Real Estate Investing
The last few decades have seen rising capital allocations to real estate as bond yields have compressed. With financing attributes beneficial to institutional investors, fund managers, and entrepreneurs alike, real estate has become an avenue to wealth building and a source of portfolio diversification for a wide range of investment entities.
More recently, the COVID-19 pandemic has had a profound impact on the real estate industry across the globe that could last for years. The disruption to financial markets and the global economy presents unique challenges for all aspects of real estate dealmaking, including fair valuation of real estate assets, decision making under uncertainty, regulatory changes, long-run implications of work from home, and risk to tenants whose ability to pay rent has been impeded. Yet, the dislocation also presents tremendous opportunities not seen since at least the great financial crisis of 2008–2010. Hotels and retail properties in particular are ripe targets for distressed-asset investors.
Taught by Columbia Business School’s top real estate faculty from the School’s esteemed Paul Milstein Center for Real Estate, the Real Estate Investing program provides participants with a deep understanding of real estate valuation and investments — sharpening their acumen of real estate principles, teaching them how to mitigate risk in real estate investing, and strengthening their strategic decision-making capabilities in the field.
While touching on residential housing, the six-session program primarily focuses on the acquisition and management of income-producing commercial properties.
This program is designed to provide a deep dive into the changing fundamentals and emerging opportunities in real estate. Participants build on their existing business knowledge and learn how to apply it to the real estate investment market. Specifically, participants will:
- Solidify their understanding of key real estate investment fundamentals and metrics
- Using real-world case studies, examine determinants of successful real estate investing
- Learn how to analyze the distressed real estate investment opportunities
- Consider the perspectives of investors and investment management firms
- Understand factors that are disrupting the business and explore strategies to improve buying, renting, selling, and managing real estate assets
PLEASE NOTE: The upcoming iteration of the program will take place in a live, virtual setting. See the agenda. You may also view the in-person program schedule for when our in-person programming resumes.
The Commercial Real Estate Asset Class, Iconic Assets, and the Investor Ecosystem
Part 1 discusses the importance of real estate as an asset class and its historical return performance. Real estate forms part of the alternative investment asset class and institutional investors target a substantial part of their alternatives portfolio in real estate.
This session also introduces participants to the various types of real estate assets by discussing an iconic asset in each sector. The discussion uncovers a diverse investor ecosystem.
CRE Fundamentals and Valuation
Part 2 discusses CRE leases and operating expenses, two key fundamentals in any real estate valuation. It provides participants with the tools to project and analyze cash flows for real estate properties, the real estate pro forma. It explains the concept of a capitalization rate and how it is used in valuations. The concepts are applied in a real-world case study.
CRE Capital Structure and Taxation
Part 3 takes a deep dive into real estate financing. It studies how mortgage financing affects the risk and return of real estate investments. The discussion covers several other ways of raising capital for real estate acquisitions and investments such as mezzanine debt and ground leases.
Participants also learn about real estate taxation, an important driver of value in many real estate investments.
Part 4 focuses on real estate in distress. It covers lenders’ and borrowers’ rights and foreclosure processes. It treats distressed investing as part of a broader value investment strategy in the real estate industry.
The Covid-19 pandemic has created many newly distressed assets, allowing investors to find new opportunities to recapitalize and reposition troubled properties and companies. A real-life case study provides participants with the tools needed to analyze distressed properties.
Private and Public Equity
Part 5 discusses real estate private equity (REPE) and public equity vehicles (REITs) and their roles in the CRE ecosystem. It discusses the incentive alignment of managers and investors through the cash-flow waterfall. It contrasts the types of assets that REPE and REITs invest in and the relative liquidity of each investment vehicle.
Real Estate Development, Affordable Housing, and Program Summary
The last part discusses real estate development. It does so in the context of an affordable housing investment case, placing the exercise in the broader context of housing affordability. The session wraps up with a review of the program.
Throughout the program, industry guest speakers will complement the classroom and experiential learning sessions.
For a complete program schedule, please download the agenda.