Course Syllabus
COURSE SYLLABUS
RISK AND INVESTMENT MANAGEMENT
SPRING 2024
PLAN6712
1.5 CREDITS
Tuesdays, 11am-1pm, 209 Fayerweather
Instructor: Ryan Severino, CFA
rjs2003@columbia.edu
(201) 725-6773
COURSE DESCRIPTION
This course is intended to give students of real estate development a foundation in portfolio and risk management as it applies to individual real estate investments, multiple investments, and portfolios of mixed real estate assets and real estate assets (including securities) as a component of institutional portfolios. This course examines the methods employed in both strategic and tactical decision-making. Students learn how to balance the potential for positive financial reward with concurrent exposure to risk and uncertainty in both single assets and portfolios. The course provides an examination of modern portfolio theory, capital market theory, and asset pricing models, particularly as they apply to real estate. The course evaluates advantages and disadvantages of small versus large-scale investments, single versus multiple property type portfolios, and local, regional, national, and global market diversification strategies. It will also examine the interaction of volatility, risk, and diversification.
COURSE STRUCTURE
The class will involve a mix of weekly online lectures and active discussion by all students. Please make sure to check Canvas regularly, as it will be used for posting the course syllabus, selected class materials/handouts, and other relevant material.
Application:
Most critical to the student’s learning in this course is the application of the learnt concepts and methods of finance to real life real estate development and investment situations. This application will be achieved by the student’s participation in the following activities:
- Attendance and Participation in Class: Concepts and analytical methods will be learned by reasoning through the real estate investment and development processes. Students are expected to engage in these investigative sessions with the professor by asking questions, responding to queries, and challenging notions.
- Exams will be undertaken individually by the student throughout the semester in order to ascertain that specific student’s progress in understanding and utilizing the concepts and analytical methods.
COURSE REQUIREMENTS
Students will be expected to attend and participate in class discussions as these will factor into the final grade.
- Attendance: Class attendance will be reflected in the final grade. An email notifying the professor of your expected absence is recommended. If a class is missed, the student is responsible for reviewing the posted class notes and make arrangements to meet with the professor to ensure that the lessons of the missed class are understood.
- Class Participation: Students are required to participate in all class discussions. Active participation will be an essential component of your grade in the course.
- Class Preparedness: Students are required to read all assigned readings for each class, together with any supplemental presentations, case studies and homework assignments. Readings from the required textbook (or e-book) and recommended readings are provided in the Course Outline below.
CLASS TEXTBOOKS
- Optional textbook: Investment Analysis and Portfolio Management, 10th edition; Frank K. Reilly, Keith C. Brown
- Optional textbook: Commercial Real Estate Analysis and Investments, Geltner, D., Miller, N., Clayton, J. and Eichholtz, P.
COURSE GRADING CRITERIA
Course grading criteria are as follows:
1) Attendance and class participation in the discussion of technical material, quizzes, and case studies: 10%.
2) FINAL EXAM: 90%
COURSE OUTLINE:
Session 1: 02/27/24
Topics: Course Overview; Introduction to Statistics and Investments; Efficient Market Hypothesis Reading Assignment:
- Geltner, Miller, Clayton, Eichholtz, Chapter 7, 13.1-13.2
- Reilly, Brown, Chapters 1, 6
Session 2: 03/05/24
Topics: Modern Portfolio Theory
Reading Assignment:
- Geltner, Miller, Clayton, Eichholtz, Chapter 21
- Reilly, Brown, Chapter 7
March 12 – Spring Break, NO CLASS
Session 3: 03/19/24
Topics: Modern Portfolio Theory (continued); Capital Market Theory and Asset Pricing Models
Reading Assignment:
- Geltner, Miller, Clayton, Eichholtz, Chapter 21
- Reilly, Brown, Chapter 7
Session 4: 03/26/24
Topics: Capital Market Theory and Asset Pricing Models (continued)
Reading Assignment:
- Geltner, Miller, Clayton, Eichholtz, Chapter 22
- Reilly, Brown, Chapters 8
Session 5: 04/02/24
Topics: Testing of Capital Market Theory and Pricing Models
Reading Assignment:
- Reilly, Brown, Chapter 9
Session 6: 04/09/24
Topics: Real Estate Derivatives
Reading Assignment:
- Geltner, Miller, Clayton, Eichholtz, Chapter 26.3
Session 7: 04/16/24
Topics: The Real Economy and Real Estate / Importance of Cycles; Real Estate Investment Management; Real Estate in a Diversified Portfolio; Course/Final Review
Reading Assignment:
- Size-Tiered Economic Geography: A New View of the US Real Estate Markets
Smith, A., Hess, R., and Liang, Y. Prudential Real Estate Investors, October 2004
- Size-Tiered Economic Geography: 2010
Update Liang, Y., Fiorilla, P., and Lumban-Tobing, P. Prudential Real Estate Investors, July 2010
- The Retail-Office Performance Rotation: Implications for Investors
Conner, P. and Severino, R. Prudential Real Estate Investors, January 2006
- Revisiting The Case For Commercial Real Estate
Conner, P. Prudential Real Estate Investors, May 2010
- Updated: uncorrelated assets now correlated
Bernstein, R. and Suzuki, D. BOA Merrill Lynch, March 2009
- A Flowchart for Integrated Real Estate Portfolio Management
Conner, P. and Liang, Y. Prudential Real Estate Investors, May 2000
Final Take-Home Exam
Course Summary:
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