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

Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2009. / 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. 49-50). / This study examines whether or not investors behave rationally when they price the U.S. office properties. After reviewing several previous studies on the market efficiency, this paper makes three new attempts: first, we employs the actual information on transactions and rents at the property level to resolve the substitution problems; second, we introduce another pricing method which use gross yields and typical cap rate method; lastly, Shiller Test with those actual data is conducted to determine whether future rental growth can be predicted by both or either of those two pricing methods. The major empirical results can be summarized into the two findings: 1) in the pricing models, the gross yield reflects a property's future rental growth, whereas the cap rate is mostly correlated to the relatively short-term rental growth in the past, 2) in Shiller Test, the future rental growth of a property can be forecasted by the gross yield, not by the cap rate. These findings suggest that although not perfect, investors of the US office properties, at least partially, forecast the future income of the investments, and reflect them into the pricings by means of gross yields rather than cap rates. / by Jinbae Jeong. / S.M.

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 131-135). / This thesis evaluates the relationship between rapid rail transit accessibility and investment property values through a series of interviews, literature and report reviews, and a quantitative empirical analysis of over 1,000 investment property sales transactions. Theory tells us that within urban environments, proximity to rail transit generates value that accrues to the real estate owner. Initiatives in various municipalities across the world have attempted to tap into the value created by major projects to help finance infrastructure investment, but there has yet to be one method that is universally applied. Major infrastructure improvements are expensive, time consuming, and challenging to deliver. While there are multiple hurdles to overcome in order to create an expansion or new rail project, finding funding sources is amongst the most difficult. A large focus of the thesis is understanding value creation along rail access nodes in pursuit of evaluating alternative financing sources. We take both a qualitative and quantitative approach to understanding the value creation, including the "announcement effect" prior to actual completion of the infrastructure project. These issues are explored through an examination of the practices in the Boston Metropolitan Region. Specifically, we use a current, in-progress rail expansion, the Green Line Extension (GLX), to investigate the process of delivering a substantial infrastructure project and its impact on real estate value. Such projects have far reaching impacts and effects, so throughout the thesis we broaden the lens and highlight issues, ancillary benefits, and experiences of other cities that have endeavored to undertake similar projects. Among our major quantitative findings, we observe that, within the Northwest Boston Basin (our focus area), having close proximity to operational rail rapid transit stations adds up to $48/SF, or nearly 39%, to property value, holding all else constant as best as data allows (including land use). We find some evidence that the GLX project may ultimately increase property values even more than this, as our study indicates that properties near planned GLX stations appear to have already increased substantially in value relative to otherwise similar properties subsequent to the announcement of specific planned station locations in 2008. / by Austin Paul and Stacey Spurr. / 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. / Page 53 blank. Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (page 52). / Modern Portfolio Theory has been developed over the last fifty years, and there are several studies linking Modern Portfolio Theory with the allocation of real estate property in multi-asset portfolios. However, in reality, most real estate fund managers don't use MPT as a guideline when they are structuring a portfolio and deploying allocation strategy for a real estate fund. The main reason for this gap between theory and reality is that the traditional mean-variance approach of MPT requires accurate data of variances, covariance and expected return over the long term; and those data are quite difficult to collect on an ad hoc base. This Thesis applies a new technique to examine property asset allocation strategies and improve the performance of a real estate investment sample portfolio in the US. We straight-model the portfolio weight in each property type of asset as a function of the asset's characteristics: either physical attributes such as property size, vacancy rate, property type, location etc.; or financial attributes such as Cap Rate. The coefficients of this function are found by optimizing the investor's average utility of the portfolio's return over a certain period of years. The aim of this approach is to find a simple and easily modified methodology for real estate portfolio managers when they are deciding on acquisitions and making portfolio policies. In general, this Thesis aims to apply the new technique to help practitioners and other researchers improve the practical implementation of optimal portfolio policies. / by Tingting Fu. / S.M. in Real Estate Development

Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate , 2009. / 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. 149-151). / The thesis aims to address the long lasting phenomena of evolution of financial services industry both in US and Europe. The topic has never been more emphasized since the Great Depression. The dramatic fact of cost cutting and diminishing the headcount in financial services industry creates question if the geographic location has substantial effect in their business activities. This study is conducted to analyze whether there is substantial change in the geographic preference of financial services industry which can result immigration away from the Metropolitan Statistical Areas (MSAs) like Chicago, New York in US and London, Paris in Europe to smaller MSAs. This thesis presents a quantitative model to find out about the historical trends, correlation with other significant variables and significance of the causalities between the variables. Furthermore, the qualitative part of the thesis will try to explain the motivations behind the change and the accelerations and decelerations of the trend at a certain point of time. The thesis examines and tests the hypothesis in two parts, US and Europe with a comparative approach. In the first section of the thesis, the specialization and concentration variables of US will be computed and ranked by taking 1974 as base year in order to observe the evolution since then for each category and subcategory of sectors. The trends of those variables along the time horizon as well as the correlation to other variables are explained for the top 4 and top 10 MSAs. Moreover, the significance of those variables is tested in order to verify the reliability of the results. / (cont.) In the second section, previously selected nine major cities in Europe are selected according to the criteria of availability of continuous data along the time period, level of the finance employment and total employment levels. Although the detailed data related to subcategories of the finance industry were not available, the value added measures of financial industry shed light on productivity measures at each city level. The outcomes of the two studies is compared and contrasted and the reasons of the deviations are investigated. Therefore, the study is also a gateway to project what trends may be expected in the future. / by Pinar Boyar and Onur Celen. / S.M.

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 45-46). / Modem mixed-use development has gained significant popularity since its conceptual introduction in the 1960s. Numerous benefits and risks have been elaborated on throughout the literature, but even today little empirical evidence exists to support these suppositions. Additionally, major data providers to the real estate industry, such as NCREIF, NAREIT, RCA, and CoStar, do not currently provide comprehensive data that identifies mixed-use developments. As such, financial analysis associated with mixed-use developments often segregates the project into its constituent uses and evaluates each use's performance individually, without much consideration, if any, for potential synergies. This study creates a database that allows for evaluation of transaction prices against different use-mixes for Boston, Massachusetts. We analyze this data for a better understanding of how and where premiums exist in this market, and to confirm the overall validity of our approach so that the methodology can be expanded to other markets. With over 2,200 commercial property transactions from Boston, Massachusetts in the database, we conclude the following: First - location matters, and better amenitized neighborhoods (i.e. mixed-use neighborhoods) are well correlated with higher property values. Second - value in mixed-use buildings is likely derived from higher density and/or lease-up speed rather than operational premiums (e.g. higher NOI or lower perceived risk). Third - larger master-planned, mixed-use developments with 3 or more uses tend to be located in less amenitized (i.e. less desirable) locations, and benefits associated with the mix of uses provided is insufficient to completely overcome the negative externalities of the general location. As such, these developments typically under-perform against the general market. / by Jason A. Tilley. / S.M. in Real Estate Development