CRER Vol. 08 (2010)

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Front matter:



Recent Submissions

Now showing 1 - 17 of 17
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    Alternatives to Golf Course Developments in an Environmentally Sensitive Market
    Grooms, Tyler (2010-07-01)
    Developers usually seek to maximize their land’s value. Amenities are often used to accomplish this purpose. One of the most popular amenities of the past half century has been the golf course and the integrated golf course development. Today, however, U.S. golf course developments are overbuilt and represent, to some, a tired model for development-supported amenities. Furthermore, trends in sustainability have led to the creation of denser and less impactful developments, in contrast to the typical sprawling and ecologically impactful golf developments. These trends have forced developers to consider alternative amenities for driving land values and sales pace. Amenities, such as open space preserves, organic farms, urban parks and community centers, create unique centerpieces for new developments and in many cases represent a better value proposal than traditional golf developments. However, in markets where golf courses are not overbuilt and strong demand exists, unique implementations can both satiate golf demand and provide an environmentally functional purpose for the development to placate shareholders and stakeholders alike.
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    The 2009 Cornell Real Estate Conference Highlights
    The 27th annual Cornell Real Estate Conference was held on September 24 and 25, 2009 in New York City featuring key note speaker Wes Edens, Founder and Co-Chair of Fortress Investment Group.
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    Sun Arrow Apartments: Investment Analysis of an Apartment Complex Acquisition
    Hagedorn, Randy (2010-07-01)
    The Sun Arrow Apartments Case Study focuses on the evaluation of an investment opportunity for a 275-unit apartment complex in the El Paso, Texas market. After taking Sun Arrow out of bankruptcy, Frank Markowitz of Fannie Mae informs the case study’s protagonist, Geoff Grayson, that he has thirty days to complete the acquisition of Sun Arrow. Grayson’s task is twofold. First, Grayson must determine how to get the funds necessary to quickly close Sun Arrow. Second, Grayson must assess his risk tolerance because various market and property risks exist in connection with any Sun Arrow acquisition. The Sun Arrow case study assists students with critical thinking skills vital to the real estate acquisitions decision-making process and provides opportunities to consider quantitative and qualitative issues in real estate acquisitions.
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    Miscellaneous Frontmatter
    Editorial Board, Cornell Real Estate Review (2010-07-01)
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    Industry Leader Profile: Art Gensler
    Editorial Board, Cornell Real Estate Review; Gensler, Art (2010-07-01)
    Gensler is a global architecture, design, planning and consulting firm with more than 2,000 professionals across 33 locations. Gensler is a multiple winner of the Business Week/Architectural Record Awards, the U.S. benchmark for business design innovation. Art Gensler founded the firm in 1965. An architect, he is widely credited with elevating the practice of interior design to professional standing. He is a Fellow of the American Institute of Architects and of the International Interior Design Association, and a professional member of the Royal Institute of British Architects. He graduated from Cornell University's College of Architecture, Art and Planning and is a memeber of its Advisoty Council. A charter member of Interior Design magazine's Hall of Fame and a recipient of IIDA's Star Award, he has also received Ernst & Young LLP's Lifetime Achievement Award and the Cornell Entrepreneur of the Year Award.
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    Green Initiatives in the U.S. Lodging Industry
    Liu, Peng; Sanhaji, Zied (2010-07-01)
    Most hotels maintain resource-intensive operations in order to serve guests around the clock. Therefore, it is important to consider lodging properties with respect to environmental concerns. Though the public has become increasingly cognizant of the environmental impact of real estate in general, it has, for a long time, ignored the specific contributions of hotels to today’s environmental decay. However, a growing number of hoteliers realize that a shift in demand towards more sustainable practice has occurred, and the recent introduction of lodging properties to green rating systems testifies to this shift. The present study is intended to provide convincing evidence of the economic value of green certifications through the lens of the lodging industry.
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    Information – The Key to the Real Estate Development Process
    Bulloch, Ben; Sullivan, John (2010-07-01)
    Information generation and sharing is an integral part of the real estate development process, but can this information flow be effectively modeled? Is there a simple yet informationally-rich methodology to detail and understand how it is shared between parties in a complex development process? Because the process is unpredictable, many developers fail to plan accordingly, relying on their past experiences or ability to solve problems as they arise. Practitioners who do attempt to model the development process typically use scheduling and project management software to list out the necessary tasks that occur. While these tools work well when tasks are done in sequence, they are incapable of showing the rework and iteration that occurs as ideas are refined in response to new and unpredictable information. As activities in the development process are completed, other tasks need to be revised and updated. It’s a process that is constantly evolving. The Design Structure Matrix (DSM) is a tool that can help us understand and model this iterative process. The DSM has been used successfully in numerous other product development industries (i.e. aerospace, microchips, etc.) to enhance the understanding of information generation and flows. This paper demonstrates the applicability of DSM methodology to the real estate development process and the insights that can be gained from explicating information flows in complex, information-dense processes. Improved understanding of the process can reduce risk and improve project development efficiency.
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    Funk, David L. (2010-07-01)
    [Excerpt] The Cornell Real Estate Review (CRER) continues its tradition of providing faculty, real estate industry practitioners, and graduate students a conduit to share practice and applied research from all fields related to the profession.
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    Redefining Distressed Opportunities
    Thypin, Ben Carlos (2010-07-01)
    [Excerpt] As the commercial real estate (CRE) industry embarks on a new year and hopes to put the pain of 2009 behind it, industry players should keep in mind that much of the wreckage left in the wake of the world financial crisis remains unresolved and billions of dollars in looming CRE loan maturities further cloud the outlook. By the end of Q1 2010, nearly $222 billion worth of CRE was distressed, of which $27 billion had been resolved. At the beginning of 2009, many predicted that a flood of distressed assets would be coming to market and hundreds of billions of dollars were raised to target the supposedly imminent opportunities. However, most of these investors have found the inventory of distressed opportunities wanting. If all of these properties are still in trouble and investors are aching to deploy their capital, why aren’t more deals getting done? Will 2010 be the year when the levees break? This report seeks to answer both of these questions.
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    Letter from the Editors
    Mendell, Brett A.; Haine, Chris J. (2010-07-01)
    [Excerpt] Dear Readers,We, the Co-Editors, are excited to present Volume 8 of the Cornell Real Estate REview, a publication of the Cornell Program in Real Estate. As this issue goes to press, much uncertainty remains regarding the nature and strength of the current economic recovery. Now, more than ever, we see the importance of joining scholarly discourse and professional expertise to gain a fuller understanding of the issues confronting the industry and the opportunities it presents. This nexus between real estate theory and practice remains the guiding principle of this publication and the Program in Real Estate.
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    Acquisition of Distressed Commercial Real Estate Debt
    Griesmer, Paul CRE, FRICS; Berenson, Harvey; Brady, Philip L. (2010-07-01)
    This article addresses key considerations that apply to the acquisition and resolution of distressed commercial real estate debt. This article is based on the experience of the authors dealing with troubled real estate loan restructurings, problem loan resolutions, and distressed loan purchases and dispositions.
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    Table of Contents
    Editorial Board, Cornell Real Estate Review (2010-07-01)
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    Commercial Leasing in China: An Overview
    Stein, Gregory M. (2010-07-01)
    China’s real estate market—including its commercial leasing sector—has grown at a remarkable rate since the late 1980s, notwithstanding the fact that China did not adopt its first modern property law until 2007. Most of China’s recent real estate development thus has occurred in the absence of a comprehensive national property law. China has somehow managed to modernize its real estate market and attract foreign investment despite the fact that its legal system is incompletely developed and characterized by uncertainty. In an effort to understand how and why investors and other professionals are willing to participate in such an unsettled market, I recently interviewed Chinese and Western experts in the real estate field, including lawyers, judges, developers, bankers, government officials, and academics. This Article summarizes my findings about China’s commercial leasing market. The new property law provides some insight into how China’s real estate market functions, but a full picture requires an understanding of how these professionals have operated in a legally uncertain environment, both before and after the new law became effective.
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    The Pitfalls of Physical Due Diligence
    Gromek, Vitold F. (2010-07-01)
    [Excerpt] The recent real estate finance debacle has starkly demonstrated the failure amongst segments of the financial markets, and more importantly, the systematic weaknesses of the market. Factors contributing to the crisis included excessive leverage, degraded lending standards, a compensation structure at financial institutions which promoted inordinate risk assumption, the lack of transparency in available market information, dubious security ratings, a confusing and inefficient regulatory structure, and the growth of increasingly complex structured securities. There appears to have been a collective inability to identify not only specific risks but also systemic risk in the real estate financial markets, including the CMBS securities market. The underlying tenets of free market theory, market discipline, and market efficiency have been severely challenged.
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    Emerging Sustainable Real Estate: Trends Opportunities and Obstacles in Bridgeport, Connecticut
    Heller, Joshua M. (2010-07-01)
    [Excerpt] As real estate professionals confront the current economic downturn, they are devoting more attention to interpreting evolving demographics, consumer preferences, and public policy in order to identify emerging trends and opportunities in real estate. Trends frequently cited include sustainability revolving around infill strategies like smart growth, and transit oriented-development (TOD).1 While analysts often cite smart growth and transit oriented development as new strategies for sustainable real estate development, they are not new concepts.
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    The Coupon Mortgage: A Luxury Construction Lender’s End Run
    Cronig, Steven C. J.D., LL.M; Keenan, Jesse M. J.D., LL.M. (2010-07-01)
    [Excerpt] The impact of the market failure that has befallen the residential real estate market during the past two years is well-known and self-evident, even if the underlying causes and remedies remain in controversy. Whether the market failure was caused by “predatory lenders,” whose only interest was in “churning product” to generate fees; “speculative developers,” who saw endless demand; “greedy securitizers,” who built a financial house of cards using over-leveraged derivative insurance contracts; “clueless speculators,” who thought the market values of real estate could only increase; or “hapless regulators,” who were under-funded and held in thrall to the industries they oversaw – the bottom line is that there is plenty of blame to go around. As a result of this market failure, primary and secondary market liquidity has slowed to a trickle, significantly reducing institutional and consumer credit for the first time since the late 1940s.