Course Real Estate Finance Number/Section FINC 220

TR 3:30 – 4:45pm; Hariri

Semester/Year Spring 2019 Schedule
230
Instructor Matthew L. Cypher
mlc239@georgetown.edu
Phone 202-687-2653 E-mail
M 3:30 - 5:00pm; or by
Offices Hariri 401 Office Hours
Appt.

Course Description:
This course provides an introduction to the world of income-producing real estate investments with a
particular focus on answering the question, “What is the real estate asset worth?” Lectures will consider
the thought process and mechanics implicit to establishing an asset’s value via proforma statement
construction and discounted cash flow methodology. The course will provide an introductory
understanding of Argus and Excel and the manner that these tools are utilized to financially model
returns. Students will then apply this fundamental level of understanding to an office asset located at
2233 Wisconsin Avenue, NW Washington, DC. Known as the Real Estate Laboratory, students will
interact directly with the physical asset and surrounding submarket to assess the impact on the building’s
value. Finally, guest speakers will frequent the class and introduce students to the many other facets of
real estate one can consider as part of a career in the space.

Course Objectives:
• Obtain a fundamental understanding of real estate valuation.
• Introduction to Argus and Excel-based financial modeling for real estate.
• Garner a strong understanding of the physical asset and the manner it relates to the financial asset
through use of the Real Estate Laboratory at 2233 Wisconsin Avenue, NW.
• Develop a broader understanding and appreciation for the real estate profession through
interaction with guest speakers.

Pre-requisite Coursework:
FINC 211 – Business Financial Management

Required Materials:
• Ling & Archer, Real Estate Principles: A Value Approach, 5th Edition, New York, McGraw-Hill
Education, 2018.
• Segel, A., Vogel, Jr., J & Strope, L. (2014) Bonnie Road. Harvard Business School. Product
Number: 9-813-186. (Coursepack - https://hbsp.harvard.edu/import/596309)
• Segel, A. (2014). Real Estate Finance: A Technical Note Based on “Bonnie Road.” Harvard
Business School. Product Number: 9-803-030.

FINC 220 – Real Estate Finance (1_4_19)

 • Articles/handouts posted to Canvas prior to class. Current real estate topics and associated
articles will be discussed during class periodically so pay close attention to Canvas for their
posting.
• Students will also be required to obtain the trial version of Argus that is available via a CD
provided by Professor Cypher.

Grading Framework:
Bonnie Road 15%
Homework Assignments 10%
Mid-Term Exam 20%
2233 Wisconsin Avenue Valuation Project 20%
Final Exam 25%
Class Participation 10%

• Bonnie Road Case – This case study will require that students work in groups of two to develop a
written deliverable and accompanying financial model to be submitted via a Canvas portal. The case
will be discussed on 4/2.
• Homework – Five homework assignments will be provided to reinforce the in-class instruction.
Homework assignments will focus on the topics of cash flow construction, unleveraged valuation,
Argus, leveraged valuation & income tax. These are individual assignments.
• Mid-Term Exam – A mid-term exam will cover topics learned through the midpoint of the class.
• 2233 Wisconsin Avenue Valuation Project – Students will be split into groups and required to
perform a physical and financial analysis of 2233 Wisconsin Avenue, NW that will result in a
valuation assessment along with an investment memorandum citing the risks and attributes of the
investment. This process will closely simulate that of a live acquisition with availability of all source
documents and access to associated real estate professionals.
• Final Exam – A cumulative final exam will cover the classroom lectures and readings from the entire
semester.
• Class Participation – The success of this class is based in part on the level of student participation.
Those students who consistently participate throughout the class will be rewarded with this portion of
the grade. We have high expectations regarding student participation, so active engagement
throughout the entire class is expected to earn a high score in this grading component. Participation
can also take the form of providing thoughtful articles that I can share with the class or other
interesting ideas or concepts that may be shared outside of the classroom setting. While we will not
limit computer usage, please refrain from surfing the Internet during class out of respect for your
fellow students, us and the work we put into delivering useful content to you.

FINC 220 – Real Estate Finance (1_4_19)

Teaching Assistant: Peter Hagerty (ph526@georgetown.edu)

Groups: You will need to establish two groups for this course. Group #1 consists of two people and will
be responsible for the Bonnie Road Case Study. Group #2 consists of four people and will be responsible
for the 2233 Wisconsin Avenue Valuation Project. Please work to establish these groups as soon as
practical. A list of groups and members will be due by 2/7.

Financial Calculator: It is expected that each student possess a financial calculator and is able to
perform basic DCF calculations (IRR, PV, mortgage calcs such as Pmt).

Extra Credit: Students will receive one additional percentage point on their mid-term exam grade for
attending the Real Estate Luminaries event. (4/11/18).

Student GPA: The level of each student grade point average has been in process since you were a
freshman. If you are a graduating senior, please do not contact me at the end of the semester and ask for
your grade to be improved so that you can receive higher academic honors at graduation. It puts me in an
unfair position as the professor for one of your final classes and I will not make adjustments unless there
is an error on my part.

Mid-term Exam: Make-up mid-term exams are not permitted. Any student unable to take the mid-term
will allocate the same percentage grade from the final exam to the mid-term component of the overall
course.

Academic Integrity:

Students are expected to adhere to the highest standards of academic integrity. It is your responsibility to
know the Honor Code and what constitutes a violation. Information about Georgetown’s Honor System
can be obtained at www.georgetown.edu/honor.

You should re-familiarize yourself with the Honor Code by reviewing the Honor Council Document
“What is Plagiarism?” (www.georgetown.edu/honor/plagiarism.html).

Please be aware that professors are obligated to report any suspected violations of the Honor System to
the Honor Council. The following notes concerning the Honor Code apply to this class:

1. Collaboration on the homework assignments is permissible.

2. Cheating on exams (in whatever form) is expressly prohibited by the Code.

3. On the group project (2233 Wisconsin Avenue Valuation Project), collaboration among group
members is required and discussion of the projects across groups is also permitted though each
group is expected to submit a deliverable that is independent of other groups.

4. If data is gathered from any source (web, library, etc.) for the 2233 Wisconsin Avenue project,
you must properly cite your sources.

FINC 220 – Real Estate Finance (1_4_19)

 Course Schedule:
Class Date Topics Covered Required Reading/Assignments Due
1 1/10 Introduction to the Course; What is RE? L&A: Chapter #1
Lynn: “Fundamentals of RE Investment”
Hudson-Wilson et al: “Why Real Estate?”
2 1/15 RE Fundamentals; Why Invest in RE?
Career Paths in Real Estate (Supplementary
Reading)
Legal & Regulatory Determinants of
3 1/17 L&A: Chapters #2 & #4
Value
4 1/22 Real Estate Leases L&A: Chapter #22
5 1/24 Income Statement Construction L&A: Chapter #8 (191-199 only)
6 1/29 Income Statement Construction 2900 Adams Mill Road Excel File
Pro Forma Statement Construction
7 1/31 Argus Cash Flow Analysis
Homework Due
8 2/5 Argus Cash Flow Analysis
L&A: Chapter #8 (199-216 only)
9 2/7 Income Approach to Value Argus Homework Due
Groups due to Peter Hagerty
10 2/12 Income Approach to Value L&A: Chapter #8 (199-216 only)
L&A: Chapters #6 & #7
11 2/14 Sales Comparison Approach to Value
Unleveraged Valuation Homework Due
Legal Documents and the Acquisition
Process & Mid-term Review L&A: Chapter #3
12 2/21
Jim Hurley (B’01), Principal, Artemis Deal Offering Memorandum
Real Estate
13 2/26 Mid-Term Exam
14 2/28 Real Estate Finance L&A: Chapters #9, #16 & #17
15 3/12 Real Estate Finance L&A: Chapters #9, #16 & #17
Class does not meet during normal
16 3/14 Leveraged Valuation Homework Due
period due to 2233 property tour
Property Tour of 2233 Wisconsin
3/15 (10am
Avenue (Building Owner - Larry Botel 2233 Wisconsin Offering Memorandum
– 12pm)
B’88 - will lead tour)
17 3/19 Real Estate Income Taxation Readings: TBD
Readings: TBD
18 3/21 Excel Financial Analysis in Real Estate
Income Taxation Homework Due
Steven Ujvary (C’04), SVP,
19 3/26 Excel Homework Due
Acquisitions, Starwood Capital Group
Susan Swanezy (F’81), Principal,
20 3/28
Hodes Weill Associates
21 4/2 Bonnie Road Case Study Discussion Bonnie Road Case Deliverables Due
22 4/4 Value-Add Investment Analysis Readings: TBD

FINC 220 – Real Estate Finance (1_4_19)

 David Hammerman (B’11), VP,
23 4/9
Fortress Investment Group
24 4/11 Real Estate Luminaries Event
Brian Milberg (B’00), Senior Partner,
25 4/16
Sitex Group
26 4/23 Real Estate Investment Trusts Keybanc REIT Primer
27 4/25 Real Estate Investment Trusts Keybanc REIT Primer
28 4/30 Introduction to Real Estate Joint Ventures Readings: TBD
4:00 – 6:00pm (location TBD) Please triple
5/7 Final Exam check again Registrar’s website to confirm
day/time above.

Please know that as a faculty member I am committed to supporting survivors of sexual misconduct, including relationship
violence, sexual harassment and sexual assault. However, university policy also requires me to report any disclosures about
sexual misconduct to the Title IX Coordinator, whose role is to coordinate the University’s response to sexual misconduct.

Georgetown has a number of fully confidential professional resources who can provide support and assistance to survivors of
sexual assault and other forms of sexual misconduct. These resources include:

Jen Schweer, MA, LPC

Associate Director of Health Education Services for Sexual Assault Response and Prevention
(202) 687-0323
jls242@georgetown.edu

Erica Shirley, Trauma Specialist

Counseling and Psychiatric Services (CAPS)
(202) 687-6985
els54@georgetown.edu

More information about campus resources and reporting sexual misconduct can be found at http://sexualassault.georgetown.edu.

FINC 220 – Real Estate Finance (1_4_19)