IDEAS home Printed from https://ideas.repec.org/a/taf/repmxx/v12y2006i1p73-80.html
   My bibliography  Save this article

Determining Real Estate Betas for Markets and Property Types to Set Better Investment Hurdle Rates

Author

Listed:
  • Manuel Breidenbach
  • Glenn Mueller
  • Karl-Werner Schulte

Abstract

Executive Summary. Corporate theory states that investment decisions are best made with a hurdle rate that is adjusted for each investment's risks. Although determining a real estate risk premium has been employed by many investors, calculating differential risk premiums within real estate are rare and usually proprietary. Many real estate investors, in fact, may not be aware of the actual risk associated with different property types or markets. Some investors have attempted to apply the Capital Asset Pricing Model (CAPM) for a private real estate investment using real estate investment trust (REIT) returns to develop betas for private investments. This paper compares property and market betas for both private real estate (using the NCREIF Index) and public real estate (using the NAREIT Index) so that investors can have a more accurate risk premium beta or benchmark for their decisions.

Suggested Citation

  • Manuel Breidenbach & Glenn Mueller & Karl-Werner Schulte, 2006. "Determining Real Estate Betas for Markets and Property Types to Set Better Investment Hurdle Rates," Journal of Real Estate Portfolio Management, Taylor & Francis Journals, vol. 12(1), pages 73-80, January.
    • Handle: RePEc:taf:repmxx:v:12:y:2006:i:1:p:73-80
    DOI: 10.1080/10835547.2006.12089740
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10835547.2006.12089740
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10835547.2006.12089740?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:repmxx:v:12:y:2006:i:1:p:73-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/repm20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.