SYLLABUS
REAE 4321.531: REAL ESTATE INVESTMENT
FALL 1999
W 7:00-9:50 AM
ROOM 241 B
Instructor:
J. Andrew Hansz
Office: 301 South Center Street, Bank Building, 4th Floor (cubicle 23), and Office hours will be held in room 509 Business Building.
Office Hours: Tuesday and Thursday 11:00 to 11:45 AM and Wednesday 10:00 to 10:45 PM in room 509 Business Building or by appointment.
Phone:
(817) 272-5843
E-mail: hansz@exchange.uta.edu
Course Description:
The determination of financial feasibility for proposed real estate investments, the effect of income taxes and various financing patterns on the equity investment, and the criteria for proper decision making to maximize benefits for equity investors.
Prerequisites:
REAE 3325 (FINA 3313 may be substituted for non-real estate majors).
Course Format:
· Lectures and Assignments – The course will be conducted on a lecture basis with discussion and questions encouraged. Specific readings in the required text will be assigned for each class period. It is expected that each assignment will be read prior to class.
· Examinations – Three exams and a comprehensive final.
· Cases – Several real estate investment case studies will be assigned.
· Attendance and participation is encouraged. Attendance will be taken.
Textbook:
Required
Investment Analysis for Real Estate Decisions, 4th Edition; Gaylon E. Greer, Dearborn Financial Publishing, Inc. 1997.
Optional
Getting to Yes, Roger Fisher and William Ury, Penguin Books.
Calculator and Spreadsheet:
A financial calculator (HP 10-B or equivalent) and a spreadsheet (Excel or equivalent) are required. The calculator must be able to calculate Internal Rate of Return (IRR) and Net Present Value (NPV). This means that the calculator must be able to deal with entry of uneven cash flows. Check the manual before you buy a calculator. You are responsible for learning the keystrokes. You may NOT store mathematical formulas and/or text for use on exams (see ‘academic honesty’ section). Additionally, you should have basic spreadsheet skills.
Grading:
Points Percent
Exam 1 50 10%
Exam 2 100 20
Invest. Problem Exam 50 10
Final Exam 150 30
2 Investments Case 25 5
Final Case 75 15
Homework/
Class Attitude 50 10
Total 450 100%
For the “Final Case,” students have the option of the Angus Cartwright, Jr. case or performing an investment analysis of an actual property in the DFW area. Any students selecting to perform a ‘real life’ investment analysis must notify the instructor on or before October 13, 1999.
Generally, the grading scale used by the Instructor can be:
90 - 100% = A
80 - 89% = B
70 - 79% = C
60 - 69% = D
Below 60% = F
The
instructor can apply a "curve" which could lower these ranges.
The distribution of final grades will normally adhere to the guidelines
of the Department of Finance and Real Estate.
These guidelines are generally based on College of Business
Administration averages for similar courses.
Make-up Examination Policy:
The instructor reserves the rights to change the style, format, and content of a make-up examination. A make-up exam will be given if the student has a reasonable, verifiable excuse. However, students should not expect to take more than one make-up exam. The make-up exam must be completed before the end of the week in which the original exam was scheduled. Once a student has taken an exam, a make-up exam cannot be given.
Policy on Attendance:
Students are expected to attend each class and students are expected to come to each class with their assignments completed. Students who must miss a class are responsible for obtaining all assignments, lecture notes, handouts, and announcements discussed in class from a classmate. You should get to know at least one student in class.
Policy on
Handing in Assignments Late:
Several homework assignments will be made during the quarter. A penalty per class period will be assessed for all assignments turned in late. Absence from class is not a valid excuse for handing in homework assignments late.
Policy on Disruptive Classroom Behavior:
This course will be conducted in a professional manner. Unprofessional behavior of any form in the classroom will not be tolerated. Students can be withdrawn at the discretion of the instructor for unacceptable behavior. Additionally, a portion of the final grade is attributed to class attitude/contribution. This grade, made at the instructor discretion, is based on attendance and attitude during class.
Academic Honesty:
It is the philosophy of The University of Texas at Arlington that academic dishonesty is a completely unacceptable mode of conduct and will not be tolerated in any form. All persons involved in academic dishonesty will be disciplined in accordance with University regulations and procedures. Discipline may include suspension form the University. You are responsible to maintain the standards of Academic Honesty included in the current UTA catalog.
Bomb Threats:
Effective April 8, 1996, the College of business Administration has adopted a policy to deal with the classroom disruption caused by bomb threats in the building. (A) Section 22.07 of the Texas Criminal Law Statutes states that a Class A misdemeanor is punishable by (1) a fine not to exceed $4,000, (2) a jail term of not more than one year, OR (3) both such a fine and confinement. (B) If anyone is tempted to call in a bomb threat, be aware that UTA has the technology to trace phone calls. (C) Every effort will be made to avoid cancellation of presentation/tests caused by bomb threats to the Business Building. Unannounced alternate sites will be available for these classes. If a student who has a class with a scheduled test or presentation arrives and the building has been closed due to a bomb threat, the student should immediately check for the alternate site notice which will be posted on/near the main doors on the south side of the Business Building. If the bomb threat is received while class is in session, your instructor will ask you to leave the building and reconvene at another location. (D) Students who provide information leading to the successful prosecution of anyone making a bomb threat will receive one semester’s free parking in the Maverick Garage across from the Business Building. UTA’s Crime stoppers will provide a reward to anyone providing information leading to an arrest. To make an anonymous report, call 817-272-5245.
Withdrawing:
It is the student’s responsibility to complete the course or withdraw form the course in accordance with University regulations. Students are strongly encouraged to verify their grade status before dropping a course after the first withdrawal date. A student who drops a course after the first withdrawal date may receive a “P” in the course if the student is failing at the time the course is dropped.
Drop for Non-payment
It is the policy of the University of Texas at Arlington that students who have not paid by the census date and are dropped for non-payment cannot, under any circumstances, receive a grade for the course. Therefore, a student dropped for non-payment whom continues to attend the course will not receive a grade for that course. Emergency loans are available to help students pay tuition and fees. Students can apply for emergency loans by going to the Emergency Tuition Loan Distribution Center at E.H. Hereford University Center (near the southwest entrance.).
Student Evaluation
of Teaching
The following appears in Administrative Memorandum No. 98-5 dated August 21, 1997, from the President for academic and administrative offices. “ Beginning in Fall 1997, teaching evaluations will be conducted in every class every semester for every instructor of record”.
Important Dates:
Tentative Course Schedule:
This is a tentative schedule. Adjustments
will be necessary during the progression of the semester.
It is the student’s responsibility to be aware of any changes announced
in class.
Week Topics Chapters
1 Introduction; Real Estate Investment Decision 1* Investment Strategy and the Concept of Market Efficiency 2
2 Land Utilization and the Rental Value of Real Estate 3
3
Exam 1 (September 1, 1999)
Market Research Tools and Techniques 4
Reconstructing the Operating History 5
4 Forecasting Income and Property Value 6
Financial Leverage and Investment Analysis 7
5 Basic Income Tax Issues 10
Traditional Measures of Investment Worth 13
6 Discounted Cash-Flow Analysis 14
7
Exam 2 (October 6, 1999)
8 Investment Goals and Decision Criteria 15
Risk in Real Estate Investment 16
9 Investment Problem Exam (October 20, 1999)
Traditional Risk-Adjustment Methods 17
10 Contemporary Risk Measures 18
Risk Management in a Portfolio Context 19
11 Comparison of Two Investments Case Write-up Due
Investment Feasibility Analysis 20
Industrial Property, Office, and Shopping Center Analysis 23
12 Angus Cartwright, Jr. Case
13 Real Estate Syndication 24
Real Estate Investment Trusts 25
14 Negotiations ‘Getting to Yes’
15 Final Case Write-up Due
Negotiations (continued)
Final Exam: Wednesday, December 8 at 8:15 to 10:45 PM