MSc Real Estate Asset Management / Course details

Year of entry: 2021

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Course unit details:
Advanced Real Estate Finance

Unit code PLAN60292
Credit rating 15
Unit level FHEQ level 7 – master's degree or fourth year of an integrated master's degree
Teaching period(s) Semester 2
Offered by Planning and Environmental Management
Available as a free choice unit? No

Overview

The course unit will build on the knowledge and skillsets acquired in the pre-requisite course unit - PLAN60191 Real Estate Investment and Finance in Semester 1. It will cover various sources of funding and their pricing mechanisms. In terms of debt funding, the coverage will include private lending, mortgages, venture capital and hybrid forms of financing. Through the case studies and discussions in the lectures and workshops, the students will be equipped with knowledge of the real estate capital markets. Students will develop an overall awareness of a wide range of issues related to financing decisions and associated risks and uncertainty relevant to real estate.

Pre/co-requisites

Unit title Unit code Requirement type Description
Real Estate Investment and Finance PLAN60191 Co-Requisite Compulsory
PLAN60191 is a Co-Requisite of PLAN60292

Aims

The unit aims to:

• apply finance and capital market theories to real estate funding decision-making process;

• develop a familiarity with the different sources of funding for real estate investments and

  development projects;

• analyse the structure and pricing of each funding sources;

• incorporate funding choices within investment decision-making process;

• understand risk and uncertainty associated with real estate investment decisions

• build an excel-based interactive model to evaluate financial viability and perform appropriate

  sensitivity analysis;

• critically analyse the implications of funding choices for various market participants

Syllabus

The content of the course unit will be delivered through the following indicative weekly structure:

Week-01: Principles underlying decisions about capital structure, debt and equity financing
Week-02: Analysis of sources and implications of real estate financing
Week-03: Risk vs uncertainty in investment decision process; Monte Carlo Simulation
Week-04: Probabilistic Scenario Analysis using Decision Trees
Week-05: Value of choice in real estate investment; Real Options
Week-06: Real Options Analysis: using business cases
Week-07: Foundations of financial modelling in excel
Week-08: Building an excel-based project finance model
Week-09: no lecture (PEM field trip week: date varies from year to year)
Week-10: Model cash flows for a real estate development project
Week-11: Sensitivity analysis for a project’s exposure to key drivers
Week-12: Revision session and assignment briefing

** 2-hour workshops in computer labs are tentatively planned for weeks 6, 8, 10 and 11.

Teaching and learning methods

Students will acquire detailed knowledge and skillsets through a combination of lectures, seminars and independent study with materials delivered through in-class contact hours and online platform.

A range of teaching and learning methods will be adopted to introduce the topics and build skills in a structured and sequential manner. Workshops in computer labs will be used to develop familiarity and competence in using financial modelling platform and software with real world information.

All unit material will be made available online. Formative feedback will be provided through Q&A, discussion forums and interactive activities within lectures and workshops. Verbal feedback will be available on coursework discussed during consultation hours. Where appropriate, the discussion board on Blackboard will be used as a repository for FAQs related to the course unit content and assignment.

** Resources needed for this course unit are computing time in semester 2 in computer labs and financial modelling platforms with information, tools and spreadsheet templates.

Knowledge and understanding

Students should be able to:

• Develop a solid understanding of fundamental concepts in finance relevant to real estate
• Demonstrate a full knowledge of the theory and practice of financing real estate projects
• Develop critical insights in appraising financial decisions and modelling outcomes along with clear identification of their       risks and uncertainties
• Develop competence and understanding to be able to apply modelling tools in real world scenarios with confidence
• Fo

Intellectual skills

Students should be able to:


• Have a critical opinion about the finance and capital market theories and issues related to their application in real estate;
• Systematically approach the construction of potential solutions and evaluate applicability to real world problems
• Produce logical arguments supported by sound empirical evidence
• Be aware of limitations of using financial modelling and be mindful of their sensitivities

Practical skills

Students should be able to:

• Apply appropriate tools and techniques to evaluate options for financing real estate investment and development projects
• Design analytical framework and develop conclusions based on evidence and make considered choice of inputs leading to sound modelling outputs
• Work with different methods and a variety of analytical and modelling concepts commonly used in practice

Transferable skills and personal qualities

Students should be able to:

• Manage complex tasks in a goal-oriented environment and deliver to strict deadlines
• Write reports that are based on sound research, objective, coherent and logically structured
• Develop quantitative and computing skills

 

Assessment methods

Method Weight
Written assignment (inc essay) 100%

Feedback methods

Verbal feedback during weekly sessions and final summative feedback via Blackboard

Recommended reading

Baum, A. and Hartzell, D. (2011): Global Property Investment - Strategies, Structures, Decisions, Oxford: Wiley Blackwell

Collier, N. S., Collier, C. A., & Halperin, D. A. (2007). Construction funding: the process of real estate development, appraisal, and finance. John Wiley & Sons.

Coval, J., Jurek, J., & Stafford, E. (2009). The economics of structured finance. Journal of Economic Perspectives, 23(1), 3-25.

Fabozzi, F. J. (Ed.). (2001). Accessing capital markets through securitization (Vol. 76). John Wiley & Sons.

Gau, G. W., & Wang, K. (1990). Capital structure decisions in real estate investment. Real Estate Economics, 18(4), 501-521.

Geltner, D., Miller, N. G., Clayton, J., & Eichholtz, P. (2001). Commercial real estate analysis and investments (Vol. 1). Cincinnati, OH: South-western.

Geltner, D., & De Neufville, R. (2018). Flexibility and real estate valuation under uncertainty: a practical guide for developers. Wiley Blackwell.

Lea, M. J. (1990). Sources of funds for mortgage finance. Journal of Housing Research, 1(1), 139-161.

Ling, D. C., & Naranjo, A. (1999). The integration of commercial real estate markets and stock markets. Real Estate Economics, 27(3), 483-515.

Riddiough, T. J. (2004). Optimal capital structure and the market for outside finance in commercial real estate. Real Estate Finance, 21(3), 3.


Trigeorgis, L. (Ed.). (1995). Real options in capital investment: Models, strategies, and applications. Greenwood Publishing Group.

Yavas, A., & Sirmans, C. F. (2005). Real options: Experimental evidence. The Journal of Real Estate Finance and Economics, 31(1), 27-52.

Study hours

Scheduled activity hours
Lectures 20
Practical classes & workshops 8
Project supervision 2
Independent study hours
Independent study 120

Teaching staff

Staff member Role
Anupam Nanda Unit coordinator

Additional notes

Private study: 60 hours
Directed reading: 60 hours
 

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