General Information
Promotional Video
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Target Audience
Real estate accounts for about one-third of the value of all capital assets globally. An understanding of commercial real estate is important for both investment applications and the provision of business services and goods. This class is, therefore, designed to be useful across the MBA program.
Format
In order to emphasize the interaction of theory and practice, academic lectures are supplemented by student presentations, case discussions, and guest lectures.
Course Mission
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.
Course Scope
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 income-producing real estate fits in the range of investment options and asset allocation. 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 the 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 to better assess risk. This course will involve interaction with industry practitioners through small group, real-world case studies.
Evaluation and Grade Breakdown
| Component | Weight |
|---|---|
| Midterm Exam | 30% |
| Group Assignment: Case Study of a Potential Investment Opportunity – Group Presentations – Written Submission | 10% 20% |
| Final Exam | 40% |
Required Resources
The course uses a textbook, Real Estate Finance & Investments by William Brueggeman and Jeffrey Fisher.