Emerald | Journal of Property Investment & Finance | Table of Contents

The European Real Estate Society - Special Issue

literatinetwork@emeraldinsight.com (Nick French) — Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Not available.

Investor attention for retail and institutional investors: a test on the real estate market

literatinetwork@emeraldinsight.com (Gianluca Mattarocci, Georgios Siligardos) — Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Purpose - The paper aims to investigate the relationship between different investor attention proxies for different types of funds (retail vs institutional ones) looking at a sample of real estate funds.Design/methodology/approach - We collect data about searching frequency on Google and all the news published on Italian specialized newspapers for a set of real estate funds. Following the approach proposed by Da, Engelberg, and Gao (2011), we construct a set of attention proxies and we compare the ranking with some summary statistics and we evaluate the causality relationship among them using a granger causality test.Findings - Results demonstrate that on-line search frequency is relevant for both institutional and retail funds and normally internet data are able to anticipate the news that will be published on the newspapers.Research limitations/implications - The analysis proposed is focused only on a small real estate market (Italy) where funds are specialized for the type of investor. A wider database can allow excluding that results achieved are biased by the specific features of the market analysed.Practical implications - The role of internet proxies attention measures also for institutional investors demonstrate the that managing companies offering financial instruments reserved to institutional investors should consider both channels of information—newspapers and the Internet—to measure any positive or negative sign of investor attention to their productsOriginality/value - The article represents the first analysis of investor attention proxies on the real estate market and the first comparison of investor attention proxies for retail and institutional investors

Principles of public-private partnership financing – Polish experience

Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Purpose - Public-private partnerships (PPP) are contractual relationships influenced by different legal traditions. The main purpose of the paper is to provide insight into the principles of PPP financing and the impact of two legal provisions in Poland. Design/methodology/approach - Appropriate regulation and documentation were investigated. Discounted subsidies, internal rate of return (IRR), economic internal rate of return (EIRR) were calculated and risk was analysed for three variants of a selected case study.Findings - The two PPP-related legal provisions are well-suited for cooperation, although they do not generally correlate. Partnership is just one of the available modes of cooperation, therefore a complete financial and economic analysis should be performed to prove value for money. Research limitations/implications - The paper was limited to one case study in three variants. Additional cases can be studied to confirm the findings and increase the usefulness of the methodological framework and improve its application. Practical implications - The interrelation of the two PPP-related legal provisions is useful for public managers searching for partners and private investors looking for opportunities. Since the proposed framework supports assessing investment advantages from the perspective of the two provisions, it supports decision-makers. The experience of the Polish market also may support development of public-private partnerships in other countries.Originality/value - The two PPP-related legal provisions are compared to determine which provides the optimal method for management of PPPs. Studying both successful and abandoned projects can help towards better management and understanding of PPPs. The work is novel providing insights into PPP financing from legal perspective and addressed financial consequences.

Is the valuer the barrier to identifying the value of sustainability?

literatinetwork@emeraldinsight.com (Georgia Warren-Myers) — Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Purpose - Broad-scale investment in sustainability is limited due to the lack of evidence of the relationship between sustainability and the property’s market value. Although evidence is amassing and being analyzed through advanced modeling, this evidence is not being reflected in the valuation process. Valuers have a pivotal role in financial markets, in the reporting of asset values. Consequently, they are the current barrier in large-scale investment in sustainability, due to their lack of reporting or consideration of sustainability in the valuation process. Design/methodology/approach - This research investigates, in the Australian context, whether valuers’ are incorporating sustainability as a consideration in the valuation process and their depth of reporting on it. Further, the research investigates whether valuers’ have the knowledge and skills to accurately report on sustainability in the valuation process. This research used an online survey to gather responses from valuers around Australia, using a combination of structured and semi-structured questions.Findings - This paper has identified that valuers are identifying a value relationship between sustainability and market value, and clearly emphasizing that they are not the barrier to this relationship from a lack of inclusion in valuation practice. However, what this research has identified is that although valuers are acknowledging sustainability in their practice, they maybe inhibiting further investment in sustainability due to inaccurate or misjudged assessments of sustainability in valuations.Practical implications - The research highlights the implications for the broader market and the valuation profession, as a result of the valuers’ current lack of knowledge, skills and ability to incorporate or consider sustainability in the valuation process. The potential for inaccurate knowledge regarding sustainability being incorporated in the valuation process is very high, and could potentially have litigious issues in the future. Originality/value - The research has highlighted that although valuers are beginning to consider sustainability at some level in the valuation process, their current knowledge of sustainability and its implications to long term viability is limited and in some cases grossly inaccurate. Consequently, this research has identified there is an imperative requirement for investigation into appropriate, accurate knowledge development in the field of sustainability for the valuation profession.

Combining Monte Carlo Simulations and Options to Manage the Risk of Real Estate Portfolios

Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Purpose - This paper aims to show that the accuracy of real estate portfolio valuations and of real estate risk management can be improved through the simultaneous use of Monte Carlo simulations and options theory.Design/methodology/approach - Our method considers the options embedded in Continental European lease contracts drawn up with tenants who may move before the end of the contract. We combine Monte Carlo simulations for both market prices and rental values with an optional model that takes into account a rational tenant’s behaviour. We analyze how the options significantly affect the owner’s income.Findings - Our main findings are that simulated cash flows which take account of such options are more reliable that those usually computed by the traditional method of discounted cash flow. Research limitations/implications - Some limitations are inherent to our model: these include the assumption of the rationality of tenant’s decisions and the difficulty of calibrating the model given the lack of data in many markets.Practical implications - In practice this model could be used by professionals to improve the relevance of their valuations and for risk management purpose: the output as a distribution of outcomes should be of interest to investors (for risk measurement).Originality/value - The main contribution of the paper is both by accounting for market risk (Monte Carlo simulations for the prices and market rental values) and for accounting for the idiosyncratic risk (the leasing risk).

Law Briefing: Rent review and unforeseen circumstances

literatinetwork@emeraldinsight.com (Malcolm John Dowden) — Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Purpose - This paper examines the English court’s approach to the interpretation of rent review provisions in circumstances where the words used by the parties may produce a commercially unforeseen or undesirable result. It emphasises that, while the court has wide discretion to adopt a purposive approach, and to interpret an agreement in a way that produces a result in accordance with "business common sense", there must first be some ambiguity in the wording. The court cannot rewrite a contract where the parties simply failed to foresee or to provide for unexpected market conditions (here, a "double-dip" fall in rental values).Design/methodology/approach - The paper examines the Court of Appeal ruling in Scottish Widows v BGC International [2012] EWCA Civ 607 as an example of the limits of the court’s ability to arrive at commercially sensible results through purposive interpretation. Findings - It concludes that where a clause has been drafted by experienced and skilled solicitors, the court is unlikely to intervene unless it is clear that there is a mistake in the language or syntax. The court will not rewrite an agreement where the parties did not anticipate adverse market factors.Practical implications - The paper identifies the key factors taken into account when the court is considering either interpretation or rectification of a clause that has produced a commercially undesirable result. It also discusses the extent to which pre-contractual negotations may be relevant to interpretation or rectification of a contract.Originality/value - The paper sets out the author's reading as a commercial real estate practitioner of key judicial dicta on the interpretation and effect of rent provisions.

Review: Real Estate Property markets and sustainable behaviour - book review

literatinetwork@emeraldinsight.com (Jorn van de Wetering) — Fri, 05 Jul 2013 00:00:00 +0100

Abstract

Not available.