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 these 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 that 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|
The exam for attending students is made of open or multiple-choice questions without calculation exercises.
Grades are determined based upon the following inputs:
- Partial Group Case Study assignments 30% aimed to test the students’ ability to develop an effective business plan for a real estate property and to simulate the related economic-financial projections.
- Individual Final Written Exam (multiple-choice test) 70% aimed to test the students’ ability to recognize the basic concepts and notions concerning real estate investments and financing.
The exam for not-attending students is made of multiple-choice questions without calculation exercises. This section aims to test the students’ ability to recognize the basic concepts and notions concerning real estate investments and financing.
The exam is based on the materials provided by teachers, on the 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.
Attending students have to attend classes since all the topics discussed during the classes will be topics for the individual exam.
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 requiredì
- G. MORRI, P. BENEDETTO, Commercial Property Valuation, Wiley, 2019
- Chapters 1-8 only
- Chapters 9-13 are not compulsory (case studies for better understanding of Part I, not requested)