Real Estate Finance
Duke University, Fuqua School of Business
This course will consist of 50% Real Estate investment analysis and 50% Real Estate Capital Markets. The course should be of interest for students interested in real estate investment, real estate ﬁnance, ﬁxed-income investments, and the recent global ﬁnancial crisis.
Real Estate Investments
The course will begin with an introduction to the fundamentals of Real Estate valuation and risk analysis including a consideration of the elements of mortgage ﬁnancing and taxation as well as the mechanics of commercial real estate leasing. The asset types we will consider include oﬃce buildings, apartments, residential single family, and retail. Real Estate Capital Markets
We will consider the operation of the U.S. mortgage and structured ﬁnance markets and study how these markets interact with the broader economy, particularly the banking sector and main street. The course covers both technical topics (e.g. valuing complex structured securities), and applied topics (such as the connection between securitization and the global ﬁnancial crisis).
Contact Information and Email Policy
Instructor: Barney Hartman-Glaser
Response Policy: I will not respond to emails sent after 6 pm eastern time until the next day.
Admin Assitant: Liz Lindsey
The course material will consist of a pre-reading handout, lecture notes, cases, a text book, various articles and optional (but recommended) books. Lecture notes will be available in class as well as on the web. Cases and articles will be available in your course-packs and some case exhibits will be available on the web.
Note that the schedule lists MORE READING THAN IS NECESSARY. The readings are meant as an optional supplement to the material we cover in lecture. I do not expect you to read everything I have included in the schedule. I expect you to “skim” the reading to get a general idea of what’s going on. Also, Real Estate is an industry with a large amount of “jargon” and rather than spend time on vocabulary in lecture, I will suggest that you look at the suggested text books to learn the industry-speak. 1
• “Real Estate Finance and Investments”, by Bruggeman, William and Jeﬀrey Fisher. Fourteenth Edition. McGraw-Hill Irwin, 2010.
• “Mortgage-Backed Securities: Products, Structuring and Analytical Techniques”, by Fabozzi, Bhattacharya, and Berliner. Second Edition. Wiley, 2011. • “The Big Short: Inside the Doomsday Machine”, by Michael Lewis. W.W. Norton & Company, 2010.
• “The greatest trade ever”, by Gregory Zuckerman. Broadway Books, 2009 Grading and Deliverables
Grades will be determined by the following rule 10% pre-reading questions, 10% class participation, 40% case write-ups, and 40% ﬁnal exam.
You will have to turn an answer to the pre-reading questions on the ﬁrst day of lecture. This problems should not be too hard and is meant as a warm up for the lectures. Class participation
The course depends heavily on student participation. Students are expected to prepare for each class in advance, attend each class and contribute throughout the course. Please bring your name cards to class and display them prominently. Absences from class and unprepared attendance at class will aﬀect class participation grades materially. I will be doing some random cold calling.
There will be two case assignments that will consist of written questions. Both quantitative and qualitative questions will be asked. Case assignments should be done in groups of 4.
The ﬁnal project will consist of ﬁnding a prospectus from a real mortgage backed security and preparing your choice of a pitch book or executive summary investment analysis as well as Powerpoint slides for the deal. Written materials should not exceed 5 pages double spaced excluding...