo prices. / by James D. Hughes. / S.M.in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 68-71). / U.S. commercial real estate debt capital market is experiencing some underlying structural changes. New regulations in banking and CMBS industry have resulted in reduced roles of these regulated lenders in the commercial real estate financing market. Funding gaps appear in the market as regulated lenders pullback from various types of lending. This paper delivers a comprehensive and most updated analyses on the current U.S. commercial real estate debt capital market opportunities and investment strategies. The paper illustrates the current debt capital market landscape, summarizes the key regulation changes that created challenges for regulated lenders, identifies the current dislocations and opportunities in the U.S. commercial real estate debt capital market, analyzes appropriate investment strategies that can capitalize on these opportunities, and finally identifies target investors for each strategy. This paper takes the angles of both investment managers and institutional investors, as it provides insights and analyses for both audience groups. / by Yunda Li. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2011. / 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 (p. 53-54). / Over the last decade, Morocco has witnessed an accelerated process of political, economic and social reforms aimed at improving the business climate and solidifying the economic indicators. Morocco's structural reforms share the objective of positioning the country as an attractive investment destination. The impact of these reforms has been felt in many sectors particularly real estate which has been developing at phenomenal rates in recent years. Aware of the great strides that Morocco has taken to position the country as an attractive investment destination, many foreign real estate developers expressed their interest to participate in the real estate sector. However, the financial crisis forced these developers to revise their business plans and put their projects on hold. Structured into three sections, the thesis aims to answer the question of: Is Morocco an attractive destination for foreign investors looking to invest in the residential real estate segment? The first chapter introduces the country and highlights key social and economic reforms which establish Morocco as a growing emerging economy whose government is proactively introducing investor-friendly reforms, incentives and programs. The second chapter presents an analysis of the housing sector, its demand drivers and supply indicators. A market segmentation is then performed which coupled with a market analysis, case studies and interviews, reveals that the low income segment is the best segment to target for investment. The third chapter sheds light on the evolution of foreign direct investments in the real estate sector. It proceeds to identify the differences between the local and foreign developers in terms of focus, strategy and profitability as well as outline key measures that the Moroccan government should take in order to encourage foreign participation in the sector. The paper concludes with a summary of findings and an investment framework for future developers looking to participate in what seems to be a lucrative and rewarding sector. / by Khadija Oubala. / S.M.in Real Estate Development

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 75-76). / A central consideration in real estate is how value is created in real estate development and investment deals. A biomass power plant is not only an asset which generates revenues, but from a real estate perspective, it also creates additional value to the owners' existing farmlands. Biomass energy assets are similar to traditional real estate and infrastructure in a lot of ways. On the other hand, biomass energy assets are characterized by the feedstock fuel and multiple revenue generators such as sale of power, carbon credits and biomass ash. Furthermore, favorable regulatory policies make biomass energy assets more distinct and attractive. The current biomass investment market is a relatively young and evolving market. Southeast Asia has a huge potential for biomass investment. The market players are mostly dominated by investors and firms with specialized technical knowledge about renewable energy and/or traditional power production, and private equity and venture capital firms are not very active in this market. The lack of technical insight and information transparency are stopping these financial institutions from entering the market. Therefore the Biomass Valuation Model (BVM), developed in Excel®, allow the critical technical and financial components to communicate effectively, which would help to determine the viability of the biomass investment projects with greater certainty. The BVM would be able to generate financial outputs from the perspectives of real estate development, financial and economic conditions, and the biomass power generation technical process. This valuation model (BVM) would be helpful to investors, considering the amount of time and effort required in overcoming the technical barrier, hence providing investors the "first-mover" advantage in tapping into the biomass investment market. / by Chester Ren Jie Foo. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 57-58). / Since 2000, the population structure has been rapidly changing in Korea. Especially, with the trends of delayed marriage, low fertility rate, high divorce rate, separated family due to jobs and education, and the growth of the senior population, the number of single or two-person households is expected to increase despite the decline in population. The government has recognized the importance of the small-sized rental housing market, and it introduced various policies to satisfy the increased demand. However, the supply market has not yet been boosted, because many big companies hesitated to execute their business concerning their profitability, and small companies and individuals suffered from lack of expertise while operating and managing their land and properties. In this situation, this study develops some strategies to increase the supply of small-sized rental housing and to improve the quality of living environments by reviewing the diverse cases and business models in Korea and in other countries. To understand the characteristics and needs of single and two-person households, they can be classified into 4 groups. This classification will be a base for developers and construction companies when they supply housing units and when the government provides subsidies and tax benefits. The biggest problem with the supply is the lack of land because of its high price. To solve this problem, a sub-lease business model is suggested, and using existing multi-family and multiplex housing is another way. With the sub-lease business model, the introduction of professional lease management services will help satisfy all the needs of landowners, tenants, developers and construction companies. For development projects, project financing is a common method to raise funds in Korea. As in the United States, various funding sources, such as asset-backed securities, Real Estate Investment Trusts, and a portfolio, are required. For construction, the modular method can be an option to save construction cost and time. / by Jung Mi Lee. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2018. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 49-50). / Since 2010, China has put forward ample efforts to liberalize its currency and financial systems to transition into an economy with sustainable growth. However, the severe capital flight in these past two years prompted the government to place capital control regulations on both retail (individual) and institutional investors engaged in cross-border investments. These regulations include temporary halts of various programs such as the Qualified Domestic Institutional Investor Scheme and the Qualified Domestic Limited Partner initially devised to facilitate a smooth capital flow in the Shanghai Free Trade Zone, while promoting new initiatives such as the Stock Connect and One Belt One Road. The action of the government has since stabilized a continuously devaluated Renminbi and increased the alarmingly low level of foreign reserve. On the negative note, however, the regulations also dramatically suppressed the volume of cross-border transactions and subsequently caused changes in Chinese investors' profile, partnership structure and preference for overseas markets. The fast change of the investment dynamics prompts questions including if there is still strong demand for foreign assets by Asian investors, what are the channels to continue to engage with China-based investors and their capital, how to build a sustainable business strategy with a policy-driven economy, and what the potential future risks would be. To answer these questions, it is important to distinguish between channels that are temporally closed but in the long term will continue to play a significant role in liberalizing the Renminbi and channels that are still viable even under the capital control regulations. Hong Kong plays a strategic role in this discussion. This thesis is based on rigorous research combined with an in-depth analysis of the strategies of local market players who have established business relationships with Chinese investors and formed insights into future developments based on the current investment dynamics. The thesis attempts to provide an idea of the gradually changing landscape of global investments and propose more sustainable business strategies with investors domiciled in policy-driven economies such as China's. / by Chang Zhao. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2012. / Cataloged from department-submitted PDF version of thesis. This electronic version was submitted and approved by the author's academic department as part of an electronic thesis pilot project. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (p. 81-83). / This paper discusses possible optimal corporate portfolio composition for Japanese trading and investment firms from stakeholders' (specifically shareholders and employees) value maximization perspective. Based on the historical returns of diversified business units of 4 subject companies, performances of individual business units and three portfolios (current, tangency, and "suboptimal") are analyzed and compared. The study suggests adjusting suboptimal portfolio composition based on each business unit's systematic risk and excess market return relative to its systematic risk and industry average. A firm also needs consideration on how the composition adjustment would affect diversification benefits the firm now enjoys and also on its overall management strategy. Key words: corporate portfolio management, diversification, stakeholder theory, portfolio theory, CAPM, Index model, accounting beta, Jensen's Alpha, Treynor ratio, multi-factor model. / by Takanori Ono. / S.M.in Real Estate Development