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 33-34). / The ability of Commercial Real Estate to provide strong current income returns has long been one of its benefits of inclusion into a long-term portfolio. Capital Expenditures can significantly hamper this income return of commercial properties and mislead the investors into making misguided decisions. However, there has long been an informational vacuum about capital expenditure and the current available literature can best be described as non-existent. This thesis focuses entirely on capital expenditure to understand the future implications of Capital Expenditure Spending, and to understand the co-relation between different property characteristics and capital expenditure. The thesis uses contingency tables to understand the behavior of commercial properties over a span of nine years. The goal was to understand if capital expenditure spends have an impact on future spends. If an investor invests high (low) capital expenditure in the present do they keep spending high (low) all throughout their hold periods or their spending changes over time. Secondly, regression analyses is used to better understand the relationship between different property characteristics and capital expenditures and this exercise helps build an intuition about capital expenditure spends. The contingency tables and regression analyses revealed distinguishing trends about capital expenditure and helped understand its behavior. It was revealed that investors currently spending high on capital expenditures are not necessarily successful in saving capital expenditure spends in the future. The regression analyses defined a positive correlation for capital expenditure with respect to age, sq. ft, NOI and market value and it defined a negative co-relation with respect to cap rate and location considering the property was located in the top six markets in the country. / by Mehul Chavada. / 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 94-98). / The prodigious US single-family housing market consists of roughly 80 million existing homes and of those, more than 14 million are currently being rented. This trillion-dollar rental market has traditionally been operated exclusively by mom and pop organizations, until now. Since the housing collapse began five years ago institutional investors began taking note of falling home prices and rising inventories of bank owned properties. Private equity giants like Blackstone and Colony Capital saw a once-in-a-generation opportunity to invest at pennies on the dollar in a sector long regarded but never before accessible to large institutions. Reminiscent of California in the late 1840's, there was a massive rush West and South by firms looking to deploy billions of dollars of investment capital through the purchase of thousands of single-family homes. By the middle of 2013 nearly $20 billion had been raised or spent and more than 150,000 homes were in the hands of institutional investors. A new market was born and fast maturing. In the early days skeptics permeated the space while investors looked to further formalize the hundreds of millions already invested. By the end of 2013 three Real Estate Investment Trusts existed with a market capitalization exceeding $4 billion and the Blackstone Group finalized the formation of the world's first bond backed by single-family rental streams. Today analysts and investors disagree on what stage of maturity the single-family rental (SFR) exists. Specifically, there are those who see SFR as a new asset class advancing toward a double or triple digit billion market capitalization. On the other hand there are those who see these investments as nothing more than a short-term trade, destined to fade within the next few years. This contemporary thesis topic aims to shed light on the buy-to-rent strategy surrounding single-family home investors including tactics being adopted to garner the greatest rewards. Furthermore, the thesis will assess the recent investment methods being made by the burgeoning industry's largest players including filing for REIT classification and securitizing single-family rental incomes. Finally, the thesis will answer the question of whether this new national investment will endure as a business model and forever change the single-family landscape or simply remain and opportunistic 'trade' at a time when so many Americans lost their home. / by Morgan W. Pierson. / 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 (page 35). / Commercial Real Estate price performance is captured at the aggregate (or market) level by a price index such as Moody's RCA CPPI Index. However, individual property performance could be significantly different from the aggregate index performance (both national and metro indices) due to several property related reasons which are different from the factors affecting the market. For example, a tenant's lease termination, an excellent property manager securing attractive leases, unusual operating expenses are some of those (unobserved) property specific characteristics that affect property performance. Specifically, the RCA CPPI Index tracks all sales transaction pairs and using them, constructs a regression model that represents the price index that best fits the sale transactions. The difference between the individual property sales pair performance and that predicted by the aggregate index is captured by the residual of the regression model and represents idiosyncratic risk which is different from the market risk as represented by the aggregate index. Idiosyncratic risk can be quite important for real estate investors. In the absence of derivative contracts for synthetic investment, no one can invest in the aggregate market as a whole. The objective of this thesis is to quantify the idiosyncratic risk (dispersion) of individual CRE transactions in the US from the observed RCA-CPPI national and metro level (regional) indices' performance during the period 2001-15. In this regard, the thesis tries to capture the basic dynamic nature of how the idiosyncratic price dispersion tends to evolve over time as well as by property type and by metro market. Also, the thesis seeks to understand the potential drivers behind the dispersion. / by Phanidhar Yella. / 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 70-73). / Taking a qualitative case study approach, this thesis examines the approach in combining a concert hall with other real estate product types in the urban redevelopment context, and demonstrates that successful mixed-use development with concert hall or other cultural facilities could be a viable strategy to add both civic and commercial value for new town development. Concert halls have been used as catalysts for place making and experience creation for wide community, with a new interest in playing a key role in urban regeneration. Combining cultural facilities in mixed-use development is expected to create a win-win situation that can benefit both the cultural institutions and the developers, and both the cities and the citizens. This thesis analyzes the Elbphilharmonie in Hamburg, Germany to examine the real estate rationale for the mix of cultural and commercial uses in civic and commercial value creation, and explores the transferability of the HafenCity model defined based on the Elbphilharmonie case to China. This thesis then studies the concert hall market in China, and summarizes the Hexi New Town model and the Macau model from cases in Nanjing and Macau. A comparison of the three mixed-use cultural project models is made, and the thesis concludes with alternative points of view that worth considering and recommendations for the application of the Hexi New Town model in China. / by Zhiyao Feng. / 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, 2017. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 69-70). / As China's elderly population grows at an accelerating rate, investors from a wide range of industries have entered the senior housing market and view it as a "sunrise industry" which can offer attractive returns for investors. Today, growth in China's senior housing market is presents both tremendous opportunities and challenges. On the other hand, due to the large capital required, long investment cycle and steady capital inflow toward the middle or the end of the projects, an alternative financing method is required to meet the rapid development of senior housing in China. REITs (Real Estate Investment Trusts), allowing anyone to invest in portfolios of large-scale properties through the purchase of stock, are a great alternative source for financing. This thesis reviews the background and current market of senior housing in China and discusses the key points in this industry, especially the ways of project to finance. Then, REITs are introduced in terms of history, pros and cons, valuation, and challenges. A case of a US leading health care REIT is conducted, with a comparison to the current quasi-REITs in China. Finally, the general strategy and structure of senior housing REITs are discussed. Based on this study, REITs clearly fit the current and future needs of senior housing sector in China. Although China's capital market is not completely ready to adopt REITs with international standards, China should pursue the experiment of such practice amid the challenges. / by Yiming Cai. / 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 (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