Australian School of Business School of Banking and Finance FINS 5533 REAL ESTATE FINANCE AND INVESTMENT

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1 Australian School of Business School of Banking and Finance FINS 5533 REAL ESTATE FINANCE AND INVESTMENT COURSE OUTLINE SEMESTER 1, 2009

2 TABLE OF CONTENTS 1. STAFF CONTACT DETAILS 1 2. COURSE DETAILS Teaching Times and Locations Units of Credit Summary of Course Course Aims and Relationship to Other Courses Student Learning Outcomes 1 3. LEARNING AND TEACHING ACTIVITIES Approach to Learning and Teaching in the Course Learning Activities and Teaching Strategies 2 4. ASSESSMENT Formal Requirements Assessment Details Assignment Submission Procedure Late Submission 3 5. ACADEMIC HONESTY AND PLAGIARISM 3 6. COURSE RESOURCES 4 7. COURSE EVALUATION AND DEVELOPMENT 4 8. STUDENT RESPONSIBILITIES AND CONDUCT Workload Attendance Special Consideration and Supplementary Examinations General Conduct and Behaviour Occupational Health and Safety Keeping Informed 5 9. ADDITIONAL STUDENT RESOURCES AND SUPPORT COURSE SCHEDULE 6

3 1. STAFF CONTACT DETAILS Mr Anatoly Kirievsky Room: ASB 350 Ph: Consultation is before and after class and by appointment. Otherwise, please your questions using the above. 2. COURSE DETAILS 2.1 Teaching Times and Locations Thu 18:00-21:00 Red Centre East M Units of Credit This course has 6 units of credit and 3 contact hours per week. 2.3 Summary of Course This course covers different types of the real estate market, namely residential, commercial and industrial as well as different ways real estate investments are accessed direct holdings, listed property trusts and securitisation. The course attempts to provide a brief analysis of the current global financial crisis in relation to the real estate market and the impact of the crisis in Australia. The course uses fundamental investment techniques to valuate different types of real estate investments and highlights the assumptions underpinning such valuations as well as inherent risks. 2.4 Course Aims and Relationship to Other Courses This course deals with one of the areas of finance, namely the real estate. The topic plays an important role as a major investment vehicle in Australia as well as a critical issue in the current economic climate. This course will build upon the more general courses already covered by students and attempt to place real estate investments on the same theoretical footing as fixed-income and equity investments. 2.5 Student Learning Outcomes By the end of this course, you should be able to: 1. Differentiate and analyse different types of real estate (commercial, industrial, residential) 2. Examine and value a property from an investment perspective and present your analysis in class as part of a group 3. Apply generally recognised investment valuation techniques to real estate 4. Understand and be able to explain the structure and the role of securitisation in the property market 5. Understand the role Listed Property Trusts play in the real estate market 6. Understand the key drivers of the current global economic crisis and its impact on Australia FINS5533 Real Estate Finance and Investment 1

4 Graduate Attributes Course Learning Outcomes 1-6 2, ASB Graduate Attributes 1. Critical thinking and problem solving 2. Communication 3. Teamwork and leadership 4. Social, ethical and global perspectives 5. In-depth engagement with relevant disciplinary knowledge 6. Professional skills 3. LEARNING AND TEACHING ACTIVITIES 3.1 Approach to Learning and Teaching in the Course The approach in this course is to introduce and inform students of the current developments in the broader economy and more specifically in the field of real estate finance and then to question students to discover why such issues arise and what drives particular economic outcomes. To the extent possible, a class discussion is encouraged as well as class questions. 3.2 Learning Activities and Teaching Strategies This course will not have a dedicated textbook as in the opinion of the lecturer there is not a single textbook that covers all the topics in the Australian context or is contemporary enough to warrant inclusion. Hence, lecture slides will form the base for the teaching in this course. Additional materials (such as papers from the RBA, articles from the NY Times and the AFR) will be uploaded to WebCT. During the lecture we will discuss the issues at a greater depth. The group assignment will ensure students are able to apply the techniques they learned in class to a practical situation and are able to present their work in front of a large audience. 4. ASSESSMENT 4.1 Formal Requirements In order to pass this course, you must: achieve a composite mark of at least 50; and make a satisfactory attempt at all assessment tasks (see below). FINS5533 Real Estate Finance and Investment 2

5 4.2 Assessment Details Assessment Task Midsession exam Weighting Learning Outcomes assessed ASB Graduate Attributes assessed Length , 2, 5, 6 2 hours Final exam , 2, 5, 6 Group Assignment (written) Group Assignment (presentation) Class attendance and participation , 2, 3, 5, words and 15 pages maximum , 3, 6 12 minutes plus questions Due Date Week 6 (23 April) Exam period Week 12 (before class) Weeks , 5, 6 ongoing W1-12 The exams will consist of a number of questions (no essays or multiple choice) requiring written answers. The aim is to have a 50/50 mixture of calculation and qualitative responses. Questions usually will have sub parts to them and each subpart will indicate the marks for that subpart. Please note for the in-class presentation you will need to provide a copy of your slides to the lecturer before the class. Also note that you are limited to a maximum of 15 slides for your presentation (for your own benefit!). The assignment will involve a valuation task on a residential property using the investment valuation techniques covered in class. The word limit for the assignment is 2500 and the maximum number of pages is 15 (including appendices but excluding pictures and diagrams). 4.3 Assignment Submission Procedure Written assignments are to be ed to the lecturer prior to the class in Week 12. Hard copies are to be submitted in class in Week Late Submission In the absence of prior approval or other major documented misadventure, the penalty for late submissions will be 10% of the marks awarded per each day the submission is late. Weekend counts as two days. Please note that chances are in the week the assignment is due computers will break down, viruses will appear, USB sticks will be lost, files corrupted, hurricanes will arrive and other major disasters can be expected to take place. Hence, it is strongly recommended that you prepare the submission early, circulate drafts to all members and take nominate a person responsible for the collation of the assignment. 5. ACADEMIC HONESTY AND PLAGIARISM The University regards plagiarism as a form of academic misconduct, and has very strict rules regarding plagiarism. For UNSW s policies, penalties, and information to help you avoid plagiarism see: as well as the guidelines in the online ELISE tutorial for all new UNSW students: FINS5533 Real Estate Finance and Investment 3

6 6. COURSE RESOURCES There is no prescribed textbook for this course. Texts that students may find useful include: Brown & Matysiak, Real Estate Investment, (2000) Waxman, P. 2004, Investing in Residential Property: Understanding the Australian Property Market (6 Edition), Wrightbooks, Melbourne. Additional reading materials will be posted on WebCT from time to time Students may also want to refer to the following AFR (available from the library) NY Times ( ASX ( Property Council of Australia ( Real estate websites ( Reserve Bank of Australia ( o Speeches o RBA Bulletin o Financial Stability Review Wikipedia 7. COURSE EVALUATION AND DEVELOPMENT Each year feedback is sought from students about the courses offered in the School and continual improvements are made based on this feedback. In this course, we will seek your feedback through end of session CATEI forms. Previous student feedback indicated that students would prefer the course to concentrate on the contemporaneous issues, with an emphasis on the Australian market. This course has not been offered in the last 2 years and the current version of the course has been significantly restructured and updated based on the previous feedback received. 8. STUDENT RESPONSIBILITIES AND CONDUCT Students are expected to be familiar with and adhere to university policies in relation to class attendance and general conduct and behaviour, including maintaining a safe, respectful environment; and to understand their obligations in relation to workload, assessment and keeping informed. Information and policies on these topics can be found in the A-Z Student Guide : See, especially, information on Attendance and Absence, Academic Misconduct, Assessment Information, Examinations, Special Consideration, Student Responsibilities, Workload and policies such as Occupational Health and Safety. 8.1 Workload It is expected that you will spend at least ten hours per week studying this course. This time should be made up of reading, research, working on exercises and problems, and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities. 8.2 Attendance Your regular and punctual attendance at lectures and seminars is expected in this course. University regulations indicate that if students attend less than eighty per cent of scheduled classes they may be refused final assessment. FINS5533 Real Estate Finance and Investment 4

7 8.3 Special Consideration and Supplementary Examinations You must submit all assignments and attend all examinations scheduled for your course. You should seek assistance early if you suffer illness or misadventure which affects your course progress. For advice on UNSW policies and procedures for granting special consideration and supplementary exams, see: UNSW Policy and Process for Special Consideration : General Conduct and Behaviour You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class. More information on student conduct is available at: Occupational Health and Safety UNSW Policy requires each person to work safely and responsibly, in order to avoid personal injury and to protect the safety of others. For more information, see Keeping Informed You should take note of all announcements made in lectures, tutorials or on the course web site. From time to time, the University will send important announcements to your university address without providing you with a paper copy. You will be deemed to have received this information. It is also your responsibility to keep the University informed of all changes to your contact details. 9. ADDITIONAL STUDENT RESOURCES AND SUPPORT The University and the ASB provide a wide range of support services for students, including: ASB Education Development Unit (EDU) ( Academic writing, study skills and maths support specifically for ASB students. Services include workshops, online and printed resources, and individual consultations. EDU Office: Room GO7, Ground Floor, ASB Building (opposite Student Centre); Ph: ; edu@unsw.edu.au UNSW Learning Centre ( ) Academic skills support services, including workshops and resources, for all UNSW students. See website for details. Library training and search support services: UNSW IT Service Desk: Technical support for problems logging in to websites, downloading documents etc. Library, Level 2; Ph: Website: UNSW Counselling Service ( Free, confidential service for problems of a personal or academic nature; and workshops on study issues such as Coping With Stress and Procrastination. Office: Level 2, Quadrangle East Wing ; Ph: Student Equity & Disabilities Unit ( Advice regarding equity and diversity issues, and support for students who have a disability or disadvantage that interferes with their learning. Office: Ground Floor, John Goodsell Building; Ph: FINS5533 Real Estate Finance and Investment 5

8 10. COURSE SCHEDULE Week Lecture Topic Date 1 12 Mar Introduction o Administrative details o Overview of the course o Assignment Real estate valuations vs prices 2 19 Mar Quantitative valuations o Annuity o Perpetuity o Perpetuity with growth o Valuations under uncertainty o Valuations with real options 3 26 Mar Residential real estate o types of properties o types of owners o types of finance, loans, lenders o demand and supply o valuation 4 2 Apr Commercial and industrial o Types of properties o Drivers of demand and supply o Valuation 5 9 Apr Funding o Types of funding o Access to markets o Loan structuring 6 23 Apr Midsession exam o Based on weeks Apr Listed Property Trusts o Types of trusts o Liquidity and current issues o Valuation 8 7 May Securitisation o What is securitisation o Deal structures o Size of the industry 9 14 May Global financial crisis o Underlying causes o Secondary consequences o Australian impact o Ruddbank May Presentations May Presentations 12 4 Jun Review and exam preparation (presentations if required) FINS5533 Real Estate Finance and Investment 6