Earticle

초록

영어

We analyze the eects of leverage on the timing of real estate developments that involve conversion of land from agricultural to urban use. We assume that a developer who maximizes the equity value obtains a defaultable mortgage loan. At the time the land conversion occurs, furthermore, a lender originates the mortgage loan at fair market value. We show that, under uncertainty, the leveraged developer moves the exercise of the land conversion option forward with the mortgage loan. Seeking to lower the uncertainty premium, the developer who can make a strategic default decision lowers the level of land conversion triggers. In urban growth models with irre- versible development, lower levels of the triggers expand equilibrium city size.

목차

Abstract
 1 Introduction
 2 Literature Survey
  2.1 Real Option in Real Estate Development
  2.2 The Default Option in Mortgage Loans
 3 A Model of the Development Option
  3.1 A Framework
  3.2 The Development Option on Vacant Land
  3.3 The Optimal Development Rules
 4 The Development Option in the Presence of a Defaultable Mortgage Loan
  4.1 Project Valuations after Development
  4.2 The Development Option for a Leveraged Developer
  4.3 Comparative Statics
 5 Leverage, Uncertainty and the City
  5.1 The City Boundary
  5.2 The Structure of Land Rents and Prices
 6 Conclusion
 References
 Figure

키워드

저자

• SeungDong (Peter) You [ PhD Candidate, Sauder School of Business, University of British Columbia, Vancouver, Canada. ]

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• 간행물명

  한국재무학회 학술대회

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• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330