Flexibility and real estate valuation under uncertainty a practical guide for developers
Provides a revolutionary conceptual framework and practical tools to quantify uncertainty and recognize the value of flexibility in real estate development This book takes a practical "engineering" approach to the valuation of options and flexibility in real estate. It presents simple simu...
| Otros Autores: | |
|---|---|
| Formato: | Libro electrónico |
| Idioma: | Inglés |
| Publicado: |
Hoboken, N.J.:
Wiley Blackwell
2018.
Hoboken, New Jersey: 2018. |
| Edición: | First edition |
| Materias: | |
| Ver en Biblioteca Universitat Ramon Llull: | https://discovery.url.edu/permalink/34CSUC_URL/1im36ta/alma991009631521606719 |
Tabla de Contenidos:
- Intro
- Title Page
- Copyright Page
- Contents
- Foreword
- Authors' Preface
- Acknowledgments
- About the Companion Website
- Chapter 1 Discounted Cash Flow Valuation: The Basic Procedures and Concepts Underlying Spreadsheet Valuation Constitute the Springboard to our Approach of Analyzing Flexibility Under Uncertainty
- 1.1 Why the Focus on the Discounted Cash Flow Model?
- 1.2 Structure of a Discounted Cash Flow Spreadsheet
- 1.3 The Cash Flow Projection
- 1.4 Discount Rate
- 1.5 Market Value and Forward-Looking (Ex-Ante) Analysis
- 1.6 Backward-Looking (Ex-Post) Analysis
- 1.7 Conclusion
- Chapter 2 Economics of the Discounted Cash Flow Valuation Model: Understanding the Discount Rate is Critical
- 2.1 Choice of Discount Rate
- 2.2 Differences between Discount Rate, Opportunity Cost of Capital, and Internal Rate of Return
- 2.3 Net Present Value
- 2.4 Relationship between Discount Rate, Growth Rate, and Income Yield
- 2.5 Relationship between Discount Rate and Risk
- 2.6 Conclusion
- Chapter 3 Future Scenarios Matter: We Need to Recognize that Future Projections are Uncertain
- 3.1 The Standard Discounted Cash Flow Model Appears to be Deterministic
- 3.2 We Live in a World of Uncertainty
- 3.3 Discounted Cash Flow Pro Forma Cash Flows Are Expectations
- 3.4 Flexibility and Options
- 3.5 Conclusion
- Chapter 4 Scenario Analysis: Future Scenarios can Significantly and Surprisingly Affect the Present Value
- 4.1 Discounted Cash Flow Scenario Analysis
- 4.2 Scenarios Affect Value
- 4.3 Flexibility Has Value
- 4.4 Conclusion
- Chapter 5 Future Outcomes Cover a Range of Possibilities: We Can Describe Uncertainties in Real Estate Using Probability Distributions of Possible Future Outcomes
- 5.1 Distribution of Future Outcomes
- 5.2 Quantifying Input Distributions.
- 5.3 Distributions of Outcomes Differ from Distributions of Inputs
- 5.4 Flaw of Averages
- 5.5 Conclusion
- Chapter 6 Simulation of Outcomes: Simulation is a Practical, Efficient Way to Explore Uncertainty and to choose between Alternative Strategies for Managing it
- 6.1 Generating Scenarios
- 6.2 Real Estate Simulation in a Nutshell
- 6.3 Simulation Is an Efficient Process
- 6.4 Number of Trials
- 6.5 Conclusion
- Chapter 7 Modeling Price Dynamics: Using Pricing Factors to Model the Dynamics of Real Estate Markets
- 7.1 Pricing Factors
- 7.2 Random Walks
- 7.3 Real Estate Pricing Factor Dynamics
- 7.4 Conclusion
- Chapter 8 Interpreting Simulation Results: Target Curves and Scatterplots can be used to Graph the Distribution of the Sample Output
- 8.1 Target Curves
- 8.2 Comparing Target Curves
- 8.3 Value at Risk
- 8.4 Scatterplots
- 8.5 Conclusion
- Chapter 9 Resale Timing Decision: Analysis: Let's See what happens when we apply the Tools of Flexibility Analysis to a Classical Investment Decision: when to sell the Property
- 9.1 The Resale Timing Problem
- 9.2 Extending the Time Horizon of the Discounted Cash Flow Model
- 9.3 IF Statements
- 9.4 Trigger Value for Stop-Gain Rule
- 9.5 Value of Example Stop-Gain Rule
- 9.6 Conclusion
- Chapter 10 Resale Timing Decision: Discussion: Let's think about Additional Insights we can get from Simulation
- 10.1 Sensitivity Analysis
- 10.2 When to Use the Stop-Gain Rule
- 10.3 Implications of Flexibility for Property Valuation
- 10.4 Conclusion
- Chapter 11 Development Project Valuation: This Chapter Looks at Valuation of Development Projects From an Investment Perspective, Considering Uncertainty, Flexibility, and Time-to-Build
- 11.1 Time-to-Build Difference between Development Projects and Existing Assets
- 11.2 Lower Opportunity Cost of Capital for Construction Costs.
- 11.3 Illustrative Example
- 11.4 Residual Value of Development Land
- 11.5 Investment Risk in Development Project
- 11.6 Conclusion
- Chapter 12 Basic Flexibility in Development Projects: The Most Basic Flexibility in Real Estate Development is the Option to Choose whether and when to Build
- 12.1 Review of Call (and Put) Options
- 12.2 Land as a Call Option on Development
- 12.3 Drivers of Option Value
- 12.4 A Practical Example of a Call (and Put) Option
- 12.5 Flexibility and Scenario Analysis for Development Projects
- 12.6 Conclusion
- Chapter 13 Option Dichotomies: We Introduce a Typology of Flexibility in Development Projects
- 13.1 Three Dichotomies for Thinking Generally about Development Options
- 13.2 Defensive versus Offensive Options
- 13.3 Options "On" and "In" Projects
- 13.4 Timing Options versus Product Options
- 13.5 Conclusion
- Chapter 14 Product Options in Development: We Discuss Three types of Product Options
- 14.1 Concept of Base Plan
- 14.2 Product Expansion Flexibility
- 14.3 Product Mix Flexibility
- 14.4 Conclusion
- Chapter 15 Timing Options in Development: Now we Turn to the Types of Timing Options
- 15.1 Project Start-Timing Flexibility (The Delay Option)
- 15.2 Project Production Timing Flexibility
- 15.3 Modular Production Timing Flexibility
- 15.4 Phasing Timing Flexibility
- 15.5 Types of Phasing
- 15.6 Recognizing Defensive and Offensive Options in Simulation Results
- 15.7 Conclusion
- Chapter 16 Garden City: An Example Multi-Asset Development Project: We Present the Traditional DCF Valuation Spreadsheet Model for the Example Development Project We use in the Rest of Book
- 16.1 Overview of Multi‐Asset Development Project
- 16.2 Structure of a Realistic Multi-Asset Spreadsheet Pro Forma
- 16.3 Cash Flows for the Example Pro Forma
- 16.4 Temporal Profile for Base Case.
- 16.5 Expected Economics of the Garden City Project
- 16.6 Conclusion
- Chapter 17 Effect of Uncertainty without Flexibility in Development Project Evaluation: We Re-analyze the Garden City Project by Reflecting Uncertainty Without Flexibility
- 17.1 Modeling Uncertainty for the Multi-Asset Development Project
- 17.2 Generating Random Future Scenarios
- 17.3 Outcomes Reflecting Uncertainty for the Multi-Asset Development
- 17.4 Effect of Different Probability Inputs Assumptions
- 17.5 Conclusion
- Chapter 18 Project Start-Delay Flexibility: We Model the Value of the Most Basic and Widely Available Development Project Option
- 18.1 Project Start-Delay Option
- 18.2 Option Exercise Decision Rule
- 18.3 Defining "Profit" in the Decision Model
- 18.4 Value of Start-Delay Flexibility in the Garden City Project
- 18.5 Conclusion
- Chapter 19 Decision Rules and Value Implications: We Further Explore the Option to Delay the Project Start
- 19.1 Simple Myopic Delay Rule
- 19.2 Trigger Values
- 19.3 Value Implications of the Decision Rules
- 19.4 Effect of Trigger Values (Start or Delay Bias)
- 19.5 Review the Meaning of Flexibility Value
- 19.6 Conclusion
- Chapter 20 Modular Production Timing Flexibility: We Explore the Timing Option to Pause and Restart the Project Any Time After its Commencement
- 20.1 Modular Production Timing Flexibility
- 20.2 Modeling the Modular Production Option
- 20.3 Value of Modular Production Timing Flexibility
- 20.4 Effect of Trigger Values (Bias toward Pause or Continue)
- 20.5 Effect of Combining Start-Delay and Modular Production Delay Flexibility
- 20.6 Conclusion
- Chapter 21 Product Mix Flexibility: This Chapter Presents the Option to Change Product Mix, and Examines the Effect of Volatility on Option Value
- 21.1 Product Mix Flexibility
- 21.2 Modeling the Product Mix Option.
- 21.3 Value of Product Mix Flexibility
- 21.4 Effect of Combining Product Mix Flexibility and Timing Options
- 21.5 Effect of Correlation in the Product Markets on the Value of Product Mix Flexibility
- 21.6 Effect of Volatility on the Value of Flexibility
- 21.7 Conclusion
- Chapter 22 Project Phasing Flexibility: We Show How to Model and Evaluate the Delay Flexibility Inherent in Project Phasing
- 22.1 Modeling the Sequential Phase Delay Option
- 22.2 Modifying the Garden City Project Plan
- 22.3 Project Economics
- 22.4 The Delay Decision Model
- 22.5 Exploring the Value of Project Phasing Flexibility
- 22.6 Conclusion
- Chapter 23 Optimal Phasing: We Now look at Adding Phases, Delineating Phases, and Distinguishing them from Expansion Options
- 23.1 Effect of Increasing the Number of Phases
- 23.2 Principles for Optimal Phasing
- 23.3 What Is the Difference between a Phase and an Expansion Option?
- 23.4 Conclusion
- Chapter 24 Overall Summary: We summarize the Main Takeaway Points from this Book
- Appendix: Quantifying Real Estate Uncertainty: Let's Think about the Inputs for Real Estate Simulation Models
- A.1 The Real Estate System
- A.2 Sources of Uncertainty and Some Practical Advice for Simulation
- A.3 The Nature of Real Estate Price Dynamics and Uncertainty
- A.4 PuttingIt All Together
- Glossary
- Acronyms and Symbols
- Index
- EULA.
