REAL ESTATE and SOCIETY

BUS 135a

Spring 2015

Tuesday & Thursday, 2:00-3:30; location T-B-D

Edward Chazen

Senior Lecturer

Sachar 208

(781) 736 4825

Office Hours: M, W: 1:30-3:00; T, Th: 9:30-11:30

OVERVIEW

This course serves as an introduction to the real estate industry, looking at it from multiple perspectives. Using class lectures, case study discussions and guest lectures, we will explore the varied dimensions of the largest asset class in the world. We will learn common industry terminology and how leases are the foundation for property cash flow; we will learn about design and market research influences on successful projects; we will learn how tenants make leasing decisions; we will learn about the role of the public sector and the community in approval and financing of real estate - often to advance public purposes - and tension between the private developer and public sector; we will study affordable, low income and senior housing; we will meet industry experts; we will learn how to use Excel for financial analysis; we will learn basic property valuation methods; and, we will learn about the debt and equity markets to finance real estate.

LEARNING GOALS & OUTCOMES

Know the terminology used in the real estate industry: familiarity with terminology used in development, financing, leasing and valuation of income property

Understand the characteristics of leases for different property types: how leases are structured, landlord and tenant rights and responsibilities, and the legal context for real estate transactions

Be familiar with the regulatory environment: property rights and limitations, land use regulations and the role of local government in project approval and financing

How property value is determined: the influence of property design, market research, capital markets and public policy on property value, and financial metrics to value property (including discounted cash flow, cap rate, replacement cost and comparable property methods of valuation)

an introduction to real estate development: managing the approval process; designing a building to maximize leasing; managing risks in development; understand how land is valued

The roles and responsibilities of the “players” in the real estate business

Understand the sources of capital and the basics workings of the real estate capital markets

Explore societal challenges and opportunities: affordable, low income and senior housing, smart growth and community engagement, Green/LEED buildings, conservation and demands for open space, historic preservation and re-purposing of older buildings – and government’s role in advancing all of these goals

PREREQUISITE: BUS 10a is required.

COURSE REQUIREMENTS

Required Reading

You are required to purchase “The Real Estate Game”, by William Poorvu, published by Free Press. It can be purchased from Amazon.com in either paperback or hard cover (new or used); the book is generally out of print but there are multiple copies available from Amazon.com. It is an informative and easy to read book introducing you to the real estate business. I will assign selected chapters on LATTE.

There are three Harvard Business School (“HBS”) cases and two HBS notes that you will need to buy. There are five cases I wrote that will also be part of this course, and they will be posted on LATTE. In addition, you will find on LATTE a copy of the “Real Estate Financial Analysis Workbook” which you must read for the third class. Read through p.22 in the workbook and complete the first four exercises found in those pages. There are also several articles I will post on LATTE that correspond to the subject of specific class topics.

I have created a course pack on the Harvard Business Publishing online website where you can order the required materials. Look for Real Estate and Society Spring 2015. The course pack link is: https://cb.hbsp.harvard.edu/cbmp/access/31423266.

Note that this information is copyright protected, so each student MUST purchase their own course pack and sharing the material from HBS Publishing is expressly prohibited.

If you have not registered with Harvard Business Online, you will be required to do so. Electronic course materials are in PDF (Portable Document Format) and should be viewed with Adobe Reader, available free at www.adobe.com. Students can access PDF files of course materials via a link on Harvard Business Online for six months from the date of purchase. You will have immediate access to the materials upon placing your order, for subsequent access, you must login to http://harvardbusinessonline.org I hope you find this a convenient way to access your course materials.

For technical assistance, please view the Quick Tips section or contact HBS Publishing at 1-800-810-8858 or 617-783-7700, from 8am-6pm. They can also be reached at

Attendance and Participation

Class attendance is required. For eight classes a case is assigned and every student is expected to come prepared to discuss it in detail – regardless if it is a graded case write-up, or not. Students are also expected to be actively engaged in discussing topics during class lectures and guest lectures, including asking pertinent questions. Class participation is critical; to ensure an effective process, students are expected to use name cards at every session.


Academic Honesty

You are expected to be honest in all of your academic work. Instances of alleged dishonesty will be forwarded to the Office of Campus Life for possible referral to the Student Judicial System. Potential sanctions include failure in the course and suspension from the University. For the University policy on academic honesty, please see section 5 of the Rights and Responsibilities Handbook.

Disabilities

If you are a student with a documented disability on record at Brandeis and wish to have a reasonable accommodation made for you in this class, please see me immediately. Please keep in mind that reasonable accommodations are not provided retroactively.

Grading

Students will be graded on case study assignments, homework assignments, the mid-term exam, the final take home exam and class participation. Each student is required to submit three individual case write ups and participate in one team case presentation (no write-up required). Within the first 10 days after start of the course I will assign students to teams for specific case study presentations.

Students should be prepared to discuss all of the assigned cases, even if a written assignment is not required for certain cases. I will randomly call on students to answer questions about each case – so be prepared.

CASE STUDIES 30% (10% for each case study)

·  Pinckney Street

·  Prosperidad Plaza

·  Negev Advanced Technology Park

HOMEWORK ASSIGNMENTS 10% (2 assignments, 5% each)

MID-TERM EXAM 20%

TAKE-HOME FINAL EXAM 20%

CLASS PARTICIPATION* 20%* (see asterisk * below)

* You are expected to attend each class and arrive before it starts. If you know you will miss a class you need to advise me ahead of time; attendance will be taken at each class. If you attend each class, but don’t contribute to class discussion or ask good questions you will get a C+ for Class Participation. Meaningful contributions and questions can improve your Class Participation grade.

COURSE MATERIALS

TEXT BOOK

“The Real Estate Game: The Intelligent Guide to Decision-Making and Investment”, by William J. Poorvu; Free Press

WORKBOOK (posted on LATTE)

“Real Estate Financial Analysis Workbook”. Please read and complete the first four (4) exercises, pp. 1-22.

HBS CASES

Pinckney Street (9-813-182)

Time Warner Center (9-208-081)

Steel Street (9-210-010)

CASES WRITTEN BY E. CHAZEN

Prosperidad Plaza

Tama 38

Negev Advanced Technology Park

Cambridge Discovery Park

Sunshine Ridge Apartments

HBS NOTES

Tenant and Landlord Rights (9-804-161)

Financial Analysis of Real Property Investments (9-379-193)

COURSE OUTLINE

Case studies requiring a write-up are in bold type

Questions for each case study are posted on LATTE

You MUST read each case study, and be ready to answer its questions, even if not a graded paper

CLASS # CASE/READINGS TOPIC

1 Class Lecture and Discussion Introduction to real estate and its terminology

HBS Note: Tenant and Landlord Rights

2 Class Lecture and Discussion Property design and leasing

3 RE Financial Analysis Workbook Real estate financial & investment analysis

4 Class Lecture and Discussion Real estate valuation techniques

HBS Note: Financial Analysis of Real Property Investments

5 Pinckney Street case study case study: starting out in real estate

(graded case study)

6 Guest speaker T-B-D; real estate approval process

7 See articles on LATTE Introduction to real estate development

Submit Homework assignment #1

8 Time Warner Center case study case study: urban, mixed-use development

Review Homework assignment #1

9 Class Lecture and Discussion Market research in real estate

10 Prosperidad Plaza case study case study: market feasibility analysis

(graded case study)

11 MID TERM EXAM

12 Class lecture and discussion Affordable and Low Income Housing

Government role in real estate

13 Guest speaker T-B-D; affordable housing developer

14 Tama 38 case study case study: affordable housing in Israel

15 Class Lecture and Discussion Debt financing for real estate

16 Class Lecture and Discussion Equity financing for real estate

17 Guest speaker T-B-D; investment manager

18 Negev Advanced Technology Park case study: real estate from tenant

(graded case study) perspective

19 Class Lecture and Discussion Institutional real estate investment

Submit Homework assignment #2

20 Steel Street case study Distressed real estate

Review Homework assignment #2

21 Cambridge Discovery Park case study Resolving a troubled property

22 Guest Speaker T-B-D; senior housing developer

23 Class Lecture and Discussion Public markets for debt and equity

24 Sunshine Ridge Apartments case study Student housing

25 Guest speaker T-B-D; sustainability and real estate

26 Final exam review session

Final Exam Take home case study

6