Course Number 1684
Professor of Management Practice Arthur I Segel
Senior Lecturer Charles F. Wu
Fall; Q1Q2; 3 credits
This course is intended for any student serious about a career in managing, developing, or investing in real estate. Due to its rigor and in-depth analysis, it is not an ideal course for those thinking about real estate as a hobby or for those considering real estate for limited personal investing.
The class goals are to show how real estate works across different property classes, how to assess the property-level and market-level risks, how to identify opportunities in real estate and become a better deal maker, how to manage a project and be a leader in the industry. Real-world examples and frequent in-class protagonists illustrate frequent issues in real estate development and investment.
Content and Organization
Conceptual Framework: The course is divided into five modules with additional exposure to international real estate.
The first module covers the analytic framework for real property development and investing, market analysis and basic financial analysis including how to value property. Students will also gain an introduction to the general vocabulary of the business.
The second module examines each of the main property types (office, hotel, industrial, retail, multifamily, single family and senior living), including their general characteristics, market analyses and metrics used in evaluating and operating each of these asset types, and particular risks or opportunities with respect to these types of projects and buildings.
The third module reviews capital markets including private equity syndications and deal making, mortgages and real estate investment trusts (REITs). Cases in this module focus specifically on the choice of capital structure and its implications for the development or investment as a whole.
The fourth module focuses on negotiations and will include discussions on buying and selling assets, elements of joint ventures and partnerships, distressed properties, and debt. Students will engage in a negotiation simulation against their classmates.
The final module discusses important trends in the industry including novel asset classes, globalization and opportunities in emerging markets, sustainability and infrastructure.
Real estate lends itself to case method teaching as virtually every subject requires quantitative and qualitative analysis, judgment calls, thinking on one's feet and development of practical action plans. "Cold calling" and active participation are frequent and important components of class.
There are at least three graded homework assignments and a take-home final exam. Most homework assignments are required to be completed in groups. Additionally, polls will be used frequently and are considered an important aspect of class participation.
Textbook readings supplement the cases, while additional, optional books and readings are suggested for more exposure to theoretical concepts. Mini-lectures and a considerable number of technical notes are used throughout the course along with a tool-kit with materials for future use. The workload and preparation is above average for HBS EC courses. Students seeking advanced real estate modeling on Excel and ARGUS can attend optional afternoon classroom sessions. However, these skills will not be necessary for the Real Property coursework.
The course will often have leading industry individuals coming to classes. Many of the guests will stay for a box lunch with students. In the past, students who have attended have enjoyed these opportunities.