THE ANALYSIS OF TENANT RISK IN THE ITALIAN REAL ESTATE MARKET
||Martelli, Duccio; Giannotti, Claudio; Pischedda, Luigi
||THE ANALYSIS OF TENANT RISK IN THE ITALIAN REAL ESTATE MARKET
||17th Annual European Real Estate Society Conference in Milan, Italy
||The volatility of tenant periodical cash flows produced by investment property can dramatically affect the expected return as estimated ex-ante, especially in recession times. Therefore tenant risk is a crucial factor for real estate investors’ strategies and asset allocation choices. The paper analyses the Italian institutional real estate market and aims at assessing tenant risk on the basis of lease events and market movements. The paper starts with a literature review of the major contributions in the field, produced by both academics (Ambrose B.W., Hendershott P.H., Klosek M.M., 2002; Crosby et al., 2000; McAllister, O’Roarty, 1999) and real estate institutions. Thanks to Investment Property Databank (IPD), who provides aggregate data of the Italian real estate market, the research offers an empirical analysis on actual leases signed in Italy in the years 2006 through 2008. The Italian lease market is further investigated in its features, in order to highlight different risk profiles across sectors and locations, with particular emphasis on break clauses. The results are compared with other IPD studies on other European markets, namely UK and France.
||Tenant risk, break option clauses, lease
||file.ppt (1,608,192 bytes)
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||Real Estate Finance & Investment
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