Financial Analysis of Development Projects

The Financial Analysis of Development Projects course provides a combination of analytical theory and practical tools needed to evaluate the financial feasibility of complex value added and opportunistic real estate investments. This includes speculative land, land development, and commercial and residential rehabilitation and development for all property types: office, industrial, retail, multi-family and mixed-use. Accounting, risk management, taxation, capital markets and organizational issues influencing the financial viability of these real estate projects will also be considered and discussed. It is designed as an introductory to intermediate experience level course. Class sessions are primarily lecture type with substantial participation and discussion expected from the students. Outside speakers, group activities, case studies and exercises will be utilized to reinforce and apply the concepts. Assessments are designed in such a way as to measure student knowledge of content.

Learning Objectives

• Recognize the role of participants of the public and private real estate capital markets and define the types of real estate financed by the real estate capital markets.
• Identify the sources and types of financing for real estate investments and apply the major indices which measure real estate investment returns and risk over time
• Define the investment strategies followed by investors and the required rates of return for each these strategies and discern the components of the expected total return on a real estate investment
• Know how to measure return on real estate investments
• Understand the complexities of valuing and assessing development projects and learn the difference between valuing a for-sale vs. a for-rent development project
• Learn how to deal with changes in project risk over time and determine the factors that drive the phasing and inventory decision for a multi- or mixed-use investment
• Understand how land can be viewed as an option and how to use this to value land
• Demonstrate knowledge of the various tax classifications and exemptions imposed on real estate
• Determine how to assess the risk exposure and identify the assumptions which must be made in the process of recommending a risk management solution
• Define terms associated with a private equity arrangements and understand the investment strategies pursued by private equity