Sauder School of Business at UBC C307 Real Estate - PDF - PDF

							                          Sauder School of Business at UBC
                            C307 Real Estate Investment

Spring 2006                                                                            Prof. Tsur Somerville
HA 367                                                                                             822-8343
tsur.somerville@sauder.ubc.ca

Course Description:
This course is a one semester study intended to give students the tools for critical analysis of
public and private equity positions in existing real estate assets. Project analysis and evaluation
are presented within the context of understanding real estate markets as distinct economic
phenomenon. The course covers the economics of real estate markets, market analysis,
investment analysis tools such as pro-formas (real estate specific discounted cash flow), debt
financing of real estate, leasing and property management, appraisal and the pricing of
heterogeneous goods, real estate securitization, real estate in a diversified portfolio, and
information and process technologies and real estate. Academic lectures are supplemented by a
series of guest lectures by local real estate professionals. The course is built around an investment
analysis project.

Course Materials:
1) Excerpt of Geltner & Miller, Commercial Real Estate Analysis and Investments, 2001.
   Available at UBC Bookstore
2) Reading packet - available at HA 109 (Commerce Copy Shop)

Course Grades:
Your grade in the course is a function of i) a pro-forma (discounted cash flow) analysis
assignment 30%, ii) investment analysis for an individual property 35%, iii) final exam 25%, and
iv) case write-ups 10% in total.

Office Hours: In Henry Angus 367. Tuesday & Thursdays 1:00-2:30 or by appointment
WebCT:
Distribution List: If you would like to be on a distribution list please send me an email.
I.     Introduction

       Wed., January 4       No Class –

       Mon., January 9       Equilibrium in Real Estate Markets – 4 Quadrant

              Geltner & Miller, Ch 1-2


II.    Asset Acquisition - Pro-Forma Analysis

       Wed., January 11      Pro-Forma Basics

              Geltner & Miller, Ch 11

       Mon., January 16      Real Estate Returns

              Geltner & Miller, Ch 9-10

       Wed., January 18      Taxation and Other Pro-Forma Issues


       Mon., January 23      Pro-Forma Case

              Shady Trail, HBS Case 9-899-143s

       Wed., January 25      Assignment Questions.


III.   Asset Management

       Mon., January 30      Guest Lecture: Asset/Property Management:

              Stephen Duyvewaardt & Dale Mumford, SDM Realty Advisors

       Wed., February 1      Leasing w/ Guest Lecture

              Geltner & Miller, Ch 30
              http://www.ciprec.ca/standards/office_standards.htm
              Guest Lecture: John Fraser

======                PRO-FORMA ASSIGNMENT DUE                            ======
IV.      Appraisal

      Mon., February 6     Introduction to Appraisal

            Vandell, Kerry. Towards Analytically Precise Definitions of Market Value and
            Highest and Best Use. Appraisal Journal. 50 (2), 1982.

      Wed., February 8     Guest Lecture: Appraisal in Action
                           Alan Johnson, Colliers International Realty Advisors


      Mon., February 20    Appraisal Smoothing

            Geltner & Miller, Ch 23

      Wed., February 22    Statistical Appraisal


      Mon., February 27     Investment Valuation Case – Value & Bidding

            The Textile Corporation Building, HBS Case 9-800-133

      Wed-Mon., March 1 & 6           Market Analysis & Bentall Site Visits

            Geltner & Miller, Ch 6


V.       Equity Securitization

      Wed., March 8        REITs: An Introduction

            Chan, Su Han, Erickson, John, and Ko Wang. “The Performance of REIT
            Stocks”, Real Estate Investment Trusts. Oxford U. Press 2003. (196-
            234).

      Mon., March 13       REIT Valuation

            Geltner & Miller, Ch 24

      Wed., March 15       US REIT Case: REIT Formation

            The AMB Consolidation, HBS Case 9-899-144

      Mon., March 20       Bentall Competition Discussion Day


      Wed., March 22       Canadian REIT Case: REIT IPO
             Legacy Hotels Real Estate Investment Trust, Ivey Business Case # 9A98N004.


VI.      Real Estate Portfolio Issues

      Mon., March 27         Portfolio Basics w/ Real Estate

             Geltner & Miller, Ch 21

             Seiler, Webb, and Myer. Diversification Issues in Real Estate Investment.
             Journal of Real Estate Literature. 7, 1999, 163-179. On line via E-Journals at
             http://toby.library.ubc.ca/ejournals/ejournals.cfm

      Wed., March 29         Guest Lecture: REITs in Canada, Prof. Stan Hamilton


      Mon., April 3 Real Estate Portfolio Case

             The IBET Pension Fund, HBS Case 9-800-133

      Mon., April 5 International Real Estate Investing Case

             LandLease (Asia) Property Limited: Redefining Real Estate Investment
             Strategies. Centre for Asian Business Case HKU267
4
                       Commerce C307 - Investment Project
               Bentall Capital Competition in Real Estate Investment

    1. Assignment Basics

This assignment is an investment analysis of the potential purchase of an income producing real
estate asset. You must prepare a written report that provides the critical analysis for whether: your
firm should acquire the asset at the listed price. In doing so bear in mind the following:

        a. While your firm is a major real estate investor for pension funds, your analysis should
           be based on the attractiveness of the property as a stand-alone asset, i.e. ignore any
           portfolio or corporate objective issues.
        b. What is the maximum price you would pay for this asset
        c. Defend your decisions relative to both of the prices.

    2. Team & Project Guidelines

This project must be done in teams of approximately four students per team. The written text of
the assignment must be no more than 20 pages, not counting citations, tables, charts, and exhibits,
which you may add as you see fit.

There is a fixed number of teams per property, approximately 5 teams per property.

        a. Making a team

I will be assigning teams. However, if you have other people with whom you collectively
would like to form a team, please submit the names to me and I will try to accommodate
you. Please submit no more than four names.

        b. Choosing a property

Projects will be allocated on a first come first serve basis. However, they will be allocated first to
groups who present a list of team members to me. Email your i) name or the names of those in
your group and ii) your preferences in order.

    3. Competition

The project is also a competition. Based on your written report, I will select the top two projects.
These teams will make an oral presentation in mid-April before a mock investment committee
made up of Bentall Capital executives and analysts. The top project among these two as selected
by the Bentall will be awarded the Bentall Real Estate Investment Prize, which includes a cash
          st      nd
prize for 1 and 2 place.
    4. Property Information

You will be given the following information
            a. Rent roll
            b. Physical information
            c. Income statement
            d. Inspection tour w/ Bentall Staff - every team will be allowed to send a representative
            e. Follow-up phone call w/ Bentall staff. Teleconference with all teams working on that site
                 present




                                                    6