Acknowledgments vii
About the Author xiii
PREFACE xvii
Part I Introduction to Real Estate and Risk 1
1 Who Should Read This Book, and Why? 3
Q&A: Interview with Danel Neidich, CEO and Founder, Dune Capital Management and former Goldman Sachs Partner 10
2 Statistics, Monte Carlo, Bayes Rule, Stochastic Arithmetic, and Uncertain Attributes 13
Q&A: Interview with Professor Joseph L. Pagliari, Jr., John Mazarakis and Chicago Atlantic Clinical Professor of Real Estate, The University of Chicago 47
Part II The Building Blocks: Public, Private, Equity, and Debt 51
3 What Is Real Estate? Leases, Buildings, and Cities 53
Q&A: Interview with Michael Fascitelli, Chairman, MDF Capital 62
4 The Capital Stack, Optimal Leverage, WACC, and Mortgage Default 65
Q&A: Interview with Michael Giliberto, Co-Creator of the Giliberto-Levy Indexes; formerly senior portfolio manager at J. P. Morgan; and currently serving on corporate and pension fund boards 79
5 The Lease: An Options Approach and Upward-Only Adjusting Leases 81
Q&A: Interview with Doug Lyons, Managing Principal, Pearlmark 99
6 The Real Estate Quadrants: Interdependent and Predictive 101
Q&A: Interview with Ethan Penner, Chairman, MOSAIC 139
7 Property: The Macroeconomics of Performance and Risk 141
Q&A: Interview with Owen Thomas, Chairman and CEO, BXP, Inc. 152
8 Office Property: COVID-19, Obsolescence, Work From Home (WFH), and Conversions 155
Q&A: Interview with John Sischo, Managing Principal, Coretrust Capital Partners, LLC 185
9 Risk Analysis in Practice: Retail, Self-Storage, and Housing 187
Q&A: Interview with Benjamin Shibe Macfarland III, CEO, SROACapital.com, LLC 199
Part III Performance Analysis, Risk, and Popular Myths 201
10 Asset Allocation, with and without Liabilities, and Shortfall Constraints 203
Q&A: Interview with Sonny Kalsi, Co-CEO, BGO 250
11 Optimal Development: Linkage, the Internal Cost of Capital, and Risk 253
Q&A: Interview with Steve Wechsler, President and CEO of National Association of Real Estate Investment Trusts 276
12 Cap Rates and Hidden Information: Avoiding Traps with Caps 279
Q&A: Interview with Steve Rosenberg, Founder and CEO, Greystone 313
13 Liquidity: Turnover, MSA Liquidity, and Investment Horizon 315
Q&A: Interview with Ron Havner, Chairman of Public Storage and Chairman Emeritus of Shurgard 340
14 Is Real Estate an Effective Inflation Hedge? Only in the Long Run 343
Q&A: Interview with Jason Benderly, President, Benderly Economics and former Chief Economist of Goldman Sachs 371
15 A Monte Carlo Model of GP and LP Interests in a Structured Joint Venture 373
Q&A: Interview with Ralph Rosenberg, Chairman of Real Assets, KKR 391
Part IV The Public Sector and Collective Risk 393
16 Public-Sector Risk: Introduction to Sprawl and Rent Control 395
Q&A: Interview with Matthew Zisler, Senior Managing Director, Greystone 401
17 Sprawl: An Options Perspective 403
Q&A: Interview with Daniel Cummings, Managing Director, Bain Capital 410
18 Rent Control Redux: Prediction, Assessment, and Opportunity 413
Q&A: Interview with Aly Worthington, Head of Capital Markets, Summit Development 425
Part V Behavioral Bias, Investment Risk, and An Investor's Guide 427
19 Cognitive Errors, Picking Winners, and the Risk of Overpaying 429
Q&A: Interview with Susan Stupin, Managing Director, Prescott Holdings, LLC; The Prescott Group, LLC 446
20 Underfunded Public Pension Funds, Risk, and Alternatives 449
Q&A: Interview with Richard F. Burns, Senior Advisor & Trustee, The NHP Foundation 460
21 Investor's Checklist and Conclusions 463
Q&A: Interview with Russell Platt, Co-Founder and CEO of Forum Partners 469
Notes 471
Index 477
