Course Outline - B.A. 280
Spring Semester 1999
UNIVERSITY OF CALIFORNIA
Walter A. Haas School of Business
Course Outline
Spring Semester 1999
B.A. 280 - Real Estate and Urban Land Economics
Professor Kenneth Rosen
This course will utilize the principles of economic and financial analysis to provide an introduction
to real estate and urban economics. The course will begin with an introduction to the fundamentals
of real estate valuation, then address financial and economic theory of residential and nonresidential
real estate markets, including basic techniques to evaluate supply and demand in these markets.
The markets we will discuss will include office, apartment, retail, industrial, and hotel. We will
analyze development and investment decisions for these property types.
We will devote one-third of our discussion to real estate finance. Topics to be covered include an
analysis of mortgage creating institutions, Real Estate Investment Trusts (REITs), commercial
mortgage-backed securities, syndications and MLP's, alternative mortgage instruments, secondary
market agencies and econometric models of the mortgage market.
Course Requirements
Course requirements include a final examination, a group project that will involve a written and oral
presentation (during the last three weeks of class), four problem sets, and active class participation.
Grades will be weighted as follows: 45% exam, 35% project, 10% problem sets and 10% class
participation.
Reading
The course outline and reading list below outline the reading for the course. The required readings
include a major portion of Real Estate Finance and Investments by Steven Brueggeman and Jeffrey
Fisher and a reader of articles. Other than the Brueggeman and Fisher book, all articles listed are
contained in the reader. Additional readings will be handed out in class. The student should also be
familiar with the key journals in the field: The Journal of Urban and Real Estate Economics, Journal
of Real Estate Economics and Finance, Real Estate Review, Journal of Real Estate Research, The
Appraisal Journal, Housing Finance Review, The Mortgage Banker, and The Real Estate Finance
Journal, and The Journal of REIT Research.
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Course Outline - B.A. 280
Spring Semester 1999
Section I: Current Real Estate Market Environment
1. Emerging Trends in Real Estate: 1999 (PriceWaterhouseCoopers & Lend Lease) October 1998.
2. Tomorrow's Real Estate Industry (Jacques Gordon, RE Finance Journal) Fall 1996.
3. Who's Still Walking Around (Fortune) November 25, 1995.
4. Fourth Street Booming (Kenneth Howe, SF Chronicle) April 26, 1996.
5. Berkeley Hopes Plant Erases an Image (John McCloud, NY Times) September 29, 1996.
6. Gambling Big, Canadian Style (Larry Greenberg, WSJ) November 29, 1996.
7. TrizecHahn Agrees to Pay Equitable $470 Million for 10 Office Buildings (Larry Greenberg,
WSJ) December 10, 1998.
8. Times Square West (Peter Slatin, Barron’s) September 28, 1998.
9. Real Estate is Still Healthy Despite Ailing Public Markets (Dennis Yeskey, Barron's) November
23, 1998
10. Lending Without a Net (Laura Holson and Charles Bagli, NY Times) November 1, 1998.
11. Nomura Subsidiary in US Ending Real Estate Venture (Joseph Kahn, NY Times) December 12,
1998.
12. Crescent Is Becoming Serial Balker, Leaving Trail of Jilted Partners (Neal Templin, WSJ)
November 2, 1998
13. Top Ten Best Cities for Business (Fortune) 1998.
14. Erosion in Japan's Foundation (Sheryl WuDunn, NY Times) October 4, 1995.
15. The New World of Real Estate (Business Week) September 22, 1997.
16. REITs Go International- U.S. REITs Are Expanding Into the Global Property Market (Carrie
Coolidge, Forbes) October 5, 1998.
17. Welcome Back Gaijin - Foreigners are gobbling up prime Japanese properties (Robert Neff and
Bruce Einhorn, Business Week) September 7, 1998.
18. American Investors Set Up Camp in Tokyo Seeking Bargains in Japanese Property Loans (Peter
Slatin, Barron's) August 10, 1998.
19. Bids Surpass $1 billion for Embarcadero (Arthur Louis, SF Chronicle) January 29, 1998.
20. $1.2 Billion for Top SF Property (Ilana DeBare, SF Chronicle) May 13, 1998.
Section II: Real Estate Investment: Financial Analysis Fundamentals and the Real
Estate Development Process
21. Brueggemann & Fisher, Real Estate Finance and Investments, (pp. 307-355, 661-704)
22. Rental Apartment Valuation: The Applicability of Rules of Thumb (Lawrence B. Smith) The
Appraisal Journal, October 1985.
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Course Outline - B.A. 280
Spring Semester 1999
23. Tax Reform and Real Estate (Kenneth T. Rosen and Andrea Lepcio) Salomon Brothers Inc.,
September 17, 1986.
24. Appendix: Cash Flow Analysis ( Kenneth T. Rosen and Andrea Lepcio) Salomon Brothers Inc.,
September 17, 1986.
25. Federal Tax Incentives for Historic Preservation: A New Direction (Peter Weiss) The Real
Estate Finance Journal, Fall 1988.
26. Reassessing Development Risk (Green Street Advisors, Inc.) October 9, 1998.
27. Out of Joint (Barry Vinocur, Barron's) 3/23/98.
28. The Old and the New Dominate RE Finance Today (Scott Moldavian, RE Finance) Winter
1998.
29. How Much Debt is Too Much for a Property Company? (Barry Vinocur, Barron's) 11/30/98.
Section III: Economic Models of the Real Estate Market
30. D. DiPasquale and W. Wheaton, "The Market for Real Estate Assets and Space: A Conceptual
Framework," AREUEA Journal, 1992.
31. Lawrence B. Smith, "Adjustment Mechanisms in Real Estate Markets," Salomon Brothers Inc.
Real Estate Research, June 1987. (pp. 329-340)
32. Kenneth T. Rosen, "Toward a Model of the Office Building Sector," AREUEA Journal, Nov. 3,
1984. (pp. 341-349)
33. Rosen and Smith, "The Price-Adjustment Process for Rental Housing and the Natural Vacancy
Rate," The American Economic Review, Sept. 1983. (pp. 351-358)
34. Brueggeman and Fisher, Real Estate Finance and Investments, (pp. 236-271)
Section IV: The Office Building Market and Foreign Investment in US Real Estate
35. Sherman Maisel, "Demand for Office Space," Salomon Brothers, May 1989. (pp. 359-369)
36. The Next You Know, They’ll do Ironing (Neal Templin, WSJ) 9/9/98.
37. Reversal of Fortunes: Study Finds US Investors Spent $10 Billion in Asian Property Buying
Spree (Jonathan Sapsford, WSJ) 11/18/98.
38. Real Estate Buyers Circle Japan: US Firms Sense Opportunity Created by Asian Woes
(Jonathan Sapsford, WSJ) 3/11/98.
39. The Revolution in Real Estate ( Richard Hylton, Fortune) September 1998.
40. For Office Towers, Being Green Can Be Beneficial ( John Holushua, NY Times) 6/30/96
41. The New York Information Technology Center: Leasing Real Space to Denizens of Cyberspace
( Claudia Deutsch, NY Times) 5/26/96.
42. LA Story: Office Complexes Rise Again (Neal Templin, LA Times) 3/11/98.
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Course Outline - B.A. 280
Spring Semester 1999
43. Bedford ( Merrill Lynch, September 3, 1996)
44. Catellus (Merrill Lynch, January 7, 1998)
45. Spieker Properties (Penobscot Group, October 14, 1998)
Section V: The Apartment Market
46. Multifamily Housing (Bradley C. Grogan, ULI) Urban Land, Vol. 56, No. 11, November 1997.
47. Why Berkeley is Turning into a Commuter School (Tom Bethell) 11/98.
48. Apartment Demographics: Good for the Long Haul? (Jack Goodman, RE Finance) Winter
1997.
49. At the Intersection of Supply and Demand (John Tierney, NY Times) May 4,1997.
50. New Restrictions in Proposition G Worry Landlords (Jason Johnson, SF Chronicle) 10/27/98.
51. Loft War Raging in SoMa (Edward Lempinen, SF Chronicle) 3/30/98.
52. AvalonBay (Merrill Lynch, October 23, 1998)
Section VI.A: Housing: The Demand for Housing
53. The Year That Housing Died (Jason DeParle, NY Times) 10/20/96
54. End of A Ghetto: Razing the Slums to Rescue the Residents (Pam Belluck, NY Times) 9/6/98.
55. Many Who Can Afford to Buy Still Opt to Rent (Sheila Muto, WSJ) 11/18/98.
56. Home Stretch: Today’s House Buyers Sometimes Live Closer to the Financial Brink (Carlos
Tejada, WSJ) 11/11/98.
57. Into the Sunset (Steven Bergenson, Barron's) 2/3/98.
Section VI.B: Housing: The Affordability of Housing and Land Use Control
58. A Housing Market in the Making (Songsu Choi, China Business Review) NovemberDecember 1998.
Section VI.C: Housing: The Supply of Housing
59. Ira Lowry, "Filtering and Housing Standards," Land Economics, November 1960. (pp. 529-537)
60. Alarm Bells Ring as Suburbs Gobble Up California’s Richest Farmland (Carley Goldberg)
6/20/96.
Section VII: New Mortgage Instruments and Alternative Financing Techniques
61. Brueggeman and Fisher, Real Estate Finance and Investments, (pp. 111-115, 198-233, 584-616)
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Course Outline - B.A. 280
Spring Semester 1999
62. Ailing Market for Securities Backed by Commercial Mortgages Puts a Sudden Chill on Property
Activity (Peter Slatin, Barron's) 9/14/98.
63. Mortgage Backed Securities Return to Life (Gregory Zuckerman, WSJ) 11/30/98.
64. Sidetracking the Locomotive of Capital America (Laura Holson, NY Times) 11/1/98.
65. Fall of the House (Gretchon Morgenson, Forbes) 10/6/97.
66. From the Ground Up (Douglas Frantz) Henry Holt and Company 1991, pp. 114-125.
67. Consolidating Realty Brokerages and Services (John Holusha, NY Times) 4/6/97.
68. The Internet Lending Boom (Warren Myer, Mortgage Banking) 8/98.
69. Online Lending - Not Business as Usual (Kathleen Sindell, Mortgage Banking) 8/98.
70. Insurance Firms Re-Enter Commercial Mortgage Biz (Geoffrey Richards, National RE Investor)
Vol. 40, No. 11 (October 1998): 92-100.
Section VIII: Retail
71. Sony's Berlin Stories (Greg Steinmetz, WSJ) 1/24/97.
72. Downtown Chicago is Back in the Loop. (Scott Kilman, WSJ) 1/24/97.
73. On Long Island the Mall as History Book (Jennifer Steinhauer, NY Times) 12/21/97.
74. Shopping Again on State Street (Robert Berner, WSJ) 9/9/98.
Section IX: Industrial Real Estate
75. First Industrial Will Buy, Sell or Lease - For a Fee (Barbara Martinez, WSJ) 11/4/98.
76. Landlord Extrordinaire - Carl Berg, Silicon Valley RE Developer, Forbes) 10/12/98.
77. Seeking Tenants for a Telecommunications Center (John Holusha, NY Times) 11/8/98.
Section X: Hotels
78. Lodging Industry Starts to Scale Back on Rapid Growth (Thomas Goetz. WSJ) 9/29/98.
79. With Picasso as a Lounge Act, Wynn Bets Big on New Casino (Christina Binkley, WSJ)
10/4/98.
80. Young Mr. Sternlicht Built Hotel Empire; Now, He Must Run It (Christina Binkley, WSJ)
3/5/98.
81. Hotel Portfolio Report (Green Street Advisors, Inc.) August 1998.
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