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Lecture 1: Introduction to Real Estate Finance. by James R. DeLisle, Ph.D. January 5, 2010. Lecture Overview. Course Organization Critical Thinking The Economic Problem: an Example in Critical Thinking Other Real Estate Trends/Issues Real Estate Process Review. Course Overview.
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Lecture 1: Introduction to Real Estate Finance byJames R. DeLisle, Ph.D.January 5, 2010
Lecture Overview • Course Organization • Critical Thinking • The Economic Problem: an Example in Critical Thinking • Other Real Estate Trends/Issues • Real Estate Process Review
Course Overview • Course Background • Course Objectives • Timetable • Computer and Technology Requirements • Grading Strategy and Policy • Project Decision: Rationale and Alternatives • Organization of Real Estate Finance 2010 • Part 1: Residential Finance • Part 2: Commercial Property Finance • Part 3: Capital Markets • Part 4: Institutional Finance
Course Objectives • Foster Creative thinking and Problem-solving • Helping students Systematically think about financial decisions related to real estate • Develop ability to model a variety of financial decisions • Develop Understanding of Real Estate Financial Markets • Market fundamentals: products and processes • Market Decision-making: players and market drivers • Residential Finance & Income Property Finance • Construction and Development Finance • Cultivate Appreciation for Capital Markets • Sources and Uses of Capital • Capital Flows to Real Estate • Private Market • Public Market • Develop Individual and Team-based Problem solving skills • Emerging Trends: class discussion of emerging issues and trends • Financial modeling: team-based modeling and application of appropriate tools • Excel Modeling • Argus Decision-support
Finance and Investments Text • Hard Copy • Brueggeman and Fisher, Real Estate Finance and Investments, 13th Edition, Irwin, (2008) • On-line Resources • General Resources • Excel Spreadsheet with selected examples from Chapter problems. • Argus Data Files & Argus Free Trial Link • Chapter Resources • New Articles and Weblinks. A listing of Internet resources • Quizzes. A series of 10 questions per chapter with automatic grading. • PowerPoint Presentations.
Supplemental Materials • Cases and Review material from Real Estate Process • Time Value of Money & Primer on Mathematics of Real Estate Finance,” (DeLisle) • Case 1: Building Envelope • Case 2: Total Replacement Cost • Case 3: Frontdoor/Backdoor Analysis • Case 4: Alternative Use Analysis • Case 5: Discounted Cash Flow • Problems in Real Estate Finance (hyperlinked files) • Problem Set 1: Basic Time Value of Money • Problem Set 2: Basic Mortgage Finance • Problem Set 3: Intermediate Mortgage Finance • Problem Set 4: Basic Corporate Real Estate Decisions • Argus Guides/Portfolio Case Studies • A Guide to Argus • Case Study in Argus • Glossary of Real Estate Finance Terms
Course Organization: Grading Policy • Grading Philosophy • Basis: curved • Emphasis: achievement vs. process/speed • Metrics • 4 Multiple Choice/Matching Quizzes & calculated quizzes on fundamentals of real estate finance • 2 Mortgage Spreadsheet Modeling: fixed rate and variable rate mortgages • 2 DCF Modeling: Enhancement to Excel model with rent roll, partnerships and portfolio integration • 2 Argus Cases. Argus Model for an individual project and a portfolio project. • 1 Final Exam. Individual paper in which students explore a contemporary issue in real estate finance • Grading Components • Quizzes 4 24% • Financial Modeling: Mortgages 2 20% • DCF Modeling 2 30% • Argus/Portfolio Decision Support 2 20% • Final Exam 1 10% • Class Participation and Forum 6%
Course Objectives • Develop a conceptual understanding of: • Real estate market at the macro and micro levels, • Linkages between the spatial and capital markets, • Integration of property, asset and portfolio management, and • Roles, drivers, and decision-making processes of major classes of space users, producers, and investors. • Cultivate an appreciation for: • Sustainable development, operation, transaction and investment, and • Integrate related disciplines to support real estate decision-making with the appropriate breadth and depth of inquiry. • Be able to make decisions drawing on: • Industry best practices, academic and theoretical concepts, and an • Understanding of basic technical and analytical tools.
Social Responsibility Irretrievable Commitment Of Scarce Resources
Timetable as of 1/5/2010 Timetable: Part 1