REAL 625: Financial Analysis and Valuation Master Syllabus
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Course Description
Students will learn key financial concepts necessary to evaluate real estate investment and development opportunities, such as: cash flow analysis, project financing options, and basic asset valuation. Various quantitative techniques for evaluating project returns, including pro forma modelling, will be presented with emphasis placed on understanding the time value of money and the relationships between money, time, and risk. Students will also learn about the risks and rewards of using financial leverage and the consequences of default. The class will also consider the economic consequences of public-sector policy and regulation of the real estate and finance industries.
Learning Objectives
At the end of this course, students will be able to:
- Demonstrate an understanding of the time value of money
- Apply the financial analytical techniques used in making real estate investment decisions
- Analyze case study fact patterns and calculate associated investment cash flows and measures of return
- Create a basic pro forma model
- Demonstrate an understanding of valuation and various metrics for measuring returns
- Analyze different financing options and evaluate their impact on investment returns
Approach to Learning
This course involves an interactive, discussion-based lecture format with individual performance measures.
Topics Covered:
- Quantitative financial measures of investment returns, including: IRR, ROI, NPV, NOI, and capitalization rates
- The time value of money and discounted cash flow models
- Valuing commercial real estate
- Specific finance products, including: land, construction, and permanent financing
- Capital sources, including: commercial banks, life insurance companies, foreign investors
- Equity arrangements and distribution of returns
- Financing agreements and relevant forms/documents
- Default and “work outs”
- Taxation of income properties
Representative Text and Learning Materials
The following are examples of the types of books that may be used as required or supplementary material for the class:
- Real Estate Finance and Investments, William B. Brueggeman & Jeffrey D. Fisher, 14th Edition. McGrawHill Irwin, ISBN 13: 978-0-07-337733-9.
- Real Estate Principles—A Value Approach, 4th ed., Ling and Archer, 2013
Student Responsibilities
Students are expected to attend all classes and are responsible for keeping themselves updated on any changes on the course website. In case of absence, it is the student’s responsibility to catch up with the material covered. Without advance notice and approval, no extensions or options to retake are provided if for any missed quizzes, exams, or assignments due to absence.
Methods of Student Evaluation
Exams, quizzes, class participation, homework assignments, and discussion of assigned readings.
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