CREATE - Commercial Real Estate Analysis, Trends & Expertise

CREATE (Commercial Real Estate Analysis, Trends & Expertise) is Professor Joseph Pagliari’s applied real-estate finance hub at Chicago Booth. It translates research and market evidence into practical tools and notes for analyzing risk, return, and capital structure across property, credit, and equity markets. The materials emphasize transparent, simulation-ready models, historical data, and teachable frameworks that connect classroom learning to real-world decisions. Many pages are living documents and will be updated as new analyses progress.

1. Credit Markets: Overview of debt’s role in real-estate capital structures, with three parts:

   • Link to Papers: two foundational high-yield studies.
   • Cost of Debt & Various Spreads: how borrowing costs/spreads move with LTV and market conditions, including a mezzanine note.
   • High-Yield Debt Market: market features, tranche-level risks, and asset characteristics.
     
     

2. Asset Markets: Focus on property returns, cap rates, and value drivers, with three parts:

   • Link to Paper: “Twenty Years of the NCREIF Property Index.”
   • Cap Rates & Property Values
   • Fundamental Components of Return
     
     

3. Equity Market: Leverage interactive applet. Choose dates (from 03/31/1978 to 12/31/2024), sub-index, rate base, spread, and leverage to see impacts on returns, cost of debt, volatility, and the share of positive-leverage periods.
   
   

4. Considering Optionality: Two parts:

   • Link to Paper (forthcoming)
   • An Alternative to Option Pricing: simulation of correlated normal variables used for promotes and capital-stack return analysis.
     
     

5. Taxation: Analysis of how reforms to carried (promoted) interest taxation could alter effective tax rates and after-tax returns for general and limited partners.
   
   

6. Class Notes: Weekly notes for Real Estate Investments I (valuation, leases, debt, REITs, risk/return) and Real Estate Investments II (tax/structuring, derivatives, leverage strategies, hedonic pricing, specialty real estate).
   
   

7. Thoughts on Current Events: Weekly housekeeping notes (market articles, commentary) plus a sign-up link for updates and materials.
   
   
   

Caveat: These papers, spreadsheets and class notes are provided in the hopes of furthering commercial real estate’s body of knowledge. They are largely intended to be viewed from the standpoint of an institutional investor. In that spirit, you should: a) acknowledge/cite them if you decide to use them in whole or in part, b) understand that no representations or warranties are made with regard to their accuracy, and c) report any suspected errors and/or oversights via our Feedback & Oversight Form.