HOTVal Toolkit

**************************************************************************** Scroll down to "Additional Files" to access the HOTVal Toolkit. **************************************************************************** HOTVal is a hotel valuation spreadsheet based on a regression model discussed in the Center for Real Estate and Finance at Cornell called Cornell Hotel Indices: Second Quarter 2012: The Trend is Our Friend by Crocker H. Liu, Adam D. Nowak, and Robert M. White, Jr. The model which will be continually updated, provides a rough estimation of the value of a hotel property once the user inputs information on whether the hotel is a large or small hotel, the year and quarter of the valuation, the state where the property is located, the number of rooms, the number of floors, the land area of the hotel property, the actual age of the hotel and whether the hotel is located in a Gateway city. For the first three inputs as well as the last input, if the user clicks on a cell highlighted in yellow, a pull down menu will appear to expedite inputting. The model is provided as a free public service by The Center for Real Estate and Finance at the School of Hotel Administration at Cornell University to academics and practitioners on an as-is, best-effort basis with no warranties or claims regarding its usefulness or implications. The estimates should be considered preliminary and subject to revision. *This October 2016 version updates the previous Hotel Valuation model, published in 2012 , provides valuation estimates up to and including the third quarter of 2016.

Green noise or green value? Measuring the effects of environmental certification on office values

This study investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and noncertified buildings. These are additional occupier benefits, lower holding costs for investors and a lower risk premium. Drawing upon the CoStar database of U.S. commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. The results suggest that, compared to buildings in the same submarkets, eco-certified buildings have both a rental and sale price premium.

Geographical concentration in the institutional market for office property in England and Wales

This paper examines the regional investment practices of institutional investors in the commercial real estate office market in 1998 and 2003 in England and Wales. Consistent with previous studies in the US the findings show that investors concentrate their holdings in a few (urban) areas and that this concentration has become more pronounced as investors have rationalised their portfolio holdings. The findings also indicate that office investment does not fully correlate with the UK urban hierarchy, as measured by population, but is focused on urban areas with high service sector employment. Finally, the pre-eminence of the City of London and and West End office markets as the key focus of institutional investment is confirmed.

The inflation hedging characteristics of US and UK investments: a multi-factor error correction approach

Historic analysis of the inflation hedging properties of stocks produced anomalous results, with equities often appearing to offer a perverse hedge against inflation. This has been attributed to the impact of real and monetary shocks to the economy, which influence both inflation and asset returns. It has been argued that real estate should provide a better hedge: however, empirical results have been mixed. This paper explores the relationship between commercial real estate returns (from both private and public markets) and economic, fiscal and monetary factors and inflation for US and UK markets. Comparative analysis of general equity and small capitalisation stock returns in both markets is carried out. Inflation is subdivided into expected and unexpected components using different estimation techniques. The analyses are undertaken using long-run error correction techniques. In the long-run, once real and monetary variables are included, asset returns are positively linked to anticipated inflation but not to inflation shocks. Adjustment processes are, however, gradual and not within period. Real estate returns, particularly direct market returns, exhibit characteristics that differ from equities.

Appraiser behaviour and appraisal smoothing: some qualitative and quantitative evidence

There is a substantial literature which suggests that appraisals are smoothed and lag the true level of prices. This study combines a qualitative interview survey of the leading fund manager/owners in the UK and their appraisers with a empirical study of the number of appraisals which change each month within the IPD Monthly Index. The paper concentrates on how the appraisal process operates for commercial real estate performance measurement purposes. The survey interviews suggest that periodic appraisal services are consolidating in fewer firms and, within these major firms, appraisers adopt different approaches to changing appraisals on a period by period basis, with some wanting hard transaction evidence while others act on ‘softer’ signals. The survey also indicates a seasonal effect with greater effort and information being applied to annual and quarterly appraisals than monthly. The analysis of the appraisals within the IPD Monthly Index confirms this effect with around 5% more appraisals being moved at each quarter day than the other months. More November appraisals change than expected and this suggests that the increased information flows for the December end year appraisals are flowing through into earlier appraisals, especially as client/appraiser draft appraisal meetings for the December appraisals, a regular occurrence in the UK, can occur in November. January illustrates significantly less activity than other months, a seasonal effect after the exertions of the December appraisals.

Hedging effectiveness of total returns swaps: application to the Japanese market

The development of the real estate swap market offers many opportunities for investors to adjust the exposure of their portfolios to real estate. A number of OTC transactions have been observed in markets around the world. In this paper we examine the Japanese commercial real estate market from the point of view of an investor holding a portfolio of properties seeking to reduce the portfolio exposure to the real estate market by swapping an index of real estate for LIBOR. This paper explores the practicalities of hedging portfolios comprising small numbers of individual properties against an appropriate index. We use the returns from 74 properties owned by Japanese Real Estate Investment Trusts over the period up to September 2007. The paper also discusses and applies the appropriate stochastic processes required to model real estate returns in this application and presents alternative ways of reporting hedging effectiveness. We find that the development of the derivative does provide the capacity for hedging market risk but that the effectiveness of the hedge varies considerably over time. We explore the factors that cause this variability.

Long run relationships between City office rents and the economy in the UK: creating a database for research

This paper sets out progress during the first eighteen months of doctoral research into the City of London office market. The overall aim of the research is to explore relationships between office rents and the economy in the UK over the last 150 years. To do this, a database of lettings has been created from which a long run index of City office rents can be constructed. With this index, it should then be possible to analyse trends in rents and relationships with their long run determinants. The focus of this paper is on the creation of the rent database. First, it considers the existing secondary sources of long run rental data for the UK. This highlights a lack of information for years prior to 1970 and the need for primary data collection if earlier periods are to be studied. The paper then discusses the selection of the City of London and of the time period chosen for research. After this, it describes how a dataset covering the period 1860-1960 has been assembled using the records of property companies active in the City office market. It is hoped that, if successful, this research will contribute to existing knowledge on the long run characteristics of commercial real estate. In particular, it should add a price dimension (rents) to the existing long run information on stock/supply and investment. Hence, it should enable a more complete picture of the development and performance of commercial real estate through time to be gained.

International office investment in global cities: the production of financial space and systemic risk

The paper explores the relationships between UK commercial real estate and regional economic development as a foundation for the analysis of the role of real estate investment in local economic development. Linkages between economic growth, development, real estate performance and investment allocations are documented. Long-run regional property performance is not the product of long-run economic growth, and weakly related to indicators of long-run supply and demand. Changes in regional portfolio weights seem driven by neither market performance nor underlying fundamentals. In the short run, regional investment shifts show no clear leads or lags with market performance.

Nonlocal office investors: anchored by their markets and impaired by their distance

Nonlocal investors purchase and sell investment property in a distant metropolitan area. In this study, we identify capital value underperformance for nonlocal investors on both sides of the transaction, when they purchase and when they sell. The commercial real estate transactions data include a national sample of office property occurring in more than 100 U.S. markets. Using propensity-score matched sample to control for selection bias, we find that nonlocal investors overpay on the purchase by an estimated 13.8 % and sell at an estimated 7 % discount. These disadvantages relative to local investors expand with the geographic distance separating investor and asset. Nonlocal investors fundamentally overvalue similar assets sold to each other relative to assets transacted between locals, and are less patient as sellers. The positive bias in overpayment is directly tied to office rent differentials between the asset and investor markets.

Evolution and change in the serviced office sector: a decade later

With particular reference to its role in the corporate real estate supply chain, this paper focuses on how the serviced office sector in the UK has evolved and changed over the last decade. A qualitative research approach involving 21 semi-structured interviews with corporate clients of serviced office operators was used to address a number of issues regarding the perceptions of users of serviced offices. It is concluded that the serviced office sector has become an established sector of the UK’s commercial real estate market providing an essential product for many corporate organisations. The serviced office sector has been relatively nimble and a range of operational models have emerged. It was found that corporate organisations use serviced office space and services in order to align workforce change with portfolio change, to transfer risk, for short-term project space, as temporary overflow space, to pilot a new location, to become familiar with a specific geographical marketplace or simply to gain an initial presence in an area.

Measuring European property investment performance: comparing different approaches

Purpose – Price indices for commercial real estate markets are difficult to construct because assets are heterogeneous, they are spatially dispersed and they are infrequently traded. Appraisal-based indices are one response to these problems, but may understate volatility or fail to capture turning points in a timely manner. This paper estimates “transaction linked indices” for major European markets to see whether these offer a different perspective on market performance. The paper aims to discuss these issues. Design/methodology/approach – The assessed value method is used to construct the indices. This has been recently applied to commercial real estate datasets in the USA and UK. The underlying data comprise appraisals and sale prices for assets monitored by Investment Property Databank (IPD). The indices are compared to appraisal-based series for the countries concerned for Q4 2001 to Q4 2012. Findings – Transaction linked indices show stronger growth and sharper declines over the course of the cycle, but they do not notably lead their appraisal-based counterparts. They are typically two to four times more volatile. Research limitations/implications – Only country-level indicators can be constructed in many cases owing to low trading volumes in the period studied, and this same issue prevented sample selection bias from being analysed in depth. Originality/value – Discussion of the utility of transaction-based price indicators is extended to European commercial real estate markets. The indicators offer alternative estimates of real estate market volatility that may be useful in asset allocation and risk modelling, including in a regulatory context.

Brownfields properties with underground storage tanks : frequently asked questions.

Information for potential buyers of abandoned commercial properties in Illinois that have underground storage tanks.

Emergence of Special Art Exhibits in Shopping Malls in Shanghai

Thesis (Master's)--University of Washington, 2016-06

Impact of Rapid Transit on the Residential Market in Hudson County, New Jersey

The New York Metropolitan region is one of the most populous urban agglomerations in the world, and the single largest in North America.[1] It is also one of the most prominent economic centers, with New York City at the epicenter of its growth. With the entire region growing rapidly over the last decade, it is essential to analyze the socio-economic changes in order to understand the impact it has on commercial real estate. With its focus on housing rentals, this study aims to highlight housing costs as a function of rapid transit over time.

Second Quarter 2016: Slowdown for Large Hotels Continues; Small Hotels Have Now Slowed as Well

Our Standardized Unexpected Price (SUP) metric continues to show a decline in the price of large hotels, and now also the price of small hotels has eased—even though hotel transaction volume has increased. Although debt and equity financing for hotels remain relatively inexpensive, we are concerned that the total volatility of hotel returns is greater relative to the return volatility for other commercial real estate. If this trend continues, lenders will eventually start to tighten hotel lending standards. Our early warning indicators all continue to suggest that the downward trend in hotel prices should continue into the next quarter. This is report number 19 of the index series.