The Impact of Capital Expenditures on Property Performance in Commercial Real Estate PDF Download
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Author: Chinmoy Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
Using a sample of 47,260 annual and 12,276 unique property observations during 2000 - 2011 we analyze the relationship between capital expenditures and performance by employing 2SLS models, in which capital expenditures are modeled as a function of property characteristics (age, square footage, occupancy rate, leverage, leasing commissions, lagged returns and property type), market conditions (interest rates, credit spread and standard deviation of cap rates) and property fixed effects. We find persistently strong positive relationship between capital expenditures and excess NPI returns when controlling for the endogeneity of capital expenditures for industrial, office and retail properties. A further analysis reveals that this relationship is driven by the positive impact of building improvements and building expansions, while returns do not fully adjust to account for tenant improvements.
Author: Chinmoy Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
Using a sample of 47,260 annual and 12,276 unique property observations during 2000 - 2011 we analyze the relationship between capital expenditures and performance by employing 2SLS models, in which capital expenditures are modeled as a function of property characteristics (age, square footage, occupancy rate, leverage, leasing commissions, lagged returns and property type), market conditions (interest rates, credit spread and standard deviation of cap rates) and property fixed effects. We find persistently strong positive relationship between capital expenditures and excess NPI returns when controlling for the endogeneity of capital expenditures for industrial, office and retail properties. A further analysis reveals that this relationship is driven by the positive impact of building improvements and building expansions, while returns do not fully adjust to account for tenant improvements.
Author: Mehul Meghji Chavada
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
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.
Author: G. Timothy Haight
Publisher: John Wiley & Sons
ISBN: 0471716685
Category : Business & Economics
Languages : en
Pages : 558
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Book Description
Investing in commercial real estate can provide excellent risk-return opportunities for both the large and small investor. Unlike equity securities, commercial real estate often generates a substantial and predictable cash flow over time--and the compounding effect of this cash flow can significantly enhance the performance of most investment portfolios. Filled with in-depth insight and practical advice, The Real Estate Investment Handbook is an essential tool for current and aspiring commercial real estate investors looking to develop and evaluate commercial real estate properties. Throughout the book, experts G. Timothy Haight and Daniel D. Singer offer careful examinations of the various types of commercial real estate available, the measures within the markets used to evaluate their performance, and the intricacies of the markets in which they are traded. The discussions of breakeven analysis, present value, financial leverage, loan packaging, and practical real-life situations found in The Real Estate Investment Handbook will help you make better-informed decisions when investing in properties such as: * Apartments, condominiums, and time-shares * Single-family homes * Self-storage facilities * Office buildings * Industrial properties * Parking lots * Shopping centers * Hotels and motels Successful real estate investing is not just about net income or cash flow; it's about the fit between an investor and an investment. With The Real Estate Investment Handbook as your guide, you'll learn how to choose properties that make sense--and money--for you.
Author: Shaun A. Bond
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Option pricing theory predicts that capital improvement expenditures are positively linked with high or increasing market lease rates. Ceteris paribus, when the market lease rate is high, or when there is an expectation of higher lease rates in the future, owners are encouraged to increase investment to capture a larger profit. In contrast, when the market lease rate is low, or when there is an expectation of lower lease rates in the future, owners are encouraged to defer capital improvements, causing a skewness in the cash flows. Our empirical results generally support the notion that normal levels of capital expenditures not only maintain value but also actually may create value.
Author: Peter Linneman
Publisher:
ISBN: 9781792331916
Category :
Languages : en
Pages :
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Book Description
Author: John McMahan
Publisher:
ISBN: 9780977018901
Category : Business & Economics
Languages : en
Pages : 484
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Book Description
Author: Michael Ball
Publisher: Routledge
ISBN: 113474966X
Category : Business & Economics
Languages : en
Pages : 422
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Book Description
This new text provides a rigorous analysis of real estate markets. Three main sections cover: microeconomics of property markets the macroeconomics of commercial property the financial economics of property Global empirical examples illustrate the theories and issues. This often complex area is made accessible: each chapter contains a boxed summary and questions for self-testing or discussion.
Author: Andrew Baum
Publisher: Taylor & Francis
ISBN: 1136416412
Category : Technology & Engineering
Languages : en
Pages : 436
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Book Description
* Author of high repute, both in academia and business * Clearly written, accessible and completely revised for investors, managers, advisors and students * Highly topical in today’s challenging market conditions This book uniquely combines academic literature and practical experience to provide a straightforward and integrated view on global real estate investment for pension funds, other institutions and professionals, particularly in the UK. The book is divided into three sections. Part One describes the market, the industry and the investment vehicles available, as well as a performance history of UK real estate as an asset class. Part Two discusses the property investment process and the tools required to develop excellence in executing that process. Part Three provides material for debate about the likely changes over the short and medium term. Designed for practitioners facing the tough global market challenges, this book provides a fascinating read for fund managers, investors, banking staff, property advisors and students.
Author: Colin A. Jones
Publisher: Springer Nature
ISBN: 3031009681
Category : Business & Economics
Languages : en
Pages : 320
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Book Description
This textbook, aimed at undergraduate and postgraduate real estate programmes, provides an overview of real estate investment and pricing in a global context with special attention to the diversification of asset types in three parts. Designed as a successor to Will Fraser’s successful student-led investment book, Principles of Property Investment and Pricing, it encompasses the microeconomics of real estate markets and context alongside pricing failures of real estate highlighted by the impact of the global financial crisis, especially with regard to irrationality and risk. Part 1 focuses on the microeconomics of the real estate sector, covering the complex nature of real estate and the consequences for economic analysis and the operation of the market, the underlying essential processes and principles of real estate investment decision making, including a pricing model, and the significance of real estate cycles and why they occur. Part 2 begins with the characteristics of real estate as an investment, differentiated between direct and indirect investment, and making comparisons with alternative stock market assets, then examines real estate investors and their objectives, including financial institutions, REITs and other indirect vehicles. Additionally, it sets out the frameworks within which real estate investment decisions are made in relation to other investments and focuses on decision-making processes and the practicalities of performance measurement. Emerging real estate debates are discussed in Part 3. These chapters are primarily forward-looking to the implications and challenges for real estate investment, including the consequences of recent aspects of regulation, changes to occupier demand, partly driven by technology but also sustainability pressures, the logic and difficulties of international investment, with a particular focus on emerging markets.
Author: Steve Berges
Publisher: John Wiley & Sons
ISBN: 1118045807
Category : Business & Economics
Languages : en
Pages : 276
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Book Description
This practical, real-world guide gives investors all the tools they need to make wise decisions when weighing the value and potential of investment properties. Written for old pros as well as novice investors, this friendly, straightforward guide walks readers step by step through every stage of property analysis. Whether you're buying or selling, investing in big commercial properties or single-family rentals, you'll find expert guidance and handy resources on every aspect of real estate finance, including: * Proven, effective valuation techniques * Finance tips for all different kinds of property * How various financing strategies affect investments * Structuring financial instruments, including leverage, debt, equity, and partnerships * Measurements and ratios for investment performance, including capitalization rates and gross rent multiplier ratios * Future and present value analysis * How the appraisal process works * Primary appraisal methods-replacement cost, sales comparison, and income capitalization-and how to know which one to use * How to understand financial statements, including income, balance, and cash flow * Case studies for single-family rentals, multifamily conversions, apartment complexes, and commercial office space * A detailed glossary of important real estate terminology
