The aim of this course is to introduce students to many of the a) institutional arrangements associated with real estate transactions and b) provide a framework for understanding valuation and transactions in these markets.
Among the topics we plan to cover are the role of various types of market participants including landlords, tenants, institutional investors and brokers (search). Many of the incentive (agency) conflicts that arise in these relationships will be considered.
From a valuation perspective we will highlight the role of market efficiency compared to financial markets, basic valuation methods, the role of appraisals, eminent domain, synergies between property types (parking, anchor stores, etc.) and the irreversible nature of decisions and real options. The role of taxes, such as Section 1031 tax-free exchanges and depreciation, in generating transactions will be considered.
In the final portion of the course we anticipate addressing the role of leverage and mortgage finance in structuring real estate transactions and the contribution of mortgage finance to the financial crisis. (10/12-CS)
Lecture: 100min/wk and Recitation: 50min/wk