Just as New York City is faring better than Las Vegas when it comes to real estate values, some countries in Microsoft's real estate portfolio are riskier than others.

During the recent downturn, the technology giant's treasury revisited its methodology for evaluating projects in its roughly $7 billion real estate portfolio. Microsoft's real estate and facilities team had been determining the corporate discount rates to use to buy or lease buildings, says Joel Combs, group manager in Microsoft's treasury.

The company typically buys most of its new facilities, and it became concerned that the discount rates did not fully reflect the riskiness of each project, given the perils confronting different areas, from political instability to the real estate ramifications of new laws or taxes. "We have specific cost of capital protocols for every business unit, but the real estate unit for some reason never did," Combs explains.

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