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 92-93). / Situated in the middle of the capital stack of a property, mezzanine financing in real estate has been established in the form of B-notes, mezzanine loans and preferred equity, allowing the borrower to reduce its equity investment. Emerged in the early 2000's, the US real estate mezzanine market has rapidly expanded mainly due to the credit crunch following the Global Financial Crisis that widened the funding gap between the senior debt and the borrower's equity and, thereby, opened investment opportunity for mezzanine lenders to fill the gap. Meanwhile, major Korean institutional investors, categorized into pension funds, mutual aid associations, life insurers and a sovereign wealth fund, had increasingly invested in foreign real estate, particularly in the form of equity investments in order to enhance investment returns and diversify their portfolio. As asset prices are approaching the pre-crisis level, however, they have started invested in debt products instead of equity investment, focusing on mezzanine debt mainly in the US and UK markets. The purpose of this thesis is to identify the mezzanine investment opportunity in the US real estate market for Korean institutional investors. The US real estate mezzanine investment section introduces the elements of the mezzanine market and investigates the emergence and evolution of the market and specific investment strategies through publication review and an open-ended interview with a US investment manager. The Korean institutional investor section introduces the profile of major Korean institutions and looks into the market environment that led them to move toward debt away from equity and to prefer mezzanine debt for their overseas real estate investments through market research and open-ended interviews with major Korean asset managers. This thesis ends with defining mezzanine investment opportunity and risk in the US real estate market for Korean institutional investors. After a thorough research, it is found that the US mezzanine market is expected to keep creating investment opportunity as long as the funding gap exists. Also, the research makes it clear that mezzanine debt commands higher returns compared to levered equity investment, drawing Korean institutions who pursue higher risk-adjusted returns while avoiding equity investment due to compressing cap rates. As being most advanced, experienced, established and biggest, the US mezzanine market can be the best target market for Korean institutions. However, they have to take into account the current issues of diminishing premium on mezzanine debt and increasing default risk. / by Sang Hoon Jeon. / 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. 80-81). / This work was inspired by three factors: as real estate increasingly becomes a global investment option, investors around the world turn their attention to real estate emerging markets, such as the Latin American one, looking for i) attractive returns, ii) diversification and iii) the option of liquidity. The latter characteristic, which has been -at varying degrees- more and more required by investors, is crucial in determining the investment strategy regarding target allocation for each real estate asset class. It is crucial because, although every asset class behaves differently, real estate is an illiquid investment by nature; it involves a large amount of capital, whose return comes in the form of both yield and appreciation, resulting in lengthy due diligence periods and costly transactions. Is important to note that attractive returns in emerging real estate markets do not always come easy; the lack of transparency and information in these markets is, many times, the toughest barrier to break. This document proposes a methodology, based on economic models and mathematical procedures, to jump across the information barrier. With this in mind, this thesis explores Real Estate Open-ended Funds and REITs, the principal real estate investment vehicles that provide liquidity to investors, in order to outline the specific characteristics that the underlying assets of a liquid real estate fund in Latin America should have. Once the characteristics are defined, the document analyzes the historic performance of different asset classes and sub-classes to narrow the investment spectrum. The analysis was done on US data, as no historic real estate information is currently available for Latin America. Through a set of equations that resulted from a regression analysis based on the Four Quadrant Model (4Q)1, the performance of three selected retail asset sub-types in the US was projected to six Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico and Peru). The final product of this work is the proposal of an investment portfolio, based on the projected performance of three retail asset sub-types across six Latin American countries. The investment portfolio was calculated based on the modern portfolio theory (MPT)2. / by Andres Martinez. / 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. / 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 113-117). / Real estate meets machine learning: real contribution or just hype? Creating and managing the built environment is a complicated task fraught with difficult decisions, challenging relationships, and a multitude of variables. Today's technology experts are building computers and software that can help resolve many of these challenges, some of them using what is broadly called artificial intelligence and machine learning. This thesis will define machine learning and artificial intelligence for the investor and real estate audience, examine the ways in which these new analytic, predictive, and automating technologies are being used in the real estate industry, and postulate potential future applications and associated challenges. Machine learning and artificial intelligence can and will be used to facilitate real estate investment in myriad ways, spanning all aspects of the real estate profession -- from property management, to investment decisions, to development processes -- transforming real estate into a more efficient and data-driven industry. / by Jennifer Conway. / 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. 39). / The National Council of Real Estate Investment Fiduciaries (NCREIF) real estate fund database was analyzed for the time period 2004-2010. Real Estate funds were grouped in to three categories: core, value-add and opportunistic. The thesis explores several possible determinants of fund performance during the time period which was examined. Ultimately, the analysis indicates that there was generally no systematic indication that a given fund's characteristic(s) would portend either better or worse performance. The analysis did however yield the conclusion that in general core funds displayed a negative correlation between returns and leverage ratio. Finally, the thesis demonstrates the material difference in measured absolute and relative performance of opportunity funds when two different metrics are used: Time Weighted Return (TWR) and Internal Rate of Return (IRR). / by Andrew Gallinaro. / 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 145-150). / The San Francisco Bay Area is in the midst of a housing crisis as population and economic growth outstrip the ability of developers to build enough housing, resulting in a significant supply-demand imbalance that is expected to last well into the foreseeable future. San Francisco, in particular, faces the most severe housing crunch as demographic trends favor increasing demand in already dense, transit-rich cities. Developers are unable to supply the necessary housing due to significant barriers to development including a lengthy and convoluted planning and entitlement process, zoning restrictions on density and height, neighborhood opposition, and a high cost of land. Supply needs to outpace demand if housing is to become affordable, and this requires regulatory reform and cost reduction. Based on case studies, interviews and development analysis, this thesis will demonstrate how developers and municipal leaders can address the crisis by embracing factory-built housing while reforming regulations. / by Luis Mejias. / 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. 79-80). / This thesis will evaluate whether an unsatisfied need to access private commercial market real estate investment opportunities exists on the behalf of individual investors via their Individual Retirement Accounts (IRAs) and 401(k)s and, if so, what the optimal investment structure is to accommodate that need given certain investment parameters. Institutional Investors, with few exceptions, maintain some percentage of their investment portfolios in commercial real estate assets. That allocation to real estate assets can be achieved in any combination of the following investment vehicles: direct ownership (separate accounts), public real estate investment trusts (REITs), closed and open-ended commingled private equity funds, and joint ventures with local partners or developers. According to the Pension Real Estate Association (PREA), the average institutional investor currently allocates approximately 9% of its investment portfolio to real estate, with public REITs only serving as 5% of that allocation. The remaining 95% is composed of direct investment, closed and open-ended commingled funds, and joint ventures. Institutional investors have a long time horizon and a myriad of resources at their disposal to optimize their asset allocations. But can individual investors with similar long-term liabilities replicate institutional real estate strategies within their own retirement portfolios? Individual investors are increasingly becoming their own fiduciaries through defined contribution programs; defined benefit plans' percentage of total retirement assets in the US has been in significant decline for decades, with no sign of reversal. Real estate is an important asset class for pension plans in terms of providing current yield, inflation protection and diversification; it should be equally important in individual investors' portfolios. This thesis argues that one way for individual investors to efficiently gain private market commercial real estate investment exposure is through a multi-manager core fund held within a collective investment trust. / by Jeffrey D. Harper. / 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 64). / Followed by huge amounts of small real estate investments from wealthy Chinese individuals, large institutional investors, like well-known insurance companies and developers, also started to step into the U.S. real estate market to make large profit since 2013. Apparently, the strong economy and relatively steady real estate market are the major attractions for both individual and institutional investors all around the world; however, compared with individual investors who care more about return and immigration, Chinese institutional investors focus more from the strategic standpoint especially when the current U.S. real estate market has such relatively high price and possibly would face another round of depression within a few years. This thesis will first look at all transaction details of large-scale real estate investments in major American cities to uncover the similarities and differences in terms of product types and geographic areas. And then, many reasons for the strong investment trend will be discussed on both macro- and micro-level. In addition, through interviews and literature reviews, specific real estate products, strategies, and investment methods will be discussed for each type of institutional investors. Finally, this thesis will compare Chinese institutional real estate investment nowadays with Japanese investors in the 1980s to find out the similarities and differences, and most importantly, what Chinese can learn from Japanese investors' failure and what is a good way to participate in the U.S. real estate market. / by Chuan Zhai. / 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 84-85). / The current world economy confronts investors with many challenges, especially investors managing institutional portfolios. Global GDP growth has been slowed, and the performance of traditional assets - equities and bonds - alone are often not able to satisfy the various risk and return objectives that institutional investors seek in their portfolios. Amid this challenging investment environment, investors around the world are seeking new investment strategies to lessen their reliance on those traditional asset classes. Consequently, alternative investments continue to garner greater attention of investors as an effective method to diversify their portfolios and to potentially increase overall returns and mitigate risk. However, the term "alternative investments" encompasses a broad range of investment concepts and there is no generally accepted standard definition. A major focus of this thesis is to compare real estate and real assets with hedge funds and private equity, the four most prevalent sub-classes within alternative investments. Specifically, we address the question of whether, or to what extent, real assets including real estate can improve the performance of institutional investment portfolio, in particular in comparison with the private equity and hedge funds. Additionally, we analyze the effect of diversifying globally compared to domestically. We first develop a common ground regarding alternative investments and their characteristics. Then, we focus primarily on traditional mean-variance optimization but also consider risk parity as the allocation criterion to explore the optimal mixed-asset allocation strategies as a function of the investor's expected return target. Additionally, we compare the resulting allocations with institutional investors current average allocation in their portfolios. The findings clearly indicate that adding alternative asset classes generally offers attractive diversification opportunities to a portfolio consisting of only traditional asset classes - stocks and bonds. We find that real assets and the private equity & hedge fund type of alternative assets both enhance the portfolio, and the aggregated optimal share of these alternative investments is much higher than current industry practice. However, the role of the various different types of alternative investments varies widely in a portfolio, in particular as a function of the investor's risk/return appetite. / by Yoojin Sul. / 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. / The ever evolving macro and microeconomic environment makes real estate developers evaluate their development strategies. They do so in order to generate a maximum present value of profits from their projects. More importantly, they want to avoid completing the projects in an unfavorable environment and missing the financial targets. As the complexity in the production of a real estate project increases, orchestrating the various parts becomes even more important in reaching the desired financial outcomes. Hence, phasing plays an important role as it brings the flexibility to break the whole project into various parts or phases, which could function as standalone entities with or without other parts or phases. And so, it is important to consider how to delineate the project components between the various phases to achieve maximum profitability? The model developed here provides a framework for users to arrive at an optimal phasing scheme for their proposed projects. It is a transparent, easy to use model, which can help a user understand the value generating parameters while evaluating various schemes. It helps one conduct a deterministic analysis, i.e. without uncertainty, to explain the impact of four different parameters - project production profile and duration, real estate cycle periods and phases - on the phasing flexibility of a project. Eventually, a user can run probabilistic analysis including uncertainty in the real estate cycles and phases to determine an optimal phasing. The output from the deterministic analysis combines large amounts of data in a graphical array bringing clarity in phasing decisions. Finally, the probabilistic analysis combines information from the deterministic analysis helping the user arrive at the optimal phasing. / by Saurabh Jalori. / 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. 98). / New Urbanism has been described as an urban design movement promoting the master planning and development of communities that have walkable, human-scale neighborhoods while integrating the necessary elements of modern life such as vehicular traffic and parking, wide ranging retail offerings, and diverse employment centers. As its core, New Urbanism attempts to counter the multitude of problems stemming from the rise of automobile transport and resulting mass migration to the suburbs in the 20th Century, including sprawl, a lost sense of local community, lack of diversity, untenable housing and transportation costs, arduous commuting times, negative environmental impacts, and harmful effects to individuals' physical health. There have been a number of smaller -- "town-scale" -- New Urbanist developments built since the movement gained traction and formal organization in the 1980s. These communities have proved their mettle not only as positive social engineering experiments, but also as profitable business models for real estate entrepreneurs. The context for New Urbanism has changed greatly over the past several decades. Today, design and development firms are undertaking the construction of secondary cities and urban nodes with housing units numbered in the tens of thousands and areas measured in hundreds of acres. These "city-scale" developments carry risks and uncertainties that eclipse the rather controllable and largely foreseeable nature of small town development by requiring exponentially larger amounts of capital over periods typically extending more than a decade. The phasing in of the wide array of product types call for clear vision, steady leadership, and stalwart relationships, despite the real challenges of fickle political support, unpredictable economic cycles, and increasingly opportunistic labor pools. The thesis will primarily focus on Miasteczko Wilanow, a master planned community in southern Warsaw, Poland. Supplemental research, through comparisons to Kentlands, Maryland and Pinehills, Massachusetts, will be presented. Through on-site interviews and analysis of historical documentation, the thesis will aim to 1) present the initial considerations and intentions of Miasteczko Wilanow; 2) chart the development's progress and evolution from groundbreaking to present day; and 3) present conclusions and potential solutions towards better planning and implementation of similar "city-scale" projects. / by Edward J. Olchowicz. / S.M.in Real Estate Development