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 (page 26). / Real estate is traditionally defined as the space market but before any investor hones in on a geographic area or asset class in which to invest, they must understand their capital limitations. If an investor only has $1 OM to invest and an asset requires $60M in equity, it is reasonable to assume that it is unattainable. Considering such financial limitations the real estate market can be defined in terms of capital investment levels in addition to the traditional delineations of the space market. Investors typically analyze space markets and may benchmark asset prices to an index but these tools do not define the nuances of their particular capital investment level but rather depict a mean of previous or projected investment dynamics. This thesis explores the price dynamics of specific price segments in the Southern office markets of the United States. Regression analyses are used to tease out the marginal differences between price segments. Modeling commercial real estate price dynamics is typically done with a standard OLS repeat-sales regression and we will do the same here for a controlled baseline analysis. However, in order to comprehend the price dynamics of specific price segments within a market this thesis will use a quantile regression model to parse the price market into deciles. This model revealed significant varying degrees of price volatility across the deciles that increased from the lowest price cohort to the highest, confirming the hypothesis. / by Alden R. Edwards, Jr. / 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 (page 48). / Real estate owned by non-real estate firms represent a substantial portion on most corporate balance sheets, yet they are often being overlooked with a lack of investment strategy and treated as the necessary evil for operating the core businesses. Corporate real estate generally involves activities such as long-term leasing, acquisition, in some cases ground-up developments, management, and disposal of real estate assets. Due to the long lasting nature of real estate, corporate real estate decisions are non-easily reversible. Different industries approach corporate real estate in ways that best support their operational needs. This paper quantitatively compares the relationship between the share price, occupancy costs per employee, and net income during the period 1999 to 2013 for U.S. Fortune 500 financial and technology companies. The first part of the paper explains our data collection methodology. We collected share prices and extracted data from 10-k filings submitted to the U.S. Securities and Exchange Commission. The extracted data consists of firm gross revenue, net income, total full-time employee number, plant, property equipment (PPE), real estate PPE, rental expense, and occupancy costs. The derivation of occupancy costs is also explained in this part. The second part studies the relationship between share price, occupancy costs, and net income for the two sectors. Consistent with our expectations, there is positive and significant correlation between share price and net income for both sectors. On the contrary, the market punishes technology firms for higher occupancy costs per employee but not as much for financial firms. The third part of the paper examines the relationship between occupancy costs and net income per employee. Contrary to common belief that occupancy costs per employee would negatively affect the net income generated by each employee, we discover a positive correlation between the two which we believe is a result of reversed causality. / by Chee San Sandra Choy. / 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. 102-108). / Current legislation has made it possible for real estate investment trusts (REITs) to earn income beyond purely passive sources such as rents from real property or interest from mortgages on real property. As a result, both the number and market capitalization of hotel REITs have substantially increased, and the difference between hotel REITs and hotel C-corporations has narrowed. However, companies such as Starwood Hotels have reverted back to the C-corporation structure. Given these organizational changes and the increasing dominance of hotel REITs, there is a need to analyze hotel REITs and hotel C-corporations in a comparative framework. Equity REITs and C-corporations have been studied extensively. However, research on various organizational forms in the hospitality industry is somewhat limited. This study attempts to fill this gap by comparing the stock market performance of publicly traded hotel REITs with hotel C-Corporations from 1993 to 2011. Furthermore, the impact of significant events such as mergers and acquisitions and legislative amendments on firms' stock price are also observed. Finally, detailed case studies of companies that underwent corporate restructuring are conducted. The research objective of this thesis is to examine (a) whether REITs are an efficient organizational structure for the lodging industry; and (b) whether the tax benefits of REITs offset the regulatory constraints they face. The study infers that REIT acquirers have an advantage in mergers and acquisitions, but in all other situations, the net benefits of REITs are not as clear. On market cap basis, the performance of hotel REITs and hotel C-Corporations was almost identical, however when equally weighted, hotel REITs outperformed their C-Corporation counterparts. In addition, the results show that the REIT returns are highly volatile. On a broad level the hospitality business has two distinct segments -- ownership of hotels and management of hotels and the degree of operating flexibility offered is one of the main factors that differentiate REITs from the C-Corporation counterparts. Therefore, this study concludes that the choice of corporate structure depends greatly on a firm's business strategy. / by Purva Gujar. / 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 PDF version of thesis. / Includes bibliographical references (page 85). / China's real estate market has recently experienced a down turn after decades of exponential growth. High returns on new developments used to attract large capital inflow to the real estate market. Yet as the real estate market slumps and the profit margin drops, the real estate market is now experiencing a shortage of capital. The modem Chinese real estate market only started around the early 1990s. With just 25 years of history, it has grown to be one of the largest real estate markets in the world. Compared to the huge advancement in the development industry, the real estate investment market seems to have lagged behind. Domestic private equity investment in Real Estate only became popular around 2009. Currently, the majority of the developers in China are still relying on traditional bank loans and internal cash to finance their projects. While compared with their foreign counterparts, the Chinese developers do reserve lots of cash, the general trend is to employ less internal capital and rely more on external equity financing. As a result, the Chinese real estate capital market welcomes and demands financial innovation, particularly on the public side. Both public equity market and the public debt market are under experiment in China. This thesis first investigates REITs and CMBS in the US from a historical perspective. Then it directs its attention to China and investigates the opportunities and challenges lying ahead for the Chinese public capital market. The thesis concludes with a prediction of the characteristics of the first Chinese REITs and CMBS. It will try to answer the following questions. Does China need a securitized public market like the US? Is China fully prepared for such a real estate financial transformation? What current securitization products are out there in China? What regulations need to be further addressed to establish the Chinese REITs and CMBS markets? What would the first Chinese REITs and CMBS be like in the near future? / by Pingchuan Fu. / 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 61-62). / The sharing economy is disrupting long-standing industries! This is one of the most common phrases used in discussions about any of the booming internet-based companies offering peer-topeer services. This public perception fed by thousands and thousands of supporting articles and blogs seems intuitively correct. However, the limited number of empirical academic studies published to date, looking only at the direct impacts on the industry under review and ignoring the more holistic indirect economic impacts, have not all reached that same conclusion. In our study we focus on Airbnb, the company that went from renting 3 air beds in a San Francisco apartment in October 2007 to a valuation of $25.5 billion in 2015 surpassing the market cap of the largest global hotel chains that have been around for decades. The purpose of the study is to empirically estimate the impact of Airbnb on hotels in Toronto since majority of the limited academic empirical studies on the topic to date are focused on U.S. cities. Regression analysis of time series is used to estimate the structural models based on hotel performance metrics, GDP, CPI, tourists, currency, and Airbnb data. The three estimated models are: change in real average daily rate, change in hotel rooms available, and change in hotel rooms sold. We project a five-year forecast of Toronto hotels key performance metrics, for the period between January 2016 and December 2020, using the estimated models. The results of the study suggest that Airbnb has a statistically positive impact on the change in number of hotel room nights sold in the overall Toronto market. Taking a closer look into each of the six hotel classes the study hypothesizes that midscale class hotels are the only ones statistically significantly negatively impacted by Airbnb growth. Results also suggest that Airbnb growth has a statistically insignificant impact on the number of luxury, upper upscale, and economy class hotel room nights sold whereas upscale and upper midscale class hotels are positively impacted. We end our study with sensitivity analyses on the forecasts by altering one of the key assumptions at a time and estimating its impact. / by Hassan Mohamad. / 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 127-130). / Despite a significant addition of new multifamily housing stock into Boston's residential rental market, Boston in 2014 faces a considerable shortage of middle income housing supply relative to demand. Both the supply shortage itself and the related city-wide prevailing high cost of residential rents arise out of conditions attributable in part to (i) high costs of construction within the Boston market and (ii) the greater Boston area's large graduate student population. Boston's public officials, under the new Walsh administration, have been actively searching for approaches that the city might adopt in trying to address this housing supply shortage and its impacts on the city's middle income households. This Thesis advances one such approach by exploring how Boston might implement a specialized permitting process to incentivize the private development of a certain type of large-scale multifamily or mixed-use project. Specifically, these projects are ones that incorporate a component devoted to graduate student housing under a master lease with a Boston area university or teaching hospital. The recommendation for this approach is delivered through an exploration of the various characteristics of this type of real estate development project, referred to as a Graduate Student Anchored Project ("GSAP"), including: (i) the ways in which the specialized permitting and zoning review process applicable to GSAPs might need to differ from existing regulatory conditions; (ii) GSAPs' design, cost and leasing dynamics, discussed both in general terms and with specificity through the use of a hypothetical GSAP development on two parcels of land in Boston; and (iii) an analysis of the financial feasibility of developing a GSAP within the current market conditions -- and the types of participation which might be needed from the city, building trades union and/or university master lessees to ensure such feasibility -- through the use of a pro forma model specifically designed to accommodate this type of real estate development analysis. / by Stephen Thayer Davis. / 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 69-70). / Sole sourcing, or acquiring grocery anchored properties that are marketed to only a few prospective buyers, is favorable to general partners, who will oversee and run the property, because it increases their chances of acquiring the target. Furthermore, this is beneficial to their limited partners who have provided meaningful sources of capital in order to acquire the property. The hypothesis is that by tracking outstanding commercial mortgage backed securities (CMBS) loans coming due in the next several years, collecting data on current owners/borrowers, attempting to understand their wants and needs at asset and portfolio levels, and providing solutions to their circumstances while effectively marketing to engage existing owners of grocery anchored retail real estate assets in US metro markets with favorable demographics, one can increase the likelihood of closing off market transactions with prospective sellers while not using brokers through a system that is replicable across various real estate property types. The conclusion is that evaluating CMBS loan maturity and other data-driven advances to sole source deals are currently underutilized in the market. Currently, firms must first define an investment thesis internally. Next, the team should gather property and owner names of target markets and submarkets that fit the established investment criteria. Analyzing owners' portfolios, fund lives, and tenant expirations builds understanding behind events that trigger property sales. Furthermore examining CMBS loan maturities and outstanding property-level debt should be analyzed when targeting properties, but this strategy has not been as widely adopted as it will be in the future. Building and establishing relationships in the market will remain critical and marketing directly to brokers and owners is essential. This is believed to be a replicable strategy across markets to source off market deals of grocery anchored retail centers today. In the future, data-driven acquisition targeting is expected to increase. Firms that adopt these strategies, in conjunction with proven methods utilized today, will be better positioned to source and close off market acquisition. / by James French Mayo-Smith. / 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 PDF version of thesis. / Includes bibliographical references (pages 66-69). / Considering Mexico's size and fundamentals, the Private Equity Industry in Mexico is underdeveloped but quickly growing. In an emerging market with over 60% of its population in its work force, and whose middle class will almost double by 2025, opportunities are emerging in all sectors. Private Equity funds could play a key role in financing and seizing them. Private Equity has had a low penetration in Mexico because of an immature financial sector, a legal system with a weak judiciary branch and a high concentration of family-owned businesses without institutional practices, among other reasons. However, this sector's potential in coming years is significant. The industry attempts to double its size by the end of this decade, translating into more available money at better prices. The question is: how can the government and industry leaders unlock this potential? Several actions at all levels of the public and private sectors are needed to access available capital. The purpose of this thesis is to show the trends, opportunities and challenges regarding the Mexican Private Equity Industry, focusing on real estate investments. Today, the investment cycle in the real estate arena is complete, generating confidence for Private Equity funds. A lack of supply in the Mexican market, regulatory changes allowing local pension funds to invest in alternative investments, and the introduction of Mexican Real Estate Investment Trusts as institutional buyers have provided managers and developers everything they need to capitalize real estate investment opportunities. Still, there are multiple challenges for the growth of the Private Equity Industry: authorities need to ensure regulation enforcement, existing vehicles such as "Structured Equity Securities" must improve for fund managers to raise and deploy capital, and the reforms underway (specifically the financial reform) must bring better long-term debt opportunities. If public and private entities decide to get in the same boat, Private Equity Investments can bring unprecedented benefits for funds, developers and the whole nation. The equity is now available and regulatory framework seems more investor-friendly. It is the turn for industry leaders and managers to guide their businesses in seeking institutional funding and thus contributing to Mexico's growth. / by Ariel Fernando Cruz García. / 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 , 2010. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 79-80). / How can volatility as well as other dynamics and characteristics in hotel market fundamentals affecting risk be better understood? This paper explores that fundamental question along with other more specific questions that naturally follow: What are the markets and hotel sectors that exhibit the most volatility in RevPAR, and its various components: occupancy, ADR, absorption and completions? How can markets be characterized as more supply driven or demand driven? How can market revenue metrics be characterized as rate or occupancy driven? What determines the variations in these metrics? What markets behave similarly? What do these findings mean in terms of various risk management practices? This paper develops a model for the systematic analysis of hotel markets based on observed trends in historical data. The paper first calculates measures of volatility. It then develops a model to characterize markets based on which fundamentals play a larger role in hotel market dynamics. It then provides a further comparison of markets based on which exhibit similar movements in RevPAR. The findings then are analyzed for their meaning in terms of risk in hotel markets. Finally, the findings are interpreted to reach conclusions about the nature and determinants of volatility in hotel markets, and how to better mitigate these risks in portfolio selection. / by Brian Cason. / 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 38-39). / Using a sample of 1458 industrial properties with 36,450 quarterly observations, we apply a pair of OLS models to predict property-level NOI and capex. We then synthesize the results by modeling capex as a fraction of NOI, which we treat as a measure of property capex performance. We model capex and NOI with a series of hedonic variables that account for property and market characteristics. Travel time to the nearest CBD predicts neither capex nor NOI, but building age strongly predicts both. We find that NOI declines continuously as buildings age, first quickly and then more gradually. Capex is lower in new buildings but rises over time, peaking after 30 years before declining. NOI and capex are strongly associated with building size, but the relationships are not linear. Large buildings experience economies of scale with respect to capex and diseconomies of scale with respect to NOI. Because the capex economies of scale are more pronounced, capex fractions of NOI are smaller in large buildings. Capex fractions of NOI rise and fall over time in a manner roughly similar to total capex, but the initial fractions are low and their peaks lag peak capex by 5 years. We find that capex fraction of NOI is lower in top markets when property characteristics are held constant. But property characteristics are not consistent across markets. We find that this fraction is actually similar across the country, as the economic efficiencies of top markets are offset by the inefficiencies of their smaller and older industrial building stock. / by Stephen James Gallagher. / S.M. in Real Estate Development