Professor Crocker H. Liu
Real Estate Finance
 (212) 998-0353 Office
(212) 995-4233 FAX
email: cliu@stern.nyu.edu
Executive MBA
Fall 2006
Real Estate Finance
 9-95 KMEC
Ofc Hrs: 
By Appointment
Texts:
Brueggeman and Fisher (BF), Real Estate Finance and Investments, Irwin 2003 12th Ed (Required)
Poorvu and Cruikshank (PC), The Real Estate Game: The Intelligent Guide to Decision-Making and Investment , Free Press 1999 (Required)
Harvard Business School Case Study: Angus Cartwright Case

Note: The Poorvu book is very EASY reading with lots of practical examples and war stories to illustrate key concepts.

Class Packet:  Real Estate Finance Lecture Notes 2006: Professor Crocker H. Liu

Reading Packet: Readings are available for download on my website for this course. The password will be given on the first day of class.

Grading Policy: Cases can be done in groups of no more than 4 people. In addition to this, for the Angus Cartwright case, each student must select one property and be responsible for the accompanying analysis. Each student must indicate which property he or she did and put their name on the applicable pages. There are 4 properties and hence the limit of 4 people per group. All students must demonstrate that they have a general understanding of the concepts through cases e.g. that they are not remoras (definition,  picture)

Deliverables
 		Due Date
 		Pct of Grade
Case 1: Location Analysis 1 week after  assigned
 		30%
Case 2: Angus Cartwright last day of class
 		35%
Exam: In Class last day of class
 		35%

Course Objective:This course is designed for the serious student who wants an in depth perspective of the theory and applications of financing and investing in real estate with an emphasis on commercial real estate. 

Tentative Topic Schedule
Session
Date & Time
Topic
Assigned Readings/Assignment
1-2
 Sat,  5/06 1:30-5:00pm The Gospel of Real Estate:   Process and Philosophy

Location Analysis
- Urban Structure
- Situs
- Succession
 PC Chapter 1 - The Game
Thrall, et al. , Applying the 7 Step Site Selection Methodology to Red Lobster: Steps 1 and 2, February 1998, Geospatial Solutions, pp. 40-43 
 ___, Step 3: Assessing Relative Performance, April 1998, Geospatial Solutions, pp. 38-44 
___, Step 4: Identify Situation Targets, June 1998, Geospatial Solutions, pp. 38-43 
___, Step 5: Assess Market Penetration, September 1998, Geospatial Solutions, pp. 46-50 
___, Step 6: Identify Markets for Expansion, Nov 1998, Geospatial Solutions, pp. 42-45 
___, Step 7: Judgement, February 1999, Geospatial Solutions, pp. 36-37 

 Case 1: Location Analysis (Due in one week)
2-3
 Fri,  5/12
1:30-5:00pm

Sat,  5/20
1:30-5:00pm
 Mortgages
- Nature of the Mortgage
- Mortgage Mathematics
 BF Chapter 1 - Legal Concepts in Real Estate Finance
BF Chapter 2 - Financing: Notes and Mortgages
BF Chapter 3 - The Interest Factor in Financing (Review)
BF Chapter 4 - Fixed Rate Mortgage Loans
BF Chapter 5 - Adjustable Rate and Variable Payment Mortgages
BF Chapter 6 - Residential Financial Analysis
BF Chapter 7 - Single Family Housing: Pricing, Investment, and Tax Considerations
BF Chapter 8 - Underwriting & Financing Residential Properties
3-4
 Sat,  5/20
1:30-5:00pm

Fri,  5/26
1:30-5:00pm 
Building Envelope

Back of Envelope:
- Solvency Ratios
- Backdoor/Frontdoor Models

PC Chapter 2 - Using Numbers in Real Estate
PC Chapter 3 - From Concept to Commitment
PC Chapter 4 - From Commitment to Closing
BF Chapter 12 - Financial Leverage & Debt Structure 
PC Chapter 2 - Using Numbers in Real Estate
PC Chapter 3 - From Concept to Commitment
PC Chapter 4 - From Commitment to Closing
BF Chapter 12 - Financial Leverage & Debt Structure 

5-6
 Fri,  5/26
1:30-5:00pm

Sat,  6/06
9:00am-5:00pm
 Cash Flow Analysis
- Anatomy of a Lease
- Types of Leases
- Rent Concessions and    
   Allowances
- Tenant Reimbursements
- Escalation of Rents and
  Expenses

PC Chapter 7 - Operations
BF Chapter 9 - Introduction to Income Producing Properties: Leases and the Market for Space
BF Chapter 11 - Investment Analysis and Taxation of Income Properties
BF Chapter 13 - Risk Analysis
BF Chapter 14 - Disposition and Renovation of Income Properties

Case 2: Angus Cartwright Case (Due last day of class)
7-8
 Sat,  6/06
9:00am-5:00pm
 Valuation of Real Estate

Financing Alternatives
 BF Chapter 10 - Valuation of Income Properties: Appraisal and the Market for Capital
BF Chapter 12 - Financial Leverage & Debt Structure
BF Chapter 15 - Financing Corporate Real Estate
8 Sat,  6/06
9:00am-5:00pm
Exam (30 -45 mins)


 Students are allowed to bring in 2 pages of formulas (single-sided)