REAL 442, Real Estate Finance and Investments
Kellogg School of Management
Northwestern University
Winter Quarter 2008
Location: Jacobs
Wednesdays, 6:00-9:00 P.M.
Instructor: Gary Rosenberg
E-mail: grosenberg@urbanr2.com
Course overview
The real estate industry employs more people, uses more capital and involves a
broader range of activities than any other industry in the private sector of the
United States economy. This course provides an understanding and insight into
the industry, its markets, its opportunities and risks and the analysis and tools
used to support financing and financial decision making in the real estate world.
The largest asset in most households is their home. The first segment of the
course, after a fundamental introduction to the industry, covers the analysis of
residential housing markets and the products for financing the home and their
relationship to managing personal finances.
Next, the commercial real estate markets and their various product segments will
be reviewed together with the techniques used to value, finance and make real
estate investments. We will also review and analyze corporate real estate use,
ownership and financial decision making.
Lastly, but certainly not least, we will review and discuss capital markets and the
securitization and globalization of real estate. These phenomena have been,
perhaps, the most powerful agents of change in the industry’s history. We will
study and analyze the creation and use of securitized real estate debt and equity
vehicles and real estate derivatives and their impact on the globalization of real
estate.
Required Reading
The textbook for this course is Real estate Finance and Investments-13th
Edition by William B. Brueggeman and Jeffrey D. Fisher. Required text readings
are set forth in the Course Outline below.
Additionally required, is the reading of Crain’s Chicago Real Estate Daily at
chicagorealestatedaily.com. Students, individually and in teams, are required to
be prepared to discuss in class how current real estate events of the week
reflect, relate to and are affected by events and conditions in the local, national
and international economies and capital markets. Problems and mini-cases
relating to analysis and strategies in dealing with current events and conditions
will be posted on the blackboard from time to time.
Class Structure
50% basic real estate foundation through review, elaboration and discussion of
required textual materials and topics;
35% development of dynamic thought processes and tools for dealing with the
ever- changing conditions and circumstances in the real estate industry providing
learning opportunities that broaden beyond the basic foundation in the text.
Solutions to case studies, mostly based on current events, will be prepared by
teams and judged on the basis of class presentations of those solutions.
15% guest lecturers and/or panels.
Course Outline and Required Readings (All page references are to the text)
Week 1—January 9
The fundamental language and concepts of (debt and equity) interests in Real
Estate, pp. 1-24
Week 2—January 16
Mortgages, the primary instrument of real estate finance and introduction to
residential real estate financial analysis, pp. 72-98, 112-136
Week 3—January 23
Residential, your home as an investment, pp. 176-209
Week 4—January 30
Introduction to income producing properties, pp. 245-276
October, 2005
Week 5—February 6
Introduction to Corporate real estate, pp 436-454;
Midterm Exam
Week 6—February 13
Valuation and market for income producing properties, pp.280-307
Week 7—February 20
Income producing properties; analysis, taxation, leverage and risk, pp. 319-345;
384-396
Week 8—February 27
Joint Ventures, Syndications and Partnerships, pp.525-550; Securitization I, the
Secondary Mortgage Markets and Pass-through Securities, pp. 554-578
Week 9—March 5
Financing development of projects, pp 459-491; Securitization II, Commercial
Mortgage Backed Securities, pp. 605-614
Week 10—March 12
Securitization III, REITS, pp 621-644
Review and prepare for final exam.
Grades
25% Class Participation and presentations
25% Midterm Exam
50% Final Exam
Prerequisites
FINC-430-0,
Or
FINC-440-0