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Anticipated Growth and the Specification of Debt in Real Estate Value Models

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  • Kenneth M. Lusht
  • Jeffrey D. Fisher

Abstract

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.

Suggested Citation

  • Kenneth M. Lusht & Jeffrey D. Fisher, 1984. "Anticipated Growth and the Specification of Debt in Real Estate Value Models," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(1), pages 1-11, March.
    • Handle: RePEc:bla:reesec:v:12:y:1984:i:1:p:1-11
    DOI: 10.1111/1540-6229.00307
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    Cited by:

    1. Doina Chichernea & Norm Miller & Jeff Fisher & Bob White & Michael Sklarz, 2008. "ACross-Sectional Analysis of CapRates by MSA," Journal of Real Estate Research, American Real Estate Society, vol. 30(3), pages 249-292.
    2. Stephen A. Pyhrr & Stephen E. Roulac & Waldo L. Born, 1999. "Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy," Journal of Real Estate Research, American Real Estate Society, vol. 18(1), pages 7-68.

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