Real Estate and Infrastructure Finance Syllabus



Real Estate and Infrastructure Finance 2 CreditsBU.234.610.XX[NOTE: Each section must have a separate syllabus.][Day & Time][Start & End Dates][Semester / ex: Fall 2019][Location / ex: Harbor East]Instructor[Full Name]Contact Information[Email Address][Phone Number, ###- ###-#### (Optional)]Office Hours[Specify the day and time of the 2 hours that will be dedicated to office hours each week. For evening classes, faculty may wish to hold their office hours by phone or email. While faculty are permitted to state “and by appointment,” office hours should not be held exclusively by appointment.]Required Texts & Learning Materials(C):Clauretie, T. M., & Sirmans, G. S. (2014). Real Estate Finance: Theory and Practice (7th ed.) ISBN 9781285181370. This book surveys the basic issues in real estate finance, as such, it serves as a very good reference material for this class. My lectures will not follow the book very closely and I will rely heavily on my hand-outs. Consequently, examination questions will not come directly from the textbook. However, I still suggest that students purchase the textbook because it provides very good background information for class discussions. (N):A package of lecture notes that can be downloaded from Blackboard:This package contains a rough draft of my lecture notes. I will follow the notes very closely in my lectures. There are a total of 4 sets of lecture notes for this class. They are:N1: Introduction. (PDF)N2: Mortgage Concept. (PDF)N3: Alternative Mortgages. (PDF)N4: Development and Construction Loans. (PDF)(F):A package of Excel files:This package contains the spreadsheet programs I used to derive some of the tables in my lecture note for this class. Those files are extremely helpful when a student wants to know the formula behind each calculation. I believe that a detailed study of the files will help students understand the course materials. Students can also download the Excel files from the Blackboard.F1: Time Value of Money. (Excel document)F2: Sinking Fund & Mortgage Constant. (Excel document)F3: Mortgage Concept. (Excel document)F4: Monthly Amortization. (Excel document)F5: Mortgage Amortization & Variations. (Excel document)F6: IRR & MIRR Calculations. (Excel document)F7: Adjustable Rate Mortgage. (Excel document)F8: Graduate Payment Mortgage. (Excel document)F9: Price Level Adjustment Mortgage. (Excel document)F10: Reverse Annuity Mortgage. (Excel document)F11: Pledged Account Mortgage. (Excel document)F12: Construction & Development Loans. (Excel document)Course DescriptionThis course examines selected techniques and issues in the area of real estate finance. Special emphasis will be placed on the design and valuation of mortgage instruments. This class will be conducted using a lecture format. While lectures will follow the textbook to some extent, supplemental readings will be required. Students are assumed to have some knowledge of finance. Before taking this class, it is important for students to have a clear understanding of the time value of money concept and knowledge of how to use spreadsheets to solve time value of money problems. Knowing how to use a calculator to solve present value problems (but without a clear understanding of the underlying concept) is not sufficient for tackling the course material of this class. Use of calculators or spreadsheets will not be taught in this class. Prerequisite(s)NoneLearning ObjectivesBy the end of this course, students will be able to: Understand the techniques used for mortgage designs.Analyze the risk–return tradeoff of mortgage instruments. Design a suitable mortgage instrument given a client’s special needs.Evaluate mortgage alternatives for your clients.Understand the operations of the mortgage market.To view the complete list of the Carey Business School’s general learning goals and objectives, visit the Carey website.Attendance Attendance and class participation are part of each student’s course grade. Students are expected to attend all scheduled class sessions. Failure to attend class will result in an inability to achieve the objectives of the course. Regular attendance and active participation are required for students to successfully complete the course.Assignments Your final grade will be weighted as follows:AssignmentWeightMidterm Exam40%Final Exam50%Class Participation10%Total100%The final class grade will be based on a relative frequency distribution (percentile ranking) of the total points accumulated over the entire semester. This approach implies that your final grade will be determined by the relative performance of the students in the class, as well as the overall performance of the entire class. While I normally do not take roll, class attendance is mandatory. Each student should read the assigned materials and give careful thought to background information prior to each class session. Having done so will not only facilitate class discussions, it will also lighten your workload because the lectures are much easier to follow after you have digested the reading materials.There will be one midterm exam and one final exam. The 2-hour midterm exam will be held during regular class hours and the 2-hour final exam will be comprehensive. The exam format will consist of two components: an in-class exam and take-home project. The in-class exam will be a combination of problems and conceptual questions. The take-home project will be problems that require intensive calculations, and students are expected to use spreadsheets to solve the problems (see appendix A for sample questions). The evaluation of class participation consists of two components: class discussions and quizzes. There are no specific rules on how to score points for the class discussions. A student's grade in this category is solely based on the instructor's objective judgement. However, a meaningful question to the instructor as well as the ability and willingness to answer the instructor's questions will definitely improve your performance. The quiz, if there is any, will be very simple. The grade of the quiz will be counted as a part of Class Participation. Class participation will play an important role in your final grade if you are at the borderline between two grades. GradingThe grade of A is reserved for those who demonstrate extraordinarily excellent performance as determined by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+ and B are awarded for good performance. The grades of B-, C+, C, and C- are awarded for adequate but substandard performance.?The grades of D+, D, and D- are not awarded at the graduate level (undergraduate only). The grade of F indicates the student’s failure to satisfactorily complete the course work.Please note that for Core and Foundation courses, a maximum of 25% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.3. For Elective courses, a maximum of 35% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.4. (For classes with 15 students or fewer, the class GPA cap is waived.)Tentative Course CalendarThe instructors reserve the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.WeekTopicReading Assignment1Introductory Remarks Money, Credit, and Interest Rate Review of Financial TableChapters 1 and 2. N1. F1.Appendix one.2Mortgage Concepts Sinking Fund and Mortgage Constant AmortizationN2.F2. F3. F4Chapters 5 and 7. N2. F5.3Fixed Interest Rate MortgageChapter 4. N2.4(Midterm Exam)Alternative Mortgage InstrumentsChapters 6 and 8. N3. F6. F7.5Alternative Mortgage InstrumentsChapters 6 and 8. N3. F7. F8.6Alternative Mortgage InstrumentsChapter 6. N3. F9. F10.7Alternative Mortgage InstrumentsDevelopment and Construction LoanChapter 18. N3. N4. F10. F11.8(Final Exam)Appendix A: Sample QuestionsIn-class exam:1.A borrower can obtain a lower first-year interest rate (as compared to the first year interest rate of a standard fixed-rate mortgage) when she/he selects an adjustable rate mortgage. Why (5 points)? Note: I will only read your first 30 words.2.Given the following information,Fixed-rate mortgage,Annual interest rate = 12%,Monthly payment, (or monthly interest rate = 1%),Amortization period = 30 years (or 360 months),Original loan amount = $100,000.Please calculate the annual debt service, annual interest payment, annual principal payment, and the ending loan balance at end of each year for the next three years. Specifically, please complete the following amortization table (10 points). YearBeginning BalanceDebt ServiceInterest PaymentPrincipal PaymentEnding Balance0$100,000N/AN/AN/AN/A1?????2?????3?????Note: This mortgage assumes monthly payments. The amortization table is different from the one using annual payments.Take-home project:Please re-construct the amortization tables of the five ARMs discussed in class. In addition, please extend the period from 37 months (as shown in the hand-outs) to 61 months. Please calculate the monthly IRR and MIRR (FMRR) for each of the 5 ARMs listed in problem 1 (20 points). Please re-construct the amortization table of a graduated payment mortgage ($100,000 at 12 present for 30 years, monthly payment, graduating in payments through the first 10 years) using 10% annual payment growth rate. Please report the amortization table of the first 181 months (10 points).Carey Business School Policies and General InformationBlackboard SiteA Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at . Support for Blackboard is available at 1-866-669-6138.Disability ServicesStudents with disabilities who require accommodations for this course should be registered with Disability Support Services and provide a copy of their accommodation letter as soon as possible. If you have not yet registered with Disability Support Services, please contact them to discuss your needs and begin the registration process (carey.disability@jhu.edu or 410-234-9243). For more information, please visit the Disability Support Services webpage.Academic Ethics PolicyCarey expects graduates to be innovative business leaders and exemplary global citizens. The Carey community believes that honesty, integrity, and community responsibility are qualities inherent in an exemplary citizen. The objective of the Academic Ethics Policy (AEP) is to create an environment of trust and respect among all members of the Carey academic community and hold Carey students accountable to the highest standards of academic integrity and excellence.It is the responsibility of every Carey student, faculty member, and staff member to familiarize themselves with the AEP and its procedures. Failure to become acquainted with this information will not excuse any student, faculty, or staff from the responsibility to abide by the AEP. Please contact the Student Services office if you have any questions. For the full policy, please visit the Academic Ethics Policy webpage.Student Conduct CodeThe fundamental purpose of the Johns Hopkins University’s regulation of student conduct is to promote and to protect the health, safety, welfare, property, and rights of all members of the University community as well as to promote the orderly operation of the University and to safeguard its property and facilities. As members of the University community, students accept certain responsibilities which support the educational mission and create an environment in which all students are afforded the same opportunity to succeed academically. Please contact the Student Services office if you have any questions. For the full policy, please visit the Student Conduct Code webpage.Student Success CenterThe Student Success Center offers free online and in-person one-on-one and group coaching in writing, presenting, and quantitative courses. For more information on these services and others, or to book an appointment, please visit the Student Success Center website.Other Important Policies and ServicesStudents are encouraged to consult the Student Handbook and Academic Catalog and Student Services and Resources for information regarding other policies and services.Copyright StatementUnless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only.?The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Academic Ethics Policy. ................
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