Real Estate Private Debt

1.5 Credits · Level: Graduate, Juris Doctor, Undergraduate

The U.S. commercial real estate debt market exceeds $2.3 trillion, and provides borrowers between 50 to 75 cents of every dollar invested. Yet, beyond returns, we can admit that these investors will not spend commensurate time to understand and analyze their financing. As a result, financing remains a mystery -- or worse, an afterthought -- despite having a significant influence on investment decisions, risk and performance. This course will provide exposure to the world of real estate finance from the perspectives of borrowers and lenders, both of which have varying incentives (financial and otherwise) and risk appetites. We will define the players in the world of private debt; among them, depository banks ($1.3 trillion), life insurance companies ($291.3 billion), pension funds and high yield debt funds. These differ from public market alternatives: bonds, REITs, CMBS and GSEs (better known as Fannie Mae and Freddie Mac). I design this course not just as an academic setting, but moreover a laboratory to simulate real-world simulations that you, the student, will encounter in your next workplace. We will utilize case studies and problem-solving exercises in addition to lectures and readings. I will incorporate the case method in order to (a) maximize decision-making opportunities for you, the student and (b) provide you situations to express and defend your ideas. As a result, you will want to prepare to discuss any assignment. Course Objectives: - Learn key terminology of real estate private debt - Familiarize yourself with the real estate financing process - Understand the concept of risk from different perspectives and weigh such against each player's respective benefits - Simulate real-world underwriting and financing discussions