Commercial mortgage market liquidity and its effect on capitalization rates

Abstract

This study extends a previously developed model of real estate capitalization rates. The preceding model suggests that real estate cap rates are a function of debt and equity spreads over the real risk free rate. In an effort to further the previous research, the effects that commercial real estate mortgage markets have on cap rates is considered. Mortgage originations and debt service coverage ratios are used to proxy the effects of the commercial mortgage market. The empirical results reconfirm the significance of debt and equity spreads. Furthermore, mortgage markets are shown to have a significant effect on capitalization rates. These results help to explain contributing factors to the real estate bubble of 2007.

Notes

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Thesis Completion

2010

Semester

Summer

Advisor

Anderson, Randy

Degree

Bachelor of Science (B.S.)

College

College of Business Administration

Degree Program

Real Estate

Subjects

Business Administration -- Dissertations, Academic;Dissertations, Academic -- Business Administration

Format

Print

Identifier

DP0022461

Language

English

Access Status

Open Access

Length of Campus-only Access

None

Document Type

Honors in the Major Thesis

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