Thursday, June 29, 2006

Better Analysis
I am reviewing and rethinking the analytical process for tenant in common (TIC) transactions. I think it needs to be better and incorporate more traditional financial and investment analysis. These deals need a more rigorous financial review. The cost of the deal - for both debt and equity - needs to be determined and compared to the expected return. The tricky part is the cost of equity. To determine the cost of equity I have been using the front-end costs, less money for reserves, but I am not convinced this is fully accurate. I know it gives a good approximation of the cost of equity, but I need to fine-tune it and determine a portable formula that could be applied across multiple offerings.

I searched the CFA Institute website for exisitng research, and there was none. (This could be a good research document.) I am searching Amazon for an appropriate real estate analysis book that will help.

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