Real estate assets account for about one-third of the value of all capital assets in the world. An understanding of real estate is important no matter what line of business a student plans to be in. This class is, therefore, designed to be useful across the MBA program.
In order to emphasize the interaction of theory and practice, academic lectures are supplemented by student presentations, case discussions, and guest lectures.
To help students understand the economics and financial metrics used in the analysis of real estate investments and capital markets; to introduce students to the principal concepts and theories in real estate investment and finance-based investment analysis; and to understand the drivers of a commercial property’s cash flows and value.
The objective of the course is to provide students with practical commercial property valuation skills; the ability to conduct acquisition underwriting; and an understanding of how investment real estate fits in the range of investment opportunities. This quantitatively heavy course will expose students to the three major valuation approaches (sales comparison approach, cost approach, and income capitalization approach), cash flow pro-forma modeling and implications of leverage from both a borrower and lender perspective. It will develop a student’s ability to conduct direct research on the financial factors that drive income-producing real estate’s profitability and apply sensitivity analysis. This course will involve interaction with industry practitioners through a small group real-world case study.
Evaluation and Grade Distribution
|Group Assignment: Case Study of a Potential Investment Opportunity||10% Group Presentations|
20% Written Submission
The course will make use of a textbook, Real Estate Finance & Investments by William Brueggeman and Jeffrey Fisher.