Real Estate Finance for Public and Private Participants (at KSG)

 Classroom is at HKS, Rubenstein G-20 (Neustadt Classroom)

Class meeting time is Mon, Wed from 4:40 to 6:00 PM. However the first class will be on Friday, September 6th at 4:40 PM.

This course is designed for students interested in understanding the fundamentals of real estate finance and development. Although SUP-665/GSD 5492 is not a \”policy\” course, its practical real estate and business content has been designed to help inform future housing, urban development, and economic development policy makers as well as real estate practitioners. A variety of real estate asset types (e.g., conventional and mixed-income housing, office, retail, hospitality, mixed-use, and land) will be used as vehicles to illustrate basic real estate finance and development principles and practices.

Students will learn how to identify, understand, and calculate the three basic financial rewards generated by successful income-producing real estate projects: cash flow, tax benefits, and future benefits. Students will also be introduced to the financial risks associated with real estate development and investment. Based upon this understanding of basic risk and reward components, students will proceed to construct simple \”After-Tax Cash Flow\” income statements incorporating a project\’s revenue stream, operating expenses, replacement reserves, debt service requirements, amortization and depreciation schedules, and federal tax requirements. As the course progresses, students will prepare discounted cash flow analyses utilizing Net Present Value and Internal Rate of Return methodologies to calculate measures of return that incorporate each of the three primary financial benefits of real estate investment.

On the capital side, students will prepare \”Sources and Uses of Funds\” statements for real estate development or investment projects using standard debt and equity financing alternatives to define the capital stack that can be supported by a project\’s net operating income.

The classroom experience will be synthesized through a final exercise in which student teams, using an analytical framework developed during the course, will design, structure and evaluate a potential real estate development by applying the general concepts learned in the course to a specific real estate opportunity within the Boston market area.