Redevelopment of Real Assets
AbstractReal assets can be redeveloped repeatedly. Unlike financial assets, the option to redevelop real assets can be exercised infinitely often. For a depreciating real asset, the optimal exercise policy and resulting market values are calculated analytically and compared to the standard solution with at most one redevelopment. Relative to the standard solution, redevelopment is on average more frequent and less extensive, and the resulting market values are greater. Copyright American Real Estate and Urban Economics Association.
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Bibliographic InfoArticle provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.
Volume (Year): 25 (1997)
Issue (Month): 3 ()
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