Elective Course
REM 703 – Finance and Portfolio Management
Course Unit Code: REM 703
Type Of Unit: Elective for Real Estate Agency Specialization
Level of Course Unit: Second cycle
Semester: Third Semester
Number of ECTS Credits: 7.5
Mode of Delivery
Face to Face
Prerequisites
None
Course Objectives
This course’s objective is to provide students with a full understanding of the principles, theories and practices associated with real estate finance and portfolio management. The course will cover key topics, including main concepts of investments, capital structure (equity and debt), analysis and applications of mortgage loans, measuring investment performance (cash flows and IRR), pricing and investment financial considerations of residential properties, income producing properties (leases and tenancy), risk analysis, financing real estate developments, portfolio theory (diversification, structure and performance), and alternative real estate vehicles (REITS).
Learning Outcomes
- Explain fundamental financial and investment concepts related to risk, return, and capital structure, and assess the relevance of these principles in real estate investment performance.
- Analyze mortgage loans and various financing options, including debt and equity financing, and evaluate their implications for borrowers, lenders, and overall investment performance.
- Evaluate the financial performance of real estate investments, including residential properties and income-generating assets, using tools such as cash flow analysis and internal rate of return (IRR)
- Identify and assess the risks associated with real estate investments and implement risk management strategies to mitigate potential impacts on financial performance.
- Conduct comprehensive real estate investment analysis, focusing on project feasibility, portfolio diversification, income properties, and lease agreements, to support informed financial decision-making.
- Examine Real Estate Investment Trusts (REITs) and their role in real estate portfolios and apply portfolio theory and performance measurement strategies to enhance investment outcomes.
- Compare international real estate finance and investment practices portfolio theory, and analyze the influence of global economic factors on real estate investment decisions.
Course Content
Real Estate investments and Financing
Mortgage Loans Analysis
Housing: Pricing and financial considerations
Investment Performance
Leases and tenancies
Risk Analysis
Portfolio Theory
Alternative real estate investment vehicles
International practices on real estate financing and investment decisions
Course Features
Planned learning activities and teaching methods
Lectures; in-class discussion and debates; in-class exercises; problem sets; teamwork; video case studies, team presentations, interactive online learning via Moodle (quizzes, assignments, forums)
Assessment methods and criteria
Participation (10%)
Final Assignment (80%)
Presentation (10%)
Readings
Lecture Slides
Chapters from Textbooks:
1. Real Estate Finance and Investments, 17th edition by William B. Brueggeman, Jeffrey Fisher, ISBN: 9781264892884, 2021
2. Real Estate Investment, A Strategic Approach, 4th edition by Andrew Baum, ISBN 9780367690694, 2022
3. Real Estate Finance and Investments Risks and Opportunities, Peter Linneman and Bruce Kirsch, 2020
Optional Articles & Journals (Indicative):
1. French N. Decision theory and real estate investment: An analysis of the decision-making processes of real estate investment fund managers: MDE. Manage Decis Econ. 2001;22(7):399-410
2. Lizieri C. After the fall: Real estate in the mixed-asset portfolio in the aftermath of the global financial crisis. Journal of Portfolio Management, suppl.Special Real Estate Issue 2013. 2013;39(5):43-59,6
3. Agnello L, Castro V, Sousa RM. The housing cycle: What role for mortgage market development and housing finance? Journal of Real Estate Finance and Economics. 2019:1-64
4. Canepa A, Khaled F. Housing, housing finance and credit risk. International Journal of Financial Studies. 2018;6(2)
5. Lizieri C, Finlay L. International property portfolio strategies problems and opportunities. Journal of Property Valuation & Investment. 1995;13(1):6-21
6. Lizieri C, Marcato G, Ogden P, Baum A. Pricing inefficiencies in private real estate markets using total return swaps. Journal of Real Estate Finance and Economics. 2012;45(3):774-803
7. Bhuyan R, Kuhle JL, Al-Deehani T, Mahmood M. Portfolio diversification benefits using real estate investment trusts – an experiment with US common stocks, equity real estate investment trusts, and mortgage real estate investment trusts. International Journal of Economics and Financial Issues. 2015;5(4)
8. Mauck N, Price SM. Determinants of foreign versus domestic real estate investment: Property level evidence from listed real estate investment firms. Journal of Real Estate Finance and Economics. 2017;54(1):17-57
9. Guerra de Luna, Alfonso Humberto. Capital inflows, real estate booms and mortgage crises: An international perspective. [Order No. 3032907]. University of California, Los Angeles; 2001
10. McGrath, K., Worzala, E. and Alexander, J. (2023) ‘TVM, NPV, and IRR, Oh My! Creating an Inclusive Environment for Teaching the Potentially Intimidating Financial Concepts for Making a Real Estate Investment’, Journal of Real Estate Practice & Education, 25(1), pp. 1–13
11. Butler, S., Searle, K.D. and Malan, P.C. (2023) ‘A portfolio selection problem arising from real-estate investments’, Orion, 39(2), pp. 159–178
12. M., H. and H., H. (2020) ‘Analysis of Annuity and Impact of COVID 19 on Mortgage in Mathematical Finance Difference Equations Approach’, International Journal of Financial Management, 10(2/3), pp. 1–13 McAndrews, T.A. (2020) ‘In search of income: Finding ways to boost revenue using your current assets’, Journal of Property Management, 85(4), pp. 26–29
13. Ranisavljević, D. and Hadžić, M. (2016) ‘Realistic Evaluation of the Ratio: Loan-Tovalue – the Key to Minimising the Credit Risk’, Economic Themes, 54(3), pp. 449–468
14. Hwang, S., Park, M. and Lee, H.-S. (2013) ‘Dynamic analysis of the effects of mortgage-lending policies in a real estate market’, Mathematical & Computer Modelling, 57(9/10), pp. 2106–2120
15. Brotman, B.A. (2022) ‘Property investor decisions using income and rental ratio signals’, Journal of Property Investment & Finance, 40(1), pp. 2–13
16. Morris A Davis, William D Larson, Stephen D Oliner, Benjamin R Smith, A Quarter Century of Mortgage Risk, Review of Finance, Volume 27, Issue 2, March 2023, Pages 581–618
17. Reite, E. J., Blix Prestmo, J., & Oust, A. (2022). Loan-to-Value Regulations on Mortgages and the Use and Refinancing of Unsecured Debt. Journal of Real Estate Research, 45(3), 300–327
18. Lee, H., Crowder, K., & Korver-Glenn, E. (2024). Racialized Real Estate Agency in U.S. Housing Markets: A Research Note. Urban Affairs Review, 60(1), 349-366
19. Lu Liu, (2023). Mortgage loan and housing market, International Review of Economics & Finance, 83, 736-749
20. Mishra, A. and Kauškale, L. (2017) ‘Comparative Analysis of Sustainable Real Estate Market Development in Two Northern Capitals: Case of Riga, Latvia and Stockholm, Sweden’, Baltic Journal of Real Estate Economics & Construction Management, 5(1), pp. 186–200
21. Lewellen J, Lewellen K., (2016). Investment and Cash Flow: New Evidence. Journal of Financial and Quantitative Analysis. 51(4):1135-1164
22. Staiger, R. (2018). Foundations of Real Estate Financial Modelling (2nd ed.). Routledge. https://doi.org/10.1201/9781315171524 – Chapter 1, pages 7-20
23. Fortin R., Michelson S., Smith S. D., Weaver W. (2007), ‘Mortgage refinancing: the interaction of breakeven period, taxes, NPV, and IRR’, Financial Services Review 16, pp. 197–209
24. Brotman, B.A. (2022) ‘Property investor decisions using income and rental ratio signals’, Journal of Property Investment & Finance, 40(1), pp. 2–13
25. Piet Eichholtz, Matthijs Korevaar, Thies Lindenthal, Ronan Tallec, The Total Return and Risk to Residential Real Estate, The Review of Financial Studies, Volume 34, Issue 8, August 2021, Pages 3608–3646
26. Clark S, Lomax N. Rent/price ratio for English housing sub-markets using matched sales and rental data. Area. 2020; 52: 136–147
27. St-Hilaire, C., Brunila, M., & Wachsmuth, D. (2023). High Rises and Housing Stress: A Spatial Big Data Analysis of Rental Housing Financialization. Journal of the American Planning Association, 90(1), 129–143
28. Martin, S.; Dimopoulos, T.; Katafygiotou, M. Factors Influencing Rental Investments in Paphos, Cyprus: Comparing Short- and Long-Term Rental Strategies. Real Estate 2024, 1, 136-157
29. Yuan, J. (2022) ‘Real estate risk based on combination of factor analysis and spatial statistics’, Journal of Computational Methods in Sciences & Engineering, 22(6), pp. 2007–2021
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