Real Estate Capital Markets

Catalog description

This course introduces students to real estate securitization from both an equity and debt perspective. It analyzes alternative types of equity securitization vehicles including real estate investment trusts (REITs), commingled real estate funds (CREFs), real estate limited partnerships (RELPs), master limited partnerships (MLPs), and real estate swaps. The course also introduces students to mortgage-backed securities (MBSs) as an example of real estate debt securitization, and explores differences in their cash flows, prepayment, and default probabilities. It discusses the dynamics of mortgage prepayments and pricing the embedded call option in a mortgage, followed by real-world applications. Students explore such mortgage derivatives as mortgage pass-throughs, interest-only and principal-only strips, floaters and inverse floaters, and various types of collateralized mortgage obligations such as planned amortization classes.