An Equilibrium Analysis of Real Estate
- Topics:
- Lease or Buy
- Tags:
- Business Operations,
- Capital Structures,
- Finance,
- Leasing,
- National Bureau Of Economic Research,
- Real Estate
FREE Registration is required
Vendor Registration: $ Paid Download
Overview: This paper provides a unified equilibrium approach to valuing a wide variety of commercial real estate lease contracts. Using a game-theoretic variant of real options analysis, the underlying real estate asset market is modeled as a continuous-time Nash equilibrium in which developers make construction decisions under demand uncertainty. Then, using the economic notion that leasing simply represents the purchase of the use of the asset over a specified time frame, I use a contingent-claims approach to value many of the most common real estate leasing arrangements. In particular, the model provides closed-form solutions for the equilibrium valuation of leases with options to purchase, pre-leasing, gross and net leases, leases with cancellation options, ground leases, escalation clauses, lease concessions and sale-leasebacks.
(Is this item miscategorized? Does it need more tags? Let us know.)
Format: PDF | Size: 522KB | Date: Jan 2003 | Pages: 41
People who downloaded this item also downloaded
 |
Rent Vs. Buy |
 |
Evidence From Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements |
 |
Due Diligence Checklist |
|
Business Valuation Techniques |
 |
Lease Versus Purchase |
