Method for valuing forwards, futures and options on real estate

• US 20040267657A1
• Filed: 10/20/2003
• Published: 12/30/2004
• Est. Priority Date: 06/28/2003
• Status: Abandoned Application

• Current Assignee: Radar Logic, Inc.
• Original Assignee: Global Skyline, LLC
• Inventors: Hecht, Andrew T.
• Application Number:
  US10/689,833
• Publication Number:
  US 20040267657A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method for matching buy and sell orders is provided. A daily cash index of real estate values for a local region is maintained and a trading instrument representative of an interest in real estate in the local region is created. In this regard, a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement. In addition, a plurality of buy orders relating to the instrument are generated; a plurality of sell orders relating to the instrument are generated; and the buy and sell orders are matched to determine a purchase and sale of the instrument.

Claims

1. A method for matching buy and sell orders, comprising the steps of:

maintaining a daily cash index of real estate values for a local region;

creating a trading instrument representative of an interest in real estate in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

generating a plurality of buy orders relating to the instrument;

generating a plurality of sell orders relating to the instrument; and

matching the buy and sell orders to determine a purchase and sale of the instrument.

2. The method of claim 1, wherein the trading instrument is a futures contract.

3. The method of claim 1, wherein the trading instrument is a forward contract.

4. The method of claim 1, wherein the trading instrument is an option on a futures contract.

5. The method of claim 1, wherein the trading instrument is an option on a forward contract.

6. The method of claim 1, wherein each day'"'"'s daily cash index is generated as a function of a survey of actual real estate transactions executed on said day.

7. The method of claim 6, wherein the real estate transactions are real estate leases.

8. The method of claim 6, wherein the daily cash index is calculated on a weighted average basis.

9. The method of claim 6, wherein the daily cash index is calculated on a moving average basis.

10. The method of claim 6, wherein the daily cash index is calculated on an exponential moving average basis.

11. The method of claim 8, wherein the daily cash index is weighted according to building classes, wherein the building classes include at least Class A building, Class B buildings, and Class C buildings.

12. The method of claim 1, wherein the daily cash index is aggregated on a monthly basis to provide a monthly index value.

13. The method of claim 1, further comprising generating a volatility value of the daily cash index, said volatility value being a function of a historic performance of the daily cash index.

14. The method of claim 13, wherein the historic performance is a function of aggregated monthly values of the daily cash index over a plurality of years.

15. A method for trading futures contracts in real estate, comprising the steps of:

a. maintaining a daily cash index of real estate values for a local region;

b. creating a futures contract representative of an interest in real estate in the local region, the futures contract having a settlement date, wherein a cash settlement of the futures contract is a function of the daily cash index on the settlement date;

c. receiving a plurality of buy orders relating to the futures contract;

d. receiving a plurality of sell orders relating to the futures contract;

e. matching the buy and sell orders to determine a purchase and sale of the futures contract.

16. The method of claim 15, wherein the daily cash index is aggregated on a monthly basis to provide a monthly index value.

21. The method of claim 16, wherein the daily cash index is calculated on an exponential moving average basis.

17. A method for providing indices for commercial real estate transaction values, comprising:

a. each day, performing a survey of actual commercial real estate transactions executed on said day in a local region;

b. each day, generating a daily cash index of commercial real estate transaction values in the local region based upon the survey;

c. each month, aggregating the daily surveys on a monthly basis to generate a monthly cash index;

d. generating a volatility value based upon the monthly cash indices over a plurality of years.

18. A method for providing indices for commercial real estate lease values, comprising:

a. each day, performing a survey of actual commercial real estate leases executed on said day in a local region;

b. each day, generating a daily cash index of commercial real estate lease values in the local region based upon the survey;

c. each month, aggregating the daily surveys on a monthly basis to generate a monthly cash index;

d. generating a volatility value based upon the monthly cash indices over a plurality of years.

19. The method of claim 18, wherein the daily cash index is calculated on a weighted average basis.

20. The method of claim 18, wherein the daily cash index is calculated on a moving average basis.

22. The method of claim 19, wherein the daily cash index is weighted according to building classes, wherein the building classes include at least Class A building, Class B buildings, and Class C buildings.

23. A method for providing indices for real estate transaction values, comprising:

a. each day, performing a survey of actual real estate transactions executed on said day in a local region;

b. each day, generating a daily cash index of real estate transaction values in the local region based upon the survey.

24. A method for providing indices for real estate lease values, comprising:

a. each day, performing a survey of actual real estate leases executed on said day in a local region;

b. each day, generating a daily cash index of real estate lease values in the local region based upon the survey.

25. The method of claim 24, wherein the daily cash index is calculated on a weighted average basis.

26. The method of claim 24, wherein the daily cash index is calculated on a moving average basis.

27. The method of claim 24, wherein the daily cash index is calculated on an exponential moving average basis.

28. The method of claim 25, wherein the daily cash index is weighted according to building classes, wherein the building classes include at least Class A building, Class B buildings, and Class C buildings.

29. The method of claim 24, wherein the real estate leases are commercial real estate leases.

30. The method of claim 24, wherein the real estate leases are residential real estate leases.

31. The method of claim 24, wherein the real estate leases are rural land real estate leases.

32. The method of claim 24, wherein the real estate leases are industrial real estate leases.

33. A method for providing indices for real estate transaction values, comprising:

a. based upon historical data, generating monthly cash indices of real estate values in a local region for each month of at least 10 prior years;

b. generating a an initial volatility value based upon the monthly cash indices over said at least 10 prior years;

c. each day, performing a survey of actual real estate transactions executed on said day in the local region;

d. each day, generating a daily cash index of real estate transaction values in the local region based upon the survey;

e. each month, aggregating the daily surveys on a monthly basis to generate a monthly cash index for said each month; and

f. updating the volatility value based upon each monthly cash index generated in step e.

34. A method for providing indices for commercial real estate lease values, comprising:

a. based upon historical data, generating monthly cash indices of commercial real estate values in a local region for each month of at least 10 prior years;

b. generating a an initial volatility value based upon the monthly cash indices over said at least 10 prior years;

c. each day, performing a survey of actual commercial real estate leases executed on said day in the local region;

d. each day, generating a daily cash index of commercial real estate lease values in the local region based upon the survey;

e. each month, aggregating the daily surveys on a monthly basis to generate a monthly cash index for said each month; and

f. updating the volatility value based upon each monthly cash index generated in step e.

35. The method of claim 34, wherein the daily cash index is calculated on a weighted average basis.

36. The method of claim 34, wherein the daily cash index is calculated on a moving average basis.

37. The method of claim 34, wherein the daily cash index is calculated on an exponential moving average basis.

38. The method of claim 35, wherein the daily cash index is weighted according to building classes, wherein the building classes include at least Class A building, Class B buildings, and Class C buildings.

39. A method for forming an exchange, comprising:

a. identifying a number of investors for an exchange, said investors being likely users of the exchange;

b. selling an ownership interest in the exchange to a plurality of the investors in return for an investment amount;

c. funding the formation of the exchange, at least in part, with the investment amount;

d. selling seats on the exchange to a plurality of exchange members in return for a membership fee, said seats providing the exchange members with an exclusive right to initiate trades on the exchange.

40. A method of operating an exchange, comprising:

a. at a daily cash market source,

i. each day, performing a survey of actual commercial real estate transactions executed on said day in a local region;

ii. each day, generating a daily cash index of commercial real estate transaction values in the local region based upon the survey;

b. at an exchange, creating a trading instrument representative of an interest in real estate in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

c. at each of a plurality of exchange members, generating a plurality of buy orders and a plurality of sell orders for the trading instrument;

d. at the exchange,

i. matching the buy and sell orders to determine a purchase and sale of the instrument, each purchase having a purchase price paid by its corresponding buy order and each sale having a sale price paid to its corresponding sell order;

ii. sending a portion of each purchase price to each of a plurality of investors in the exchange.

41. A method of operating an exchange, comprising:

a. at a daily cash market source,

i. each day, performing a survey of actual commercial real estate leases executed on said day in a local region;

ii. each day, generating a daily cash index of commercial real estate lease values in the local region based upon the survey;

b. at an exchange, creating a trading instrument representative of an interest in real estate in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

c. at each of a plurality of exchange members, generating a plurality of buy orders and a plurality of sell orders for the trading instrument;

d. at the exchange,

i. matching the buy and sell orders to determine a purchase and sale of the instrument, each purchase having a purchase price paid by its corresponding buy order and each sale having a sale price paid to its corresponding sell order;

ii. sending a portion of each purchase price to each of a plurality of investors in the exchange.

42. A method for matching buy and sell orders, comprising the steps of:

maintaining a daily cash index of hotel room rates for a local region;

creating a trading instrument representative of an interest in hotel room rates in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

generating a plurality of buy orders relating to the instrument;

generating a plurality of sell orders relating to the instrument;

matching the buy and sell orders to determine a purchase and sale of the instrument.

43. The method of claim 42, wherein the trading instrument is a futures contract.

44. The method of claim 42, wherein the trading instrument is a forward contract.

45. The method of claim 42, wherein the trading instrument is an option on a futures contract.

46. The method of claim 42, wherein the trading instrument is an option on a forward contract.

47. The method of claim 42, wherein each day'"'"'s daily cash index is generated as a function of a survey of actual hotel room rates on said day.

48. The method of claim 47, wherein the daily cash index is calculated on a weighted average basis.

49. The method of claim 47, wherein the daily cash index is calculated on a moving average basis.

50. The method of claim 47, wherein the daily cash index is calculated on an exponential moving average basis.

51. The method of claim 48, wherein the daily cash index is weighted according to hotel classes, wherein the hotel classes include at least a two star hotel class, a three star hotel class, and a four star hotel class.

52. A method for matching buy and sell orders, comprising the steps of:

maintaining a daily cash index of hotel room occupancy (or vacancies) for a local region;

creating a trading instrument representative of an interest in hotel room occupancy (or vacancies) in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

generating a plurality of buy orders relating to the instrument;

generating a plurality of sell orders relating to the instrument;

matching the buy and sell orders to determine a purchase and sale of the instrument.

53. The method of claim 52, wherein the trading instrument is a futures contract.

54. The method of claim 52, wherein the trading instrument is a forward contract.

55. The method of claim 52, wherein the trading instrument is an option on a futures contract.

56. The method of claim 52, wherein the trading instrument is an option on a forward contract.

57. The method of claim 52, wherein each day'"'"'s daily cash index is generated as a function of a survey of actual hotel room occupancy (or vacancies) on said day.

58. The method of claim 57, wherein the daily cash index is calculated on a weighted average basis.

59. The method of claim 57, wherein the daily cash index is calculated on a moving average basis.

60. The method of claim 57, wherein the daily cash index is calculated on an exponential moving average basis.

61. The method of claim 58, wherein the daily cash index is weighted according to hotel classes, wherein the hotel classes include at least a two star hotel class, a three star hotel class, and a four star hotel class.

62. A method for matching buy and sell orders, comprising the steps of:

maintaining a daily cash index of real estate vacancies for a local region;

creating a trading instrument representative of an interest in real estate vacancies in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

generating a plurality of buy orders relating to the instrument;

generating a plurality of sell orders relating to the instrument;

matching the buy and sell orders to determine a purchase and sale of the instrument.

63. The method of claim 62, wherein the trading instrument is a futures contract.

64. The method of claim 62, wherein the trading instrument is a forward contract.

65. The method of claim 62, wherein the trading instrument is an option on a futures contract.

66. The method of claim 62, wherein the trading instrument is an option on a forward contract.

67. The method of claim 62, wherein each day'"'"'s daily cash index is generated as a function of a survey of actual hotel room vacancies on said day.

68. The method of claim 67, wherein the daily cash index is calculated on a weighted average basis.

69. The method of claim 67, wherein the daily cash index is calculated on a moving average basis.

70. The method of claim 67, wherein the daily cash index is calculated on an exponential moving average basis.

71. The method of claim 68, wherein the daily cash index is weighted according to building classes, wherein the building classes include at least Class A building, Class B buildings, and Class C buildings.

72. A method for trading buy and sell orders, comprising the steps of:

generating one of a buy and sell order for an instrument representative of an interest in real estate in a local region, wherein a cash settlement of the trading instrument is a function of a daily cash index on the date of said cash settlement, the daily cash index being an index of real estate values for the local region; and

transmitting the order to an exchange for matching buy and sell orders to determine a purchase and sale of the instrument.

73. A method for matching buy and sell orders, comprising the steps of:

maintaining a daily cash index of real estate data for a local region;

creating a trading instrument representative of an interest in real estate data in the local region, wherein a cash settlement of the trading instrument is a function of the daily cash index on the date of said cash settlement;

generating a plurality of buy orders relating to the instrument;

generating a plurality of sell orders relating to the instrument;

matching the buy and sell orders to determine a purchase and sale of the instrument.