20261 - REAL ESTATE FINANCE
Course taught in English
Go to class group/s: 31
Students are expected to be competent in Excel and are also expected to perform basic financial calculations including mortgage amortization, internal rate of return, compounding and discounting of cash flows. Students should be comfortable with modern financial mathematics and should have taken some introductive finance course. Familiarity with computer spread sheets, concepts of net present value, and other financial formulae is required, as well as introduction to methods of financial analysis for real estate investments. Topics include methods of valuation, cash flow forecasting, computer modelling, debt, leverage, and deal structures.
Real estate is an important sector both for investments and for companies in general. Both private and institutional investors allocate a relevant amount of money in this asset classes. Companies and families as well use properties to carry out their business and for personal use. The course covers real estate market and investment issues providing the students with the necessary tools in order to understand the tendencies of the different property market segments (residential, office, commercial and trade related properties) and the various business models used by the main players (property companies, property management companies, developers, real estate funds). The objective of the course is to provide the students with the basic principles of financial analysis, in order to allow them to evaluate the development, trading, financing and portfolio management operations, along with a clear understanding of the inner and outer critical factors relative to real estate market transactions. After an introductory theoretical part needed to provide basic tools, the course includes many case studies, financial models for real estate and an analysis of the main transactions occurred over the last few years.
- Real estate market and players
- Economic models: space & capital markets
- Principles of real estate investments & financial valuation
- Real estate capitalization and discount rates
- Income producing properties
- Real estate valuation & feasibility study
- Real estate development schemes
- Property financing
- Indirect real estate investments: private equity funds & REITs
- Understand the dynamics of the real estate market
- Understand the strategies and the economic models of different players involved
- Understand the market of indirect real estate investments: REITs and Funds
- Estimate the market value of income producing properties and land
- Create financial models to analyse real estate investments and development projects
- Negotiate the bank financing for properties
- Understand the real estate indirect market
- Face-to-face lectures
- Guest speaker's talks (in class or in distance)
- Case studies /Incidents (traditional, online)
- Group assignments
- Interactive class activities (role playing, business game, simulation, online forum, instant polls)
- Guest speaker's talks (in class): several guest speakers bring their experience during some classes under the guidance of the teacher
- Case studies (traditional) & Group assignments: students work at home in groups on case studies. Every group is required to present at least one case solution during an open plenary discussion with other students and the teacher.
|Continuous assessment||Partial exams||General exam|
Course valuation is based on 3 case studies during the term. All homework assignments are group projects and must be completed using Excel and Word/Power Point. All cases are due at the beginning of class prior to the case discussion. Deadlines in this class, as they are in business, are firm. If assignments are not handed in on time, they are not accepted.
- Case Studies are corrected only at the end of the course. Case study solutions are provided at the end of the presentation in class and all groups’ presentations are available. Self - evaluation of your performance is very important.
- Grades are determined based upon the following inputs:
- Partial Group Case Study assignments 30%
- Individual Final Written Exam (multiple choice test) 70%
The exam for not-attending students is made of multiple choiche questions without calculation exercises. No case studies are required.
The exam is based on materials provided by teachers and on students’ notes and on some selected chapters of G. MORRI, P. BENEDETTO, Commercial Property Valuation, Wiley, 2019 and G. MORRI, A. MAZZA, Property Finance: An International Approach, Wiley, 2015 (Part I only, part II is not required)
A list of the complete studying material will be provided and updated during the course.
- G. MORRI, A. MAZZA, Property Finance: An International Approach, Wiley, 2015 (Part I only, part II is not required).
- G. MORRI, P. BENEDETTO, Commercial Property Valuation, Wiley, 2019 (Chapters 1-8 only, Chapters 9-13 are not compulsory).