SCHOOL OF URBAN & REGIONAL PLANNING SURP 844: Real Estate Planning & Development Winter 2014 Course Outline Instructor: John S. Andrew, Ph.D., MCIP, RPP Office: Robert Sutherland Hall, Room 525 E-mail: john.andrew@queensu.ca Telephone: 613-533-6000 ext. 75756 Session Time: Tuesdays, 11:30 am - 2:20 pm Session Room: Robert Sutherland Hall, Room 554 Overview of the Course This course aims at promoting an understanding of the structure of urban real estate markets, the process of real estate development and the techniques of real estate project planning and feasibility analysis. It emphasizes methods and procedures of site assessment, market analysis and financial analysis of proposed property developments, i.e. the various key stages of a developer s planning and decision-making. The focus of this course will be on the development of new income-generating properties, rather than the analysis of the potential acquisition of existing real estate assets (covered in SURP 841). It covers a range of property types, with an emphasis on multi-unit residential, office and retail. This course addresses the analytical tools employed in the two distinct steps that comprise feasibility evaluation: i) market analysis and ii) financial feasibility. Through lectures, guest lectures, class exercises, case studies and a project based on a simulated development, students will have the opportunity to learn methods of market and feasibility analyses and their application to actual projects. Objectives 1. To provide the theoretical and empirical background to real estate markets. 2. To explain the development process, project planning and the developer s decision-making process. 3. To promote a practical understanding of real estate project analysis techniques and their application.
2 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline Course Materials Required Textbook Whitehead, Jim. 2008. Real Estate Development. Vancouver: University of British Columbia, Faculty of Commerce and Business Administration, Real Estate Division. R1B44508. Available at the Campus Bookstore at a cost of $69.29 (new). Weblink: http://www.campusbookstore.com/textbooks/course/13265-surp844-2nd14 Required Cases Six case studies from the Harvard Business School will be employed. Soft copies (in.pdf format) must be purchased by each student as a coursepack directly from Harvard, at: https://cb.hbsp.harvard.edu/cbmp/access/23501279. The total cost is approximately US$24. See Assignments and Evaluation below for information on expectations and deliverables relating to cases. Other Required Readings Required readings are listed in the Schedule of Lecture Topics beginning on Page 3. Those that are not in the required textbook (Whitehead 2008) will be available in digital (pdf) format on the Moodle course site (https://moodle.queensu.ca/2013-14/dashboard.php). These readings have been carefully selected to complement each lecture, and should be completed prior to each class. Recommended Textbooks Many of the readings that are not in the required textbook are from the following optional textbooks (in alphabetical order). Although these are excellent resources, their cost and U.S. focus (except for the first, which is Canadian) make them unsuitable as texts for this course. 1. Boiron, Pierre and Claude Boiron. 2008. Commercial Real Estate Investing in Canada. Mississauga: John Wiley & Sons Canada, Ltd. 2. Ling, David and Wayne Archer. 2008. Real Estate Principles: A Value Approach, Second Edition. New York: McGraw-Hill Irwin. 3. Miles, Mike E., Gayle L. Berens, Mark J. Eppli et al. 2007. Real Estate Development: Principles and Process, Fourth Edition. Washington, DC: The Urban Land Institute. 4. Peiser, Richard and David Hamilton. 2012. Professional Real Estate Development: The ULI Guide to the Business, Third Edition. Washington, DC: The Urban Land Institute. 5. Ratcliffe, John, Michael Stubbs and Miles Keeping. 2009. Urban Planning and Real Estate Development, Third Edition. New York: Routledge. 6. Wilkinson, Sara and Richard Reed. 2008. Property Development, Fifth Edition. New York:
3 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline Routledge. 7. Geltner, David M., Norman G. Miller, Jim Clayton and Piet Eichholtz. 2007. Commercial Real Estate Analysis & Investments, Second Edition. Thomson South-western. Other Materials Required: Students will need a common financial spreadsheet software package such as Excel. You may not use specialized real estate analysis software such as Argus for this course, as you are required to design your own spreadsheet. Optional: Students may find it useful to have access to a business/financial calculator, such as the popular model(s) sold in the Campus Bookstore. Schedule of Lecture Topics (topics and readings are subject to change during term) 1. Jan. 7 Part 1: Introduction to the Course Part 2: Introduction to Commercial Real Estate and the Development Process Geltner, et al. 2007. Ch. 7: Real Estate as an Investment. (pdf) Whitehead. 2008. Ch. 1 Real Estate Development Overview. Wilkinson & Reed. 2008. Ch. 1. Introduction. (pdf) Long, Charles. 2011. Finance for Real Estate Development. Ch. 1. The Development Process. (pdf) 2. Jan. 14 Part 1: Introduction to Commercial Real Estate Markets Ling & Archer. 2008, Ch. 1: The Nature of Real Estate and Real Estate Markets. (pdf) Geltner, et al. 2007. Ch. 1. Real Estate Space and Asset Markets. (pdf) Part 2: The Time Value of Money and Discounted Cash Flow Analysis Harvard Business School. 1976. Cash Flow and the Time Value of Money. Case Note 9-177-012. (pdf) Ling & Archer. 2008. Ch. 15: The Effects on Time and Risk on Value. (pdf) 3. Jan. 21 Analysis of Financial Feasibility of Development (Part 1) Whitehead. 2008. Ch. 7. Introduction to Economic Feasibility Studies.
4 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline Whitehead. 2008. Ch. 8. Economic Feasibility Analysis. Poorvu, William J. and Samuel Plimpton. 2003. Financial Analysis of Real Property Investments. Harvard Business School Case Note 9-379-193 (especially The Set-Up ) (pdf) 4. Jan. 28 Part 1: Analysis of Financial Feasibility of Development (Part 2) Peiser & Hamilton. 2012. Financial Feasibility Analysis. pp. 168-191. (pdf) Ratcliffe, et al. 2009. Ch. 13. Development Valuation. (pdf) Miles et. al. 2007. Ch. 9. Discounted Cash Flow. (pdf) Kolbe, P.T. & G.E. Greer. 2006. Investment Analysis for Real Estate Decisions. Third Edition. Dearborn Real Estate Education. Ch. 21. Development and Rehabilitation. (pdf) Part 2: Case 1: Revere Street Case 1: Revere Street Harvard Business School. Learning by the Case Method. 9-376-241. (pdf) 5. Feb. 4 Part 1: Developing a Residential Subdivision Financial Analysis & Getting Approvals Guest Speaker: John Armitage, Partner, Llynlea Homes Part 2: Analysis of Financial Feasibility of Development (Part 3): Leverage, Risk vs. Return Wu, Charles F. and Arthur I. Segel. 2008. Technical Note on Financial Leverage in Real Estate. Harvard Business School. 9-208-041. (pdf) Brueggeman, W.B. and J.D. Fisher. 2011. Real Estate Finance and Investments, 14 th Edition. McGraw-Hill Irwin. Ch. 10: Financial Leverage and Financing Alternatives. (pdf) Hamilton, Stanley W., ed. 2011. Real Estate Investment Analysis and Advanced Income Appraisal. Vancouver: University of British Columbia, Faculty of Commerce and Business Administration, Real Estate Division. Ch. 10: Risk Determination, Measurement and Analysis. (pdf) 6. Feb. 13 This is a Thursday, 11:30 am - 2:20 pm, rescheduled from Tuesday, Feb. 11 Part 1: Institutional Real Estate Asset Management Guest Speaker: Lachlan MacQuarrie, Vice President, Real Estate Management National Programs, Oxford Properties Group
5 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline Part 2: Case 2: 503 Cricket Road - Case write-up due at beginning of class. Case 2: 503 Cricket Road 7. Feb. 25 Land Use Regulation and the Development Approval Process Peiser & Hamilton, 2012. Ch. 3 (pdf) Whitehead. 2008. Ch. 9. Development Approval Process. Boiron & Boiron. 2008. Ch. 4. Land Use Controls. (pdf) 8. Mar. 4 Part 1: Making Real Estate Decisions Within Ottawa s Planning Policy Framework Guest Speaker: Michelle Taggart, Director of Development, Taggart Construction Part 2: Case 3: Prospect Hill Case 3: Prospect Hill 9. Mar. 11 Part 1: Seniors Housing Analyzing Transactions Guest Speaker: Gilbert Schiller, Asset Manager, Revera Inc., Vancouver Long, Charles. 2011. Financing for Real Estate Development. Washington: Urban Land Institute. Ch. 2. The Basics of Real Estate Finance. (pdf) Long, Charles. 2011. Financing for Real Estate Development. Washington: Urban Land Institute. Ch. 6. Obtaining Financing for Development. (pdf) Part 2: Case 4: Concord Center Case 4: Concord Center 10. Mar. 18 Part 1: Vaughan Metropolitan Centre Development Guest Speaker: Paula Bustard, Director of Development, SmartCentres Peiser & Hamilton. 2012. pp. 159-168. Site Selection. (pdf) Ratcliffe et al. 2009. Ch. 12. Development Site Appraisal. (pdf) Part 2: Case 5: Nehemiah Strategy: Bringing it to Boston Case 5: Nehemiah Strategy: Bringing it to Boston
6 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline 11. Mar. 25 Part 1: Analysis of Commercial Real Estate Market Demand Whitehead. 2008. Ch. 4. Analysis of Development Potential. Peiser & Hamilton. 2012. pp. 151-159. (pdf) Wilkinson & Reed. 2008. Ch. 7. Market Research. (pdf) Miles, et al. 2007. Ch. 11. Market Research: A Tool for Generating Ideas. (pdf) Geltner, et al. 2007. Ch. 6. Real Estate Market Analysis. (pdf) Part 2: Case 6: Highlands Garden Village Case 6: Highlands Garden Village 12. Apr. 1 Issues in Joint Venture Real Estate Development Guest Speaker: Jonathan Hack, Director, Sierra Planning and Management Whitehead. 2008. Ch. 5. Land Acquisition. Assignments and Evaluation Case Summary Report Each student will be required to submit a hard copy summary of their analysis of the 503 Cricket Road case at the beginning (8:30 am) of the class on Thursday, February 13, in which the case is being discussed. This case summary must be limited to two pages, plus any exhibits (e.g. spreadsheets). Late submissions will not be accepted, nor will those submitted electronically. Students may work collaboratively but each must hand in an individual summary that reflects their own analysis and conclusions. This summary will account for 15% of the final grade. Feasibility Analysis for a Potential Development Project Working in pairs, students will carry out a comprehensive feasibility analysis for a hypothetical real estate development project on an actual site of the team s choosing anywhere in Canada. There are two components of this analysis: i. market analysis; and ii. pro forma financial feasibility analysis. Detailed written instructions for this assignment will be provided. The hard copy report is due to the main SURP office by 3:30 pm on Friday, April 11, and will account for 65% of the final grade. A penalty of 5% per day will apply to late reports. Teams must also submit via email electronic copies of their dynamic Excel file, set up to do all calculations automatically.
7 SURP 844: Real Estate Planning & Development - Winter 2014 - Course Outline In-Class Participation The instructor will assign a grade based on each student s informed and constructive participation throughout the course. Students are reminded that the key to being fully engaged in the course is preparation in advance of each session. Students are expected to come to class having completed required readings and thoroughly prepared cases. For the six sessions in which cases are discussed, students must work through the case in advance, and hand in at the beginning of that session their rough notes containing calculations and numerical and/or written answers to the questions posed in the cases. This will not apply to the second case, 503 Cricket Road, for which students will submit a more formal write-up. These submissions will be reviewed and returned by the instructor and will comprise part of the participation grade. In-class participation will account for 20% of the final course grade. Academic Dishonesty Students are encouraged to discuss the course material with each other and to assist one another with assignments. However, answers, conclusions and recommendations that a student submits for an individual assignment must be the result of that student s individual effort. It is your responsibility to avoid making all aspects of your work products available to any other student. Failure to meet these criteria could result in charges of Academic Dishonesty that will be vigorously pursued by the university. Health and Disability Accommodation Students requiring health and disability accommodation must provide the instructor with official documentation from Queen s Health, Counselling and Disability Services. Ideally, this is done at the beginning of the course. For more information on your rights and responsibilities regarding health and disability accommodation, see http://www.queensu.ca/hcds/ds/students/accommodations.html.