Real Estate Private Equity

Course Number 1484

Senior Lecturer Nori Gerardo Lietz
Winter; Q3Q4; 3 credits
22 Sessions
Paper

Career Focus

This course is intended for any student interested in a career in private market investing. Specifically, we will cover topics pertaining to investing, managing, and developing investments in real estate and private asset backed companies. The course will be divided into two parts consisting of a half course focused on the investment and risk aspects of private investments and a full course which will include the first component and a focus on general partners and how they manage their firms on behalf of themselves and their limited partners. We will analyze the attributes of both successful and unsuccessful investments and investment firms. The course will analyze investment portfolios and individual transactions, primarily in the private equity real estate industry. Additionally, the course will include presentations from the senior executives of the leading global private equity real estate firms. The course will be taught by a leading figure in the real estate private equity industry.

Educational Objectives

1. How to construct a private investment portfolio
2. How to assess the risks and returns in private investments and real estate portfolios
3. How to perform relative value analyses of differing investments
4. How to manage troubled investments (when to "hold 'em and when to fold 'em).

Course Content and Organization

Conceptual Framework: the course is divided into two parts with special emphasis on real estate financial analysis for transactions and portfolios in Part I and management of investment firms from the perspective of the general partner and on behalf of the limited partners. In Part I we will address portfolio construction issues and then move into a micro analysis of individual transactions. We will apply a relative value construct in differentiating more attractive investments based upon their risk adjusted returns. We will also analyze troubled investments including deciding when to "double down" and how to protect investments already in place. In Part II we will focus on the general partner and their management of the firm on behalf of themselves and their limited partners. The analysis will also include a study of firm economics and the incentives the 2/20 standard compensation model generates.

Pedagogical Mix

Private equity real estate investments lend themselves to the case study method as virtually every subject requires both quantitative and qualitative analysis, judgment calls and development of a practical action plan. "Cold calling" is a frequent and important component of the class.

Textbook readings and technical notes supplement the cases, while additional optional books and articles are suggested for more exposure to theoretical concepts. A very significant component of the course are presentations by case protagonists including the leading industry figures. The senior executive of the largest global private equity real estate firms will be in class to discuss the case and offer practical perspectives on lessons learned from the case. Out-of-class review sessions are offered by the professor to supplement concepts included in the case, particularly with regards to modeling certain concepts included in the given case. The workload and preparation is above average for the HBS EC courses.