Case Studies - Bel Air Crossroads I, II & III -Real Estate Finance - Spring 2010

Case Studies - Bel Air Crossroads I, II & III -Real Estate Finance - Spring 2010

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IMPORTANT READ THIS FIRST - Overview of the class Utilizing BACI and BACII, the first half of the semester will focus on how to complete financial forecasting models in Excel to include a discounted cash flow analysis, tenant rollover and conversion of the projections (via Yo, TRo) into value estimates. The estimates will serve to make a decision regarding the investment decision aka “The Real Estate Investment Decision.” The second half of the semester will utilize the same case studies and BACIII to create the same financial forecasting models in Argus. During the semester, intertwined with the case studies, additional topics will include the following: Real estate definitions; 3 step modeling process; Rollover; Financing; Capital Stack relative to Market Value; % Breakdown of value from assured/prospective income and reversion; Conversion factors – Yo, Tro, IRR etc.; Identification and evaluation of “risk” associated with the deal; Basic concepts behind Joint Ventures; Market analysis which forms the basis for the rollover variables; Abstracting leases; Differences in risk characteristics between multi- family and multi- leased assets 1 | P a g e - C a s e S t u d i e s f o r S p r i n g 2 0 1 0 R e a l E s t a t e F i n a n c e
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IMPORTANT READ THIS SECOND - Overview of how students should utilize the textbook, case studies and accompanying Excel files. “The Real Estate Game” by Poorvu is a required reading book for the class. Chapter readings reinforce concepts covered in class and the course objectives. Especially useful is the “Back of the Envelope Glossary” that begins on page 299 of the book. These definitions will provide a useful perspective on “lingo” used during lectures and class discussions. Study these definitions carefully and keep the book and glossary handy during lectures as a reference guide. The Brueggeman text is an optional text for the course. A good source to reinforce concepts covered in class and in the model but not necessary . BACI.xls and accompanying case study which is part of this document The model is the “electronic textbook” for this class. The model is setup to walk the students through underwriting, capital (debt and equity) structuring and return measurements for an income producing asset which is BAC I. The model includes detailed formulas with comments to help clarify how the model operates. We will refer to this model throughout the course of the semester. Understanding the purpose and functionality of each tab within this model is critical to successfully completing the Real Estate Finance course. BACII.xls and accompanying case study which is part of this document This is the practice case for the first half of the semester. The instructor will email exercises 4-7 (via WebTyco) that are part of this case (Exercises 1-3 are already referenced at the end of the case study within this document) with instructions for what the students are to complete prior to the schedule lecture night (refer to the
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This note was uploaded on 05/16/2010 for the course FIN 750 taught by Professor Bob during the Spring '10 term at University of Baltimore.

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Case Studies - Bel Air Crossroads I, II & III -Real Estate Finance - Spring 2010

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