17Effect of Uncertainty without Flexibility in Development Project Evaluation: We Re‐analyze the Garden City Project by Reflecting Uncertainty Without Flexibility

While the preceding chapter provides a good description of current best practice in the analysis of multi‐asset real estate developments, that analysis is incomplete. Current best practice does not sufficiently or explicitly consider the uncertainty and flexibility that exist in reality. The Garden City pro forma and DCF evaluation reflect a single‐stream cash flow model analogous to that described for an existing rental asset in Chapters 1 and 2. Its single cash flow projection represents, at best, the expectation of future cash flows from the project. Table 16.1 is merely the ex‐ante mean of the future outcome probability distributions governing the possible ex‐post investment performance of the project. These average values do ...

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