Premium
Anticipated Growth and the Specification of Debt in Real Estate Value Models
Author(s) -
Lusht Kenneth M.,
Fisher Jeffrey D.
Publication year - 1984
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00307
Subject(s) - economics , real estate , debt , investment (military) , loan , value (mathematics) , econometrics , monetary economics , macroeconomics , financial economics , finance , mathematics , statistics , politics , political science , law
Standard value models for investment real property do not distinguish between current income and future growth in estimating the probable level of debt financing. Analysis of loan commitment data from 1971–1981 suggests that this was not a proper assumption during that period. Consistent with recent models from the literature of the firm, the portion of the value of investment properties attributable to anticipated growth apparently supported less dept than did current income.