The explosion of commercial property securitization

Article Abstract:

Securitized real estate business entities were first introduced in 19th century Boston, MA and called Massachusetts Realty Trusts. These entities were established so that those individuals made rich by the industrial revolution could acquire and manage real estate. The real estate investment trust was introduced in 1960 with legislation by US Pres Dwight Eisenhower. The abundance of real estate investment trusts during 1993-4 enabled firms to 'go public' rather than just market some assets.

Real Estate Invest Trusts, Real Estate Investment Trusts, History

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The misuse of DCF analysis

Article Abstract:

Real estate investors have criticized the discounted cash flow method for calculating property values because it requires subjective decisions on the part of appraisers. It is still the best analytical tool available. An analyst should evaluate the entire economic situation, especially looking toward future trends, before making a valuation. Some decisions will inevitably be subjective, but incorporating a number of subjective factors will make it more accurate.

Investment advice, Methods, Usage, Practice, Real estate investment, Real estate investments, Investment advisers

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Calculating residual value in DCF analyses

Article Abstract:

Appraisals of real property are typically done according to certain assumptions about price fluctuations, income expectations and inflation. These assumptions can result in loans being made on unrealistic expectations. A different set of assumptions is offered for determining the value of income property. These assumptions are based on a discounted cash flow method that determines the property's actual or intrinsic value.

Commercial Banks, Real estate agents and managers, Analysis, Management, Bank loans, Income accounting

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