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Michael Olafusi

MIT: Real Estate Capital Markets

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You can register on MIT Opencourseware for Real Estate Capital Markets at https://ocw.mit.edu/courses/urban-studies-and-planning/11-432j-real-estate-capital-markets-spring-2007/

About the course

This half-semester course introduces and surveys the major public capital market real estate vehicles, REITs and MBS (with primary emphasis on CMBS). Some background is also included in basic modern portfolio theory and equilibrium asset pricing. This course is primarily designed to provide MSRED students with a basic introduction to the public capital market sources of financial capital for real estate, and how those markets value such capital investments. Students can take 11.432/15.427 without having taken 11.431/15.426 provided they have taken 15.401. Such students may have to do some review of the real estate terminology presented in the earlier course if they are not already familiar with basic real estate finance and investment terminology (see the "Key Terms" listed in the backs especially of Chapters 1, 9, 11, 14, and 16-18 of the text).

Sloan and other students taking this course as an elective should understand that this is a required course in MITs MSRED program core and, as such, is taught as a "core" subject. That is, a large body of material is covered in a short amount of time, aimed at students who do not necessarily have much finance background. This precludes primary reliance on the case method (though there are some cases). The course reflects the rather quantitative nature of the subject matter (i.e., the course features intensive lectures presenting large quantities of analytical material).

Syllabus

LEC # TOPICS LECTURE NOTES
1 Course introduction, portfolio theory Chapters 21 and 22, slides 19-29 (PDF)
2 Portfolio theory and CAPM Chapters 21 and 22, slides 30-59
3 CAPM (cont.) Chapters 21 and 22, slides 60-73
4 REITs introduction

Chapter 23, slides 80-82, 1-26 (PDF)

5 REIT CF-based valuation (as stocks) Chapter 23, slides 27-46
6 REIT NAV-based valuation and asset valuation Chapter 23, slides 79, 47-72
7 Lincoln case due  
8 REITs management considerations, wrap-up Chapter 23, slides 73-78
9 CMBS introduction, CMBS structure (start) Chapter 20, slides 1-16 (PDF)
10 CMBS structure and rating Chapter 20, slides 17-36
11 CMBS rating and other topics Chapter 20, slides 37-54
12 Real estate equity derivatives: Index swaps

Chapter 26 (PDF)

Derivatives (PDF)

13 Course wrap-up, CMBS case due  

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