Georgetown University School of Continuing Studies
MPRE 621: Foundations of Real Estate Finance
Summer 2013, Wednesdays 6:00 – 9:20 PM
May 22 – August 7, 2013
Instructor: Stephen R. Lowe
Office Hours: By appointment
Email (preferred) Lowe.stephen.r@gmail.com
Cell (202) 271-8504
Work (202)778-3443
Course Description
This course will provide a solid foundation in real estate finance. The first portion of the course
will introduce students to key real estate finance terms and concepts including net present
value, internal rate of return, loan-to-value ratios, discounting property cash flows, pro forma
modeling, securitization, mezzanine financing, tax-preferred financing, etc. The remainder of
the course will be devoted to understanding how these concepts are understood and applied
by the key entities involved in the real estate finance arena. Students learn how to think
critically about business, real estate and real estate transactions from a broad real estate
finance perspective.
Course Materials
You must bring a laptop with Microsoft Excel to every class. The required text is Real Estate
Finance & Investments: Risks and Opportunities, Third Edition (not the Second Edition) by Peter
Linneman (ISBN 978-0-615-44951-7). There will be other handouts in class from the professor
and from the guest presenters.
There will be several guest presenters representing various segments of the real estate finance
arena including lenders, developers, capital markets participants, and others. The speakers will
provide detailed insight into which real estate finance concepts they utilize in their respective
roles in the real estate world.
Assignments
Students will be expected to read one to two chapters per week; answer questions from the
readings and lectures, and participate in a team presentation as well as evaluating the
presentations of other student teams. Assignments are due before the beginning of class.
Exams
There will be an in-class Midterm Exam, and a final Funding Request presentation by student
teams. Each student will be graded on his or her teams Funding Request and on his her analysis
in regard to each of the other teams’ Funding Requests.
Grading
20% Homework Assignments
25% Mid-term Exam
20% Group Project Presentation
15% Analysis of Project Presentations
20% Class Participation
Additional Recommended Reading and References (Optional)
 Model For Success, the REFM Blog
 Dictionary of Real Estate Terms, by Barron's Business Guides
 Professional Real Estate Development: The ULI Guide to the Business, by Anne B. Frej
and Richard B. Peiser
 The Real Book of Real Estate, by Robert Kiyosaki
 The Complete Guide to Financing Real Estate Developments, by Ira W. Nachem
 The Real Estate Game, by William J. Poorvu and Jeffrey L. Cruikshank
 Real Estate Market Analysis: Methods and Case Studies, Second Edition, by Adrienne
Schmitz and Deborah Brett.
Class Participation – Class participation is expected and students will be called upon in class at random
to discuss issues relevant to the readings, professor’s comments, and presenters’ comments for any
specific class and in reference to any previously covered material. Class participation allows students to
demonstrate an understanding of the key concepts being presented in the class. Questions are also
encouraged, especially those that help the class to achieve a more comprehensive understanding of the
subject matter being discussed. The readings and assignments listed on this syllabus should be
accomplished prior to class.
Electronic Etiquette—Please turn off cellphones, pagers, and other communication devices before class
starts. Surfing the web or engaging in other non-class techno-activity during class is unacceptable.
Writing Center—The Georgetown University Writing Center is a free writing resource open to all
Georgetown students. Graduate students trained in teaching writing are available to assist you at any
stage of your writing process. Whether you are just beginning to brainstorm or revising a later stage of
your work, the Center’s goal is to provide a collaborative place for the discussion of writing. The Center
offers assistance in topic development, general organization, guidance on paper revisions, and specific
or recurring structural problems with writing. Center writing consultants are not trained to proofread
papers for grammar or spelling errors, but rather to help individuals improve their own critical thinking,
revision, and editing skills. http://writingcenter.georgetown.edu/
Syllabus
May 22
1) Class organization; discussion of key RE finance terms to be mastered; discussion of various
roles within RE finance industry
2) Speaker: Role of Financial Institution lenders
3) Homework Assignment for May 29: Linneman, “Prerequisite I – The Basics of Discounted Cash
Flow & Net Present Value Analysis,” and “Prerequisite II – IRR: What It Is and What It Isn’t”)
questions to be determined (TBD)
May 29
1) Review homework; further discussion of terms to be mastered; begin discussion of financial
concepts such as NPV, IRR, cap rates, etc.
2) Speaker: Developer Perspective on Real Estate Finance
3) Homework Assignment for June 5: Linneman, Chapter 4 , “Property Level Pro Forma Analysis”;
questions TBD
June 5
1) Review homework questions; continue discussion of financial concepts; in class exercises
2) Speaker: Commercial real estate financial analysis
3) Homework Assignment for June 12: Linneman, Chapter 5, “Financial Modeling” and Linneman,
Chapter 7, “The Use and Selection of Cap Rates”; questions TBD.
June 12
1) Review homework questions, begin discussion of financial goals of various real estate finance
entities, discuss individual property vs. portfolio concepts
2) Speaker: Role of pensions, insurance companies and other institutional lenders
1) Homework Assignment for June 19: Chapter 6, “Real Estate Due Diligence Analysis”; questions
TBD
June 19
1) Review homework assignment, continue discussion of financial goals of various real estate
finance entities, begin discussion of sources of real estate finance information
2) Speaker: Real Estate Information provider
2) Homework Assignment for June 26: Search web for 5 sources of real estate information and
write a paragraph describing the value of each; study for test.
June 26
1) Mid-term Test, review homework questions.
2) Speaker: Multifamily Housing expert
3) Homework Assignment for July 3: Linneman, Chapter 12, “Should You Borrow?” and Linneman
Chapter 13, “The Use of Debt and Mortgages”; questions TBD.
July 3
1) Test result review; homework question review, discussion of first half of class, discussion of
second half of the class.
2) Speaker: Role of Tax Laws and Government Programs in Real Estate Finance (in celebration of
the Independence Day holiday)
3) Homework Assignment for July 10: Linneman, Chapter 14, “Commercial Mortgage Backed
Securities” and Linneman, “Supplemental II: A Look at a Real CMBS Issue (pp 453-458)”,
questions TBD
July 10
1) Review homework questions, discuss CMBS in detail, form three person teams for final project –
Prepare a 5-10 page power point Funding Request Memorandum for a Real Estate Project
2) Speaker: Commercial Mortgage Capital Markets Professional
3) Homework Assignment for July 17: Linneman, Chapter 18, “REITS and Liquid Real Estate;”
questions TBD.
July 17
1) Review homework, work in class on final project
2) Speaker: Real Estate Investment Trusts as a source of real estate financing
3) Homework Assignment for July 24: Linneman, Chapter 7, “ Supplement C – How Should
Commercial Real Estate Be Priced?”; work on final project
July 24
1) Review homework, discuss real estate valuation
2) Speaker: Commercial real estate appraiser
3) Homework Assignment for July 31: Complete 5-10 page Funding Request Memorandum
July 31
1) Evaluate Funding Requests from each team; each class member will evaluate each team’s
Funding Request on five key elements in class
August 7
1) Finish evaluation of Funding Requests from student teams
2) Discuss strengths and weaknesses of the various Funding Requests