Lecture_2___Real_Estate_and_Asset_Mgmt___Classroom_version

Lecture_2___Real_Estate_and_Asset_Mgmt___Classroom_version...

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Lecture 2 An Introduction to Real Estate and Asset Management
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What’s an asset? Real assets Financial assets
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What’s value? val´ue (n.) 1. relative or assigned worth or importance. 2. monetary or material worth. The foundation of the real estate discipline is on VALUE.
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Cost vs. value If Value > Cost , buy, build or hold Once Value < Cost , sell or redevelop Hotel assets must create value for their owners to be viable investments.
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How do you measure value? Revenue generating potential (or “investment value”) Market value Replacement value Sheraton Grande, Washington DC
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Revenue generating potential Typically assessed by determining the present value of cash flows during the holding period TR - TE = NOI “Reversion” Value = PV of NOI’s plus PV of reversion Revenue: Room Sales F&B Sales Other … Total Revenue TR Expenses: Administrative Labor & Benefits F&B Cost Maintenance & Repair Utilities Marketing Other… Total Expenses TE
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Market value What others have paid for comparable properties At issue: what’s comparable?
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  • Fall '07
  • SROBSON

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