Problems in Real Estate Valuation
FIN 6242
Fall 2012
Tuesday 7:10-9:40 PM in Room 208 of Funger Hall
Instructor:
Dr. Tom G. Geurts, FRICS
Phone: +1 (202) 994-7542
E-mail: TGG@gwu.edu
Room: Funger Hall 510
Course Overview:
This course is meant to teach an understanding of the valuation of different types of real estate from
different viewpoints. The course provides the student with an analysis of the risks of investing in
real estate as well as the opportunities. Successful investing in real estate requires superior skills and
knowledge and as such this course provides both the required knowledge basis as well as the tools to
succeed when investing in real estate. A solid theoretical framework is augmented with practical
examples and applications. In addition the student will become familiar with widely used spreadsheet
models and commonly used software, as well as the pertinent data sources. Finally, it will be shown
how differences in valuation methodology and levels of financing affect the value analysis of real
estate.
Office Hours:
Tuesday = 5:00pm – 6:00pm
Wednesday = 2:00pm – 5:00pm
Thursday = 1:00pm – 2:00pm
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Course Objectives:
By the end of the semester, students are expected to be able to:
1. Identify where and how value is created in real estate.
2. Evaluate risks and return opportunities for different types of real estate.
3. Collect and analyze pertinent data.
4. Create a financial model used for analyzing real estate investments.
Students will demonstrate these capabilities through class discussions, assignments, and exams.
Required Textbook:
Real Estate Principles for the New Economy by Miller and Geltner. 1st Edition (2004): South-Western.
ISBN # 978-0324187403.
All articles that are required readings will be posted on Blackboard or can be found on-line.
Course Requirements:
Class attendance and participation are strongly suggested. Attendance at exams is mandatory.
Failure to complete an exam will result in a failure for the final grade. There are no make-up exams,
unless the student has contacted the instructor before the scheduled exam and has a valid reason.
Note that the exam dates and assignment submission dates are tentative, hence it is possible that
they change. Any changes will be announced in class. It is the responsibility of the student to know
about any announcements made by the professor!
Final Grades:
Final grades will be determined using the following weights:
Mid Term Exam
25%
Final Exam
35%
Assignments
40%
==== +
100%
The material to be learned for both exams will be non-comprehensive and will encompass the
lecture material, the course textbook, and class discussions. The format of the exams will be essays
and problems.
A total of 4 Assignments will have to be submitted in this course, where each assignment is worth
10% of your final grade. You have to do the assignments alone. No credit will be given for
assignments handed-in late, regardless of reason!!
In order to receive full credit one has to show the work leading to the answer. Assignments with
just the answers will NOT get full credit. Assignments need to be typed, hence I will ignore
handwritten assignments.
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Academic Integrity:
The School of Business at GW strives to promote an ethical learning environment and want to
ensure that all students understand the concepts of academic integrity. We see this as an extremely
important issue for the students' time at GW, but also for after graduation. Hence we require that
all students familiarize themselves with the Code of Academic Integrity as found on the following
link: http://www.gwu.edu/~ntegrity/code.html
Please read the Code of Academic Integrity carefully and make sure that you follow it whenever you
submit any work for this course.
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Sessions:
08/28/2012 = Course Overview and Introduction to Real Estate.
LITERATURE :
* Book: Chapters 1 and 2.
09/04/2012 = The Creation of Value: Property Rights and Their Protection
LITERATURE :
* Book: Chapters 7, 8, and 10.
* Article: T.G. Geurts and A.J. Jaffe, “The Property Rights Game: Discovering the Meaning of
Private Property.” Journal of Real Estate Finance and Economics, 12 (Winter 1996).
09/11/2012 = Location, Location, Location: Urban Economics.
LITERATURE :
* Book: Chapters 3, 4, and 24.
* Article: A. Bertaud, “The Spatial Organization of Cities: Deliberate Outcome or Unforeseen
Consequence?” See: http://alain-bertaud.com (May 2004).
On 9/11/2012 ASSIGNMENT 1 (10% of Final Grade) is due: See Blackboard for Instructions.
09/18/2012 = Drivers for Different Types of Real Estate: Real Estate Cycles and Bubbles.
LITERATURE :
* Book: Chapters 5, 6, and 24.
* Articles: T.G. Geurts and I. Holz, “Core Real Estate: Do We Perceive a Renaissance of the
Risk Assessment of an Asset Class?” Paper presented at the 2010 Annual European
Real Estate Society Conference in Milan, Italy, June 2010.
T.G. Geurts, “Is Your Real Estate Portfolio Ready for Stagflation?” RICS Americas
Real Estate Brief, 1:7 (July 2011).
09/25/2012 = Valuation as a Part of a Well-Diversified Portfolio.
LITERATURE :
* Book: Chapter 9.
10/02/2012 = Highest and Best Value and Data Issues.
LITERATURE :
* Book: Chapters 11, 12, and 13.
* Article: T.G. Geurts and J. Black, “Analyzing Market and Property Data: CoStar Techniques
for the Classroom”. Paper presented at the 2011 Annual American Real Estate Society
Conference in Seattle, WA, April 2011.
On 10/02/2012 ASSIGNMENT 2 (10% of Final Grade) is due: See Blackboard for Instructions.
10/09/2012 = Guest Speaker on Valuation.
10/16/2012 = Mid-Term Exam (25% of Final Grade).
10/23/2012 = Pro Forma Analysis.
LITERATURE :
* Book: Chapter 14.
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10/30/2012 = Discounted Cash Flow Analysis.
LITERATURE :
* Book: Chapters 15 and 18.
11/06/2012 = Overview of Additional Valuation Methodologies and Results Reconciliation
LITERATURE :
* Book: Chapters 12 and 13.
On 11/06/2012 ASSIGNMENT 3 (10% of Final Grade) is due: See Blackboard for Instructions.
11/13/2012 = Pulling It All Together: Using ARGUS for Value Analysis.
11/20/2012 = The Impact of Leverage on Valuation.
LITERATURE :
* Book: Chapters 16, 17, and 18.
11/27/2012 = Summary and Conclusions.
On 11/27/2012 ASSIGNMENT 4 (10% of Final Grade) is due: See Blackboard for Instructions.
Final Exam (35% of Final Grade) during Final Examinations Period.
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