Advanced Real Estate Finance

PLAN60292 Advanced Real Estate Finance 15 Semester 2 Postgraduate Taught Level 7 Anupam Nanda Unit coordinator 1 FHEQ level (Framework for Higher Education Qualifications) ' Masters/Integrated Masters P4 ' European Credit Transfer & Accumulation System Rating : 7.5 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. 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.Cash flow modelling of project appraisal with different funding structures will develop transferable analytical and quantitative skills. Through workshops in the computer lab, the students will develop competence in the excel-based financial modelling and be familiar with the usefulness as well as limitations of the tools and techniques.The assignment will further develop students’ ability to undertake evaluation of real estate projects and then test sensitivities, leading to a clear understanding of their implications. It will also develop report writing skills.   <div>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</div> 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 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 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 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  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. 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 the VLE 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. 0 Other 100% Written assignment (3000 words) 100% weighting Final summative feedback via VLE in line with faculty requirements. PLAN60191 Real Estate Investment and Finance Co-Requisite Compulsory PLAN60191 is a Co-Requisite of PLAN60292 MSc Real Estate MSc Real Estate Development PGDT Taught Component Optional MSc Real Estate MSc Real Estate Asset Managet PGDT Taught Component Optional MSc Real Estate PT MSc Real Estate Development PT PGDT Taught Component Optional MSc Real Estate PT MSc Real Estate Asset ManagePT PGDT Taught Component Optional N Baum, A. and Hartzell, D. (2011): Global Property Investment - Strategies, Structures, Decisions, Oxford: Wiley BlackwellCollier, 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. Lectures 20 Practical classes & workshops 8 Project supervision 2 0 120 Private study: 60 hours Directed reading: 60 hours