A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development
This study examines the integration of multi-real-option valuation and security token offering (STO) as an innovative approach to real estate project financing. The case study of Aspen Resort Development serves to illustrate this methodology. The traditional discounted cash flow (DCF) method is freq...
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MDPI AG
2025-01-01
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| Online Access: | https://www.mdpi.com/2075-5309/15/2/216 |
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| author | Jung Kyu Park Jun Bok Lee Young Mee Ahn Ga Young Yoo |
| author_facet | Jung Kyu Park Jun Bok Lee Young Mee Ahn Ga Young Yoo |
| author_sort | Jung Kyu Park |
| collection | DOAJ |
| description | This study examines the integration of multi-real-option valuation and security token offering (STO) as an innovative approach to real estate project financing. The case study of Aspen Resort Development serves to illustrate this methodology. The traditional discounted cash flow (DCF) method is frequently ill-suited to the dynamic and uncertain nature of long-term real estate projects, particularly in regard to the ability to adapt to market fluctuations. In order to address these limitations, this study employs a multi-real-option model with a binomial lattice framework, thereby facilitating flexible decision-making in various investment stages. The analysis demonstrates that the STO-based project financing (STO-PF) model offers enhanced financial performance and strategic advantages in comparison to the conventional DCF approach. Furthermore, the STO-PF model has the effect of increasing liquidity, expanding investment accessibility, and improving risk management through the utilization of digital platforms. By quantifying the project’s extended net present value (ENPV), the integration of STOs with real-options models can facilitate optimal investment decisions in the context of a high level of market volatility. Consequently, the STO-PF model is determined to yield a project value (E) of USD 7.34 million and a real-options value (ROV) of USD 3.69 million. This is markedly higher than the net present value (NPV) of USD 3.65 million derived from the traditional project finance (PF) model. Furthermore, the put option for the second investment stage contributes USD 16.45 million to the overall value of the project, thereby demonstrating the flexibility and strategic advantages of the STO framework in comparison to static NPV analysis. The Aspen project serves as a case study, demonstrating the financial viability of phased investments in dynamic market conditions. It contributes to the theoretical understanding of STO-based financing and provides practical insights for developers seeking flexible and innovative financing solutions in the real estate sector. Further research is required to confirm the applicability of STOs in diverse market environments and regulatory contexts. Additionally, in-depth research is necessary to integrate emerging technologies, such as artificial intelligence and machine learning, into multi-real-option-based financial platforms. This integration aims to enhance financial modeling and decision-making processes, as well as to facilitate the integration of digital technologies in this field. Only then can the development and implementation of smart construction development advance. |
| format | Article |
| id | doaj-art-03d8984a07b84831975bd2060f0fa040 |
| institution | Kabale University |
| issn | 2075-5309 |
| language | English |
| publishDate | 2025-01-01 |
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| series | Buildings |
| spelling | doaj-art-03d8984a07b84831975bd2060f0fa0402025-01-24T13:26:13ZengMDPI AGBuildings2075-53092025-01-0115221610.3390/buildings15020216A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate DevelopmentJung Kyu Park0Jun Bok Lee1Young Mee Ahn2Ga Young Yoo3Department of Architectural Engineering, Kyung Hee University, Yongin 17104, Republic of KoreaDepartment of Architectural Engineering, Kyung Hee University, Yongin 17104, Republic of KoreaDepartment of Environmental Science & Environmental Engineering, Kyung Hee University, Yongin 17104, Republic of KoreaDepartment of Environmental Science & Environmental Engineering, Kyung Hee University, Yongin 17104, Republic of KoreaThis study examines the integration of multi-real-option valuation and security token offering (STO) as an innovative approach to real estate project financing. The case study of Aspen Resort Development serves to illustrate this methodology. The traditional discounted cash flow (DCF) method is frequently ill-suited to the dynamic and uncertain nature of long-term real estate projects, particularly in regard to the ability to adapt to market fluctuations. In order to address these limitations, this study employs a multi-real-option model with a binomial lattice framework, thereby facilitating flexible decision-making in various investment stages. The analysis demonstrates that the STO-based project financing (STO-PF) model offers enhanced financial performance and strategic advantages in comparison to the conventional DCF approach. Furthermore, the STO-PF model has the effect of increasing liquidity, expanding investment accessibility, and improving risk management through the utilization of digital platforms. By quantifying the project’s extended net present value (ENPV), the integration of STOs with real-options models can facilitate optimal investment decisions in the context of a high level of market volatility. Consequently, the STO-PF model is determined to yield a project value (E) of USD 7.34 million and a real-options value (ROV) of USD 3.69 million. This is markedly higher than the net present value (NPV) of USD 3.65 million derived from the traditional project finance (PF) model. Furthermore, the put option for the second investment stage contributes USD 16.45 million to the overall value of the project, thereby demonstrating the flexibility and strategic advantages of the STO framework in comparison to static NPV analysis. The Aspen project serves as a case study, demonstrating the financial viability of phased investments in dynamic market conditions. It contributes to the theoretical understanding of STO-based financing and provides practical insights for developers seeking flexible and innovative financing solutions in the real estate sector. Further research is required to confirm the applicability of STOs in diverse market environments and regulatory contexts. Additionally, in-depth research is necessary to integrate emerging technologies, such as artificial intelligence and machine learning, into multi-real-option-based financial platforms. This integration aims to enhance financial modeling and decision-making processes, as well as to facilitate the integration of digital technologies in this field. Only then can the development and implementation of smart construction development advance.https://www.mdpi.com/2075-5309/15/2/216STO-PFmulti-real optionmulti-real-option-based integrated STO-PF platformalternative modeldigital constructionintegrated project financing system |
| spellingShingle | Jung Kyu Park Jun Bok Lee Young Mee Ahn Ga Young Yoo A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development Buildings STO-PF multi-real option multi-real-option-based integrated STO-PF platform alternative model digital construction integrated project financing system |
| title | A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development |
| title_full | A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development |
| title_fullStr | A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development |
| title_full_unstemmed | A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development |
| title_short | A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development |
| title_sort | case study on multi real option integrated sto pf models for strengthening capital structures in real estate development |
| topic | STO-PF multi-real option multi-real-option-based integrated STO-PF platform alternative model digital construction integrated project financing system |
| url | https://www.mdpi.com/2075-5309/15/2/216 |
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