University of Cambridge > > Land Economy Departmental Seminar Series > Leverage, Timing and Real Estate Performance

Leverage, Timing and Real Estate Performance

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With equilibrium pricing of property and debt, leverage will theoretically boost expected return and risk. But the standard method of presenting the theory (in, for example, appraisals) typically fails to discuss how leverage can be managed through cycles of changing property values, and potential mis-pricing of property and debt. The presentation will use simulation methods and evidence on realised returns to investors with varying leverage to argue that, in the out-turn asymmetric timing effects and mis-pricing mean the leveraging property does not pay off in risk-adjusted return or even in absolute return.

This talk is part of the Land Economy Departmental Seminar Series series.

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