Golden Opportunity: Commercial Real Estate Valuation

2017 ◽  
pp. 1-18
Author(s):  
Craig Furfine ◽  
Sara Lo ◽  
Daniel Kamerling
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Fixed Income ◽  
Commercial Property ◽  
Real Estate Valuation ◽  
Wide Range ◽  
Golden Opportunity ◽  
Pros And Cons ◽  
Cash Flow Forecasts ◽  
Fixed Income Portfolio

Aurelia Dimas had been sent to investigate the various properties being offered by the State of California in the form of a sale-leaseback agreement. The opportunity was perfect for her firm, Orrington Financial Partners, which had recently expanded its fixed-income portfolio to include real estate. The wide range of offerings in the Golden State Portfolio provided both diversification and stability over a period of decades. She had spent the last week walking the halls of each and every building to see the offering first hand. Now the task of valuing the portfolio rested on her shoulders.By reading and analyzing this case, students will be exposed to real estate valuation and understand the issues with a sale-leaseback investment. The objectives are obtained by requiring students to justify how and why they make adjustments to the cash flow forecasts provided to them by a real estate advisory firm, explain their methodology for arriving at a specific value for a piece (or a portfolio) of commercial property, and debate the pros and cons of a sale-leaseback structure.

scholarly journals Compilation of Commercial Property Price Indices for Germany Tailored for Policy Use

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Thomas A. Knetsch
Keyword(s):  
Time Series ◽  
Real Estate ◽  
Commercial Real Estate ◽  
German Population ◽  
Price Indices ◽  
Commercial Property ◽  
Price Increases ◽  
Comprehensive Data ◽  
Property Price ◽  
Existing Data

Abstract The compilation of commercial property price indices (CPPIs) is challenging. Policymakers urge for timely, reliable and comprehensive data. In Germany, lack of data prevents the calculation of official figures by the national statistical authority. Different applications of price indices need different definitions of commercial real estate. CPPIs according to these definitions are constructed on the basis of existing data for 127 German towns and cities (that cover about one-third of German population). The overall price developments revealed by the various indices are rather similar in terms of central time series characteristics, while differences in detail can be explained by their specific compositions. Price increases for all definitions have been strongest in the seven largest cities. The definitions tend to lead to more marked differences for medium-sized towns.

Capitalisation rates for commercial real estate investment decisions

2015 ◽  
Vol 33 (3) ◽  
pp. 242-255 ◽  
Author(s):  
John McDonald
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Office Buildings ◽  
Office Building ◽  
Vacancy Rate ◽  
Recent Past ◽  
Content Type ◽  
Empirical Results ◽  
Real Estate Valuation ◽  
Capitalization Rate

Purpose – The purpose of this paper is to present a basic model of commercial real estate valuation in which the capitalization rate is the critical variable, and to present empirical results for a study of office building capitalization rates. Design/methodology/approach – The model is derived from standard economic and financial theories. The empirical study uses data from the sale of office buildings in 37 downtown markets for 2012. The empirical results are related to concepts of asset market efficiency. Findings – The empirical results show that capitalization rates depend on features of the office buildings, vacancy rate, and recent change in the office building market as captured by the vacancy rate. In other words, investors are using variables implied by standard economic and financial theory and basic economic data from the recent past to determine the capitalization rate. Practical implications – The empirical results show how investors determine capitalization rates for office buildings, so potential investors can gauge the state of a property market. Originality/value – The paper shows that changes in capitalization rates are predictable; investors use past data to adjust their capitalization rates. Furthermore, if an investor does not agree that current trends will continue, then the investment decision should be determined accordingly. For example, if an investor thinks that the future will not be as robust as the recent past, then other investors will bid more than the investor thinks is reasonable. However, if the investor sees a future that is brighter than the recent past, it is time to buy.

scholarly journals THE CHANGING NATURE OF TRANSACTIONS ACTIVITY AND LIQUIDITY IN UK COMMERCIAL PROPERTY

2016 ◽  
Vol 20 (4) ◽  
pp. 384-396 ◽  
Author(s):  
Colin JONES ◽  
Nicola LIVINGSTONE ◽  
Neil DUNSE
Keyword(s):  
Real Estate ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Active Management ◽  
Urban Change ◽  
Commercial Property ◽  
Causality Tests ◽  
One Year ◽  
The Uk

This paper examines changing transactions activity and liquidity over thirty years in the UK. It reviews the multi-dimensional concept of liquidity analysis and demonstrates that it is not just a function of the time necessary to sell an asset, a typical real estate perspective. Instead liquidity is defined in terms of transactions activity. The paper then hypothesises that urban change and an increased information base has contributed to a more active management of real estate portfolios and increased liquidity. Superimposed on this long term trend it is also hypothesised that property cycles create rise and falls in liquidity. The empirical core quantifies the changing nature of liquidity and transactions activity over thirty years from 1981 based on the IPD database. It confirms the hypothesised substantial rise in liquidity but increasing variability in the level of transactions activity from one year to the next queries the cyclical liquidity hypothesis. This is supported by causality tests. Over the last two decades a short term opportunity driven real estate investment culture appears to have emerged stimulated by the increased churn of properties, partly the consequence of the pace of urban change. It has brought greater volatility to the commercial real estate market.

scholarly journals Enforcing the ADA and Stopping Serial Litigants

2020 ◽  
Vol 6 (4) ◽  
Author(s):  
R. Cameron Saenz
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Real Estate Industry ◽  
Commercial Property ◽  
The Real ◽  
The Real Estate ◽  
Effective Implementation ◽  
Property Owners ◽  
Legal Challenges ◽  
Title Iii

This comment explores the evolution of Title III of the Americans with Disabilities Act (“ADA”) and argues for a new and more effective implementation of this important anti-discrimination law through the real estate industry. First, this comment discusses the intricacies of the ADA, including its revisions over time and impactful legislation it has spawned. Second, this comment addresses current practical and legal challenges to enforcement of Title III of the ADA, including commercial property owners’ lack of understanding ADA responsibilities, serial litigation, and standing in courts. Finally, this comment proposes a new emphasis on ADA enforcement within the real estate industry. Such focus would obviate the need for many private lawsuits, place responsibility for ADA enforcement on parties involved in commercial real estate transactions and result in more effective implementation of both the spirit and letter of the ADA.

scholarly journals ANALYSIS OF INSTALLATION OF MARKET VALUE OF LAND INDUSTRY OF INDUSTRIAL PRODUCTION

2018 ◽  
pp. 88-93
Author(s):  
A.Yu. Palamar ◽  
Ya.V. Osipenko
Keyword(s):  
Real Estate ◽  
Social Life ◽  
Residential Buildings ◽  
Technical Condition ◽  
Commercial Real Estate ◽  
Theory And Practice ◽  
Practical Application ◽  
Distribution Method ◽  
The Real Estate ◽  
Real Estate Valuation

Purpose: 1) to study the concept of wear in the theory of valuation of real estate; 2) analyze the main types of wear and methods of their assessment; 3) to analyze the requirements for the procedure for determining the technical condition of residential buildings when planning and designing repairs; 4) analysis of the reconstruction and technical inventory of the commercial real estate object; 5) in the given example, determine the accumulated depreciation of the real estate by the method of partitioning. Methodology. Many different methods of estimating the value of real estate have been developed, which shows the importance of this task. However, the practical application of existing techniques is problematic. Most of them follow the international practice of evaluation without taking into account the specifics of legislation and the existing conditions of the economic, urban, political and social life of Ukraine. Findings. Thus, the development of the theoretical foundations of real estate valuation, the improvement of its methods, and the implementation of applied research seem rather relevant and practically significant for land management of settlements. Originality consists in the following: the analysis of the best and most efficient use of the land plot; the calculation of the value of the object of valuation by three independent methods of valuation has been made, namely: the method of taking losses into land improvements; income distribution method; the method of comparing the prices of sales of real estate. Practical value. To date, the situation of the domestic assessment school should be considered as being in the period of formation. A large number of modern methodological developments are based on the theory and practice of assessing foreign developments. Many different methods of estimating the value of real estate have been developed, which shows the importance of this task. However, the practical application of existing techniques is problematic. Most of them follow the international practice of evaluation without taking into account the specifics of legislation and the existing conditions of the economic, urban, political and social life of Ukraine. Keywords: estimation, real estate, tax, rent, foreign experience, land market, land payments

scholarly journals Added value of sites suitable for sustainable office development

2021 ◽  
Vol 13 (2) ◽  
pp. 2465-2471
Author(s):  
Josef Kupec
Keyword(s):  
Real Estate ◽  
Free Market ◽  
Market Value ◽  
Commercial Real Estate ◽  
Added Value ◽  
The Real Estate ◽  
Real Estate Valuation ◽  
Valuation Methodology ◽  
The Impact ◽  
Office Development

Abstract Valuations of real estate are widely used for various purposes and it relied always upon the financial and other markets. Valuation methodology is based on the operation of the free market economy and the real estate properties. The issue of certified properties is relatively new in the field of real estate valuation and is not sufficiently explored. Certified buildings are preferred by major corporate tenants with international field of activity who often have ethical rules for sustainable development. Therefore, certified properties are attractive to international commercial real estate investors who have higher purchasing power and are willing to pay a higher purchase price. Sustainable property certification is an element affecting the market value of the property. The purpose of this presented research is to quantify the impact of property certification on the value of office properties in Prague and subsequently to determine the impact of sustainability certificates on the market value of the land by using basic valuation techniques. The outcome of the project could be used by real estate valuation experts as a guideline to consider the future project certification and its impact on the land market value.

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