C15.0039.00 Professor Crocker H. Liu
Spring 1999
Real Estate Finance
9-10 Tisch Hall
4-5:15 pm TuTh in UC62
Ofc Hrs: Open Door (Mo-Thu)
(212) 998-0353 Office
(212) 995-4233 FAX
email: cliu@stern.nyu.edu
Seminar in Real Estate Finance
Texts: The
bookstore has all of the following material
Brueggeman and Fisher (BF), Real Estate Finance
and Investments, Irwin 1997 10th Ed (Required)
Jones and Simmons (JS), Location, Location,
Location, Methuen 1987 (Recommended)
Harvard Business School Case Studies and Notes:
-
Angus Cartwright Case
-
Anderson Street Case
Real Estate Lecture Outlines: Professor Crocker H. Liu
Grading Policy:
| Case Study 1: Angus Cartwright (Due February 23,
1999) |
25% |
| Case Study 2: Locational Analysis (Due
March 23, 1999) |
15% |
| Case Study 3: Anderson Street Case (Due April 22,
1999) |
20% |
| Midterm Exam: March 9, 1999 |
20% |
| Final Exam: |
20% |
The Angus Cartwright Case is an individual
case. You are allowed to work on the Locational Analysis and the Anderson
Street case studies in a group of not more than 2-3 people. However,
each person in the group will have to do one part of the project which
includes analysis and spreadsheets. Point: unlike most group projects
wherein one person does the work and another person does the typing with
the rest of the group being remoras, each member of the group is responsible
for a specific part of the project. You will get 2 grades for group
projects. One is an individual grade for your particular section
and one is a group grade. Grading is based on the class curve.
This means that if you score 60 out of a 100 points and yours is the top
grade in the class, you receive an A. For each case, you will receive 3
grades for the case: 1) Quantitative Ability, 2) Analytical Ability, and
3) Grammar (Writing Ability)/Presentation Skills.
Course Objective: This course is not designed
to provide an overview of general real estate principles and practices.
Rather, this course is tailored 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. However,
residential real estate will also be covered. This course is not a how
to get rich quick in real estate with no money down.
Topic Schedule
1 The Real Estate Finance Process
1.1 Analogy to Risk Management
1.2 Overview, History, and Current Trends
-
BF Chapter 1 - Overview of Real Estate Finance
1.3 Nature of the Mortgage
-
BF Chapter 2 - Legal Considerations in Real Estate Finance
2 Introduction to Mortgage Mathematics
-
BF Chapter 3 - The Interest Factor in Financing
-
BF Chapter 4 - Fixed Interest Rate Mortgage Loans
3 Analysis Of Income Property
3.1 Bricks, Mortar, and the Building Envelope
3.2 Tests of Financial Solvency (Static Analysis)
-
BF Chapter 8 - Introduction to Analysis of Income Properties
3.3 Tests of Profitability (Dynamic Analysis)
-
BF Chapter 10 - Investment and Risk Analysis
3.4 Location Analysis
3.5 Participation Mortgages, Leases and Sale-Leaseback
Financing
-
BF Chapter 11 - Financial Leverage and Debt Structure
3.6 Appraisal of Income Property
-
BF Chapter 9 - Valuation of Income Properties
3.7 Construction and Land Development Loans
-
BF Chapter 15 - Financing Construction Projects
-
BF Chapter 18 - Financing Land Development Projects
-
BF Chapter 12 - Partnerships, Joint Ventures, and Syndications
4 Analysis Of Residential Property
4.1 Borrower Analysis and Housing Affordability
-
BF Chapter 6 - Underwriting and Financing Residential
Properties
-
BF Chapter 7 - Residential Financial Analysis
4.2 Alternative Mortgage Instruments
-
BF Chapter 4 - Fixed Rate Mortgages
-
BF Chapter 5 - Adjustable Rate and Variable Payment
Mortgages
5 Securitization and the Secondary Mortgage Market
(If time permits)
5.1 Real Estate Debt Securitization: MPTs, CMOs and
REMICs, Strips, and Floaters
-
BF Chapter 18 - Secondary Mortgage Market: Pass-Through
Securities
-
BF Chapter 22 - Secondary Mortgage Market: CMOs and
Derivative Securities
5.2 Real Estate Equity Securitization and Investment
Performance
-
BF Chapter 17 - Institutional Sources of Real Estate
Capital
-
BF Chapter 20 - Real Estate Investment Trusts (REITs)
-
BF Chapter 21 - Real Estate Investment Performance and
Portfolio Considerations
Calendar
of Events
|
Week
|
Date
|
Assignment
|
|
1
|
1/19
|
Form Groups of 2-3 People, Read Sec 1.2
(BF Chapter 1) and Section 1.3 (BF Chapter 2) |
|
2
|
1/26
|
Read Section 2 (BF Chapters 3-4) |
|
3
|
2/01
|
Begin Angus Cartwright Case; Read Sec
3.1-3.3 (BF Chapter 8 and Chapter 10) |
|
4
|
2/09
|
Turn in Preliminary Angus Cartwright Exhibits |
|
5
|
2/16
|
Finish Write-up of Angus Cartwright |
|
6
|
2/23
|
Turn in Angus Cartwright; Read Sec 3.4
(JS Entire Book) |
|
7
|
3/02
|
Start studying for midterm; Start on Locational
Analysis project; Read Sec 3.5 (BF Chapter 11) |
|
8
|
3/09
|
Midterm Exam on 3/09 (Bring 2 one-sided
formula sheets); Read Sec 3.6 (BF Chapter 9) |
|
9
|
3/16
|
Spring Recess (You should finish Locational
Analysis project over this period at the latest) |
|
10
|
3/23
|
Locational Analysis Project Due (3/23);
Read Sec 3.7 (BF Chapters 15, 18, and 12) |
|
11
|
3/30
|
Read Sec 4.1 (BF Chapters 6-7) |
|
12
|
4/06
|
Turn in Preliminary Anderson Street Exhibits;
Read Sec 4.2 (BF Chapters 4-5) |
|
13
|
4/13
|
Read Sec 5.1 (BF Chapters 18 and 22) |
|
14
|
4/20
|
Anderson Street Project Due (4/22); Read
Sec 5.2 (BF Chapters 17,20-21) |
|
15
|
4/27
|
Start Studying for Final |
|
16
|
5/04
|
Last Day of Spring Classes (5/03 Monday) |
|
|
|