Real Estate Finance

Real 442

Fall Quarter 2007

Instructor: Dan Lupiani

E-mail:

Course Overview

This course provides an overview of real estate markets and the analysis used to support financial decision-making. The initial portion of the course will cover residential housing and mortgage products, including securitized residential debt. Next, the commercial property market and its various product segments will be reviewed together with the techniques used to value and finance investments. Finally, the securitized commercial debt (CMBS and CDO) and equity vehicles (REITs) for real estate will be reviewed. Case studies will be used throughout course to amplify the concepts. Industry guest speakers will share their experience with the class. Class discussion will include discussion and analysis of current real estate market events.

The textbook for this course will be Real Estate Finance and Investments -13th edition by William B. Brueggeman and Jeffrey D. Fisher.

The Course Packet will consist of five case studies. The first four cases will include discussion and written assignments. The fifth case will be incorporated into the final exam.

Course Requirements and Guidelines

Prerequisite: FIN-430-0 or FIN 440-0. In addition, a working knowledge of Excel and the ability to operate a financial calculator is necessary. A financial calculator should be brought to each class.

Grading

Course Activities / Weights
1.  Class Participation / 8%
2.  Midterm Exam / 40%
3.  Case Discussion and Assignments / 8%
4.  Final Exam / 44%

1)  Class Participation: Students are expected to attend class and contribute to the class discussion (e.g., questions, ideas, experiences, etc.).

2)  Midterm Exam: Closed book – take home. Will be based material covered through midterm exam date.

3)  Cases: The grading of cases will be based on the written assignments and participation in class discussion of the case.

4)  Final Exam: Closed book – take home. Will be based on material covered subsequent to the midterm exam.

The final course grade will be based on the course activities, their corresponding weights and the Instructor’s subjective assessment of the overall accomplishments of the class.

Important Notices

  1. Compliance with the Kellogg Honor Code is assumed at all times and under all circumstances.
  2. Compliance with the Kellogg classroom laptop policy is expected.

3.  The Real Estate Finance and Investments textbook is the 13th edition. This edition is recently released and students are encouraged to acquire this edition. This is an excellent textbook and future reference book and students are encouraged to read the entire chapters. However, the required material from each chapter will be highlighted in the class lecture notes available on blackboard.

  1. Students and prospective students are encouraged to email me with any questions they have regarding the course objectives, information, materials or schedule.
  2. Please notify me by email prior to class if you will be unable to attend.

Class Schedule

This following schedule is tentative and subject change. Additional articles may be added to Blackboard. Guest speakers may be added or deleted based on their availability.

Date

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Class Agenda

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Suggested Readings and Assignments

Class 1
9/26 / 1.  Course Introduction & Overview
2.  Discussion of “The Survey Says”
3.  Real Estate Legal Concepts
4.  Real Estate Financing: Notes and Mortgages / Textbook: Chapters 1 & 2
The Survey Says (Blackboard)
Class 2
10/3 / 1.  The Interest Factor in Financing
2.  Fixed Rate Mortgages
3.  Adjustable Rate Mortgages / Textbook: Chapters 3 & 4 & 5
Class 3
10/10 / 1.  Residential Financial Analysis
2.  Single Family Housing: Pricing, Investment, and Tax Considerations / Textbook: Chapters 6 &7
Nation’s Housing - 2007 Study (Blackboard)
The American Dream Case
Class 4
10/17 / 1.  Underwriting and Financing Residential Properties
2.  The Residential Secondary Mortgage Markets
Guest Speaker(s) on Residential Markets / Textbook: Chapters 8 & 19 & 20 (thru page 604)
Mid Term Exam Provided
Class 5
10/24 / 1.  Income Producing Properties: Leases, Rents, and the Market for Space
2.  Valuation of Income Properties: Appraisal and Market for Capital
Guest Speaker on Commercial Property Markets / Textbook: Chapters 9 & 10
Mid Term Exam Due
Class 6
10/31 / 1.  Investment Analysis and Taxation of Income Properties / Textbook : Chapter 11
Ft. Myers Eldercare Case
Class 7
11/7 / 1.  Financial Leverage and Financing Alternatives
2.  Risk Analysis
3.  Disposition and Renovation of Income Properties / Textbook: Chapter 12 &13 & 14
Tysons Corner Case
Class 8
11/14 / 1.  Financing Corporate Real Estate
2.  Project Finance
3.  Land Development Finance / Textbook: Chapter 15 & 16 & 17
Millegan Creek Apartment Case
Class 9
11/28 / 1.  The Commercial Secondary Mortgage Markets
2.  Real Estate Investment Trusts
3.  Discussion of CMBS Articles / Textbook: Chapters 20 (from page 605) & 21
CMBS Articles (Blackboard)
Class 10
12/5 / Review of Semester
State of the Real Estate Markets Speaker / Final Exam