Change search
ReferencesLink to record
Permanent link

Direct link
Forecasting Performance on Opportunistic Real Estate Investments
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
2013 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This thesis investigates the difficulty in making accurate forecasts on opportunistic commercial real estate investments. The purpose is to quantify the differences between unlevered cash flows from underwriting estimates and actual outcomes, analyse them and arrive at conclusions about the difficulty in producing forecasts on opportunistic investments.

The data used in this thesis comes from two opportunistic real estate portfolios previously owned by the private equity firm Niam. Both portfolios comprised Swedish office properties.

The results from analysing Niam’s investments shows that operating cash flows on individual properties are most difficult to forecast since the strategy for the assets constantly needs to be updated in order to adjust for current events like for example change in demand of office properties. This can have great impact on the profit allocation between property cash flows and exit cash flows in comparison to underwriting.

Furthermore the results show of an increased need of diversification for opportunistic investments, since individual investments have high volatility. Also, analysing investments on unlevered level has limitations. On an unlevered level an investment can have actual outcomes worse than in the underwriting, but when adding effects from financial leverage and currency movements the same asset can outperform the underwriting.

Place, publisher, year, edition, pages
Keyword [en]
commercial real estate, opportunistic investments, real estate funds, underwriting, cash flows, outcomes
National Category
Engineering and Technology
URN: urn:nbn:se:kth:diva-124112OAI: diva2:632847
Available from: 2013-06-25 Created: 2013-06-25 Last updated: 2013-06-25Bibliographically approved

Open Access in DiVA

Jakob Paljak and Per Edenström(1020 kB)289 downloads
File information
File name FULLTEXT01.pdfFile size 1020 kBChecksum SHA-512
Type fulltextMimetype application/pdf

By organisation
Real Estate and Construction Management
Engineering and Technology

Search outside of DiVA

GoogleGoogle Scholar
Total: 289 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 190 hits
ReferencesLink to record
Permanent link

Direct link