The Transactional Asset Pricing Approach(Tapa) : Incorporation of Leverage and Derivation of Extended Ellwood Formula with Fixed Leverage Benefits

• Autorzy: Vladimir B. Michaletz , Andrey Artemenkov
• Języki publikacji: EN

Abstrakty

EN

The Paper discusses the derivation of the Ellwood formula on the basis of the Transactional Asset Pricing approach to valuation (TAPA) and proceeding from the dynamic principle of transactional equity-in-exchange. Discussing the notion of leverage, it introduces a formulation, in capitalized value terms, and measurement, for leverage benefits to a property purchaser. It is found that such a measure for the Ellwood formula is always zero, essentially obviating any-gains-from-trade to the purchasers of property to be had on account of leveraged transactions. To address this weakness in the Ellwood formula, a modified formula is proposed, which accounts for the requirement of positivity of leverage benefits to the purchaser of property. (original abstract)

Słowa kluczowe

EN

Financial leverage; Asset valuation; Ownership capital; Real estate

PL

Dźwignia finansowa; Wycena aktywów; Kapitał własny; Nieruchomości

• Czasopismo: Real Estate Management and Valuation
• Rocznik: 2021
• Numer: vol. 29, iss. 1
• Strony: 54--71

Twórcy

autor

Vladimir B. Michaletz

• RF Directorate of State Scientific Research Programs, Russia

autor

Andrey Artemenkov

• The Westminster International University in Tashkent, WIUT, Uzbekistan

Bibliografia

• Akerson, C. B. 1970. Ellwood Without Algebra. The Appraisal Journal, 38(2), 327.
• Akerson, C.B. 2000. Capitalization Theory and Techniques. Second Edition. Chicago, Illinois. Appraisal Institute.
• d'Amato, M., Siniak, N., & Mastrodonato, G. (2019). "Cyclical assets" and cyclical capitalization. Journal of European Real Estate Research, 12(2), 267-288. https://doi.org/10.1108/JERER-05-2018- 0022
• Ellwood, L. W. (1977). Ellwood tables for real estate appraising and financing: containing both explanatory text and tables Cambridge, Mass.: Published for the American Institute of Real Estate Appraisers of the National Association of Realtors [by] Ballinger Pub. Co., Fourth edition, c1977. (First edition -1957)
• Epley, Donald R. 2007. Impact of the Ellwood Approach on Value. The Appraisal Journal, 75 (3), 295- 297.
• Galasuyk, V. V. (2018) Fair Exchange Value for Objects in Purchase-sale, Gift and Exchange Transactions', Art-Pres publishers, Dnipro, p.203, ISBN: 978-966-348-413-6.
• Fisher, I. (1930). The Theory of Interest: As Determined by Impatience to Spend Income and Opportunity to Invest It. Macmillan.
• Jefferies. (2017). History and development of real estate investment (property) valuation models January 2017 https://www.researchgate.net/publication/316507454_History_and_development_of_real_estate_ investment_property_valuation_models/citations
• Kelly, W., Epley, D. R., & Mitchell, P. (1995). A requiem for Ellwood. The Appraisal Journal, 63(3), 284- 290.
• KPMG. (2018). Property Lending Barometer: A survey of banks on the prospects for real estate sector lending in Europe, https://assets.kpmg/content/dam/kpmg/nl/pdf/2018/advisory/propertylending- barometer-2018.pdf.
• Kucharska-Stasiak, E. (2019). Valuation Schools and the Evolution of the Income Approach. An Evaluation of Change Trends. Real Estate Management and Valuation, 27(2), 66-76. https://doi.org/10.2478/remav-2019-0016
• Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth and the valuation of shares. The Journal of Business, 34, 411-433. https://doi.org/10.1086/294442
• Lombardo, R. (1998). Unravelling the mysteries of Ellwood's basic mortgage equity capitalisation model, Reseearch Gate Working Paper (October 1998) https://www.researchgate.net/publication/261983374_Unravelling_the_mysteries_of_Ellwood's_ basic_ mortgage_equity_capitalisation_model
• Metcalf, R. L. (2015). Understanding the roots of mortgage/equity capitalization. Journal of Property Tax Assessment & Administration, 12(1), 23-31. https://researchexchange.iaao.org/jptaa/vol12/iss1/2
• Michaletz, V., Artemenkov, A., & Artemenkov, I. (2007) Income Approach and Discount Rates for Valuing Income-Producing Illiquid Assets - Outlines of New Framework: Revisiting the Concepts in Income Approach and Developing the Model of Illiquid Assets Transactional Pricing. ICFAI Journal of Applied Finance, December 2007; Proceedings of the ICFAI University and the University of Philadelphia V International Conference on Business and Finance, Hyderabad (India), 2006 Available at SSRN: https://ssrn.com/abstract=996016
• Michaletz, V. B., & Artemenkov, A. (2018). The Transactional Assets Pricing Approach and Income Capitalization Models in Professional Valuation: Towards a "Quick" Income Capitalization Format. Real Estate Management and Valuation, 26(1), 89-107. https://doi.org/10.2478/remav-2018- 0008
• Michaletz, V., & Artemenkov, A. (2019). The transactional asset pricing approach: Its general framework and applications for property markets. Journal of Property Investment & Finance, 37(3), 255-288. https://doi.org/10.1108/JPIF-10-2018-0078
• Mooya, M. (2016). Real estate valuation theory: A critical appraisal January 2016. University of Capetown, 2016. Advance online publication. https://doi.org/10.1007/978-3-662-49164-5
• Michael, S. (2018, Summer). Market value: What does it really mean? The Appraisal Journal, 206-235.
• Sauder (2009). Course material: Mortgage-equity and Residual valuation techniques, Chapter 9 https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/352/33 1_chapter09.pdf
• RICS. (2017) 'The future of valuations: the relevance of real estate valuations for institutional investors and banks- views from a European expert group', Insight Paper of the Royal Institution of Chartered Surveyors, November [online] http://anavaliadores.pt/wp-content/uploads/2018/04/RICSFuture- of-Valuations-insights-paper.pdf
• RICS. (2018) Bank lending valuations and mortgage lending value, 1st edition, RICS Professional Standards and Guidance (March 2018), https://www.rics.org/globalassets/ricswebsite/ media/upholding-professional-standards/sector-standards/valuation/bank-lendingvaluations- and-mortgage-lending-value-1st-edition-rics.pdf

Identyfikatory

DOI

doi.org/10.2478/remav-2021-0006