BUSI 331 - Real Estate Investment Analysis and Advanced Income Appraisal
UBC Real Estate Division. 2019. Real Estate Investment Analysis and Advanced Income Appraisal. Vancouver, BC: UBC Real Estate Division.
Chapter 1: Overview of Real Estate Assets and Markets
- Investment Characteristics
- Competitive Real Estate Markets
- Attributes of Real Estate Investments: Advantages
- Attributes of Real Estate Investments: Disadvantages
- Investment Analysis Process
- Feasibility Studies and Appraisals
- Appendix 1.1: Review of Mortgage Finance Calculations
Chapter 2: Analysis of Income and Expenses
- Traditional Accounting Statements
- Moving from GAAP to IFRS
- Forecasted Financial Statements for Appraisal and Analysis
- Gross Potential Income
- Vacancy and Collection Loss
- Expense Covenants
- Operating Expenses
- Appraisal vs. Investment Analysis: Forecasting Considerations
- Ratio Analysis
- Operating Leverage
- Cash Flow Analysis
- Forecasting for Appraisers
- Operating Cash Flows and Income
- Pro Forma Statements
- Property Appreciation and Reversionary Flow
- Debt Refinancing and Capital Expenditures
- Appendix 2.1: Rental Covenants
- Appendix 2.2: Major Expense Classifications
Chapter 3: Introduction to Leasing
- The Rights and Obligations of the Parties
- Remedies for Breach
- Termination of Tenancy
- Registration and Priority of Leases
- Dispute Resolution
- Comparing Residential and Commercial Tenancies
- Lease Documents
- Types of Property Commonly Leased
- Advantages to Landlord and Tenant of Leases
- Types of Risk
- Appendix 3.1: Glossary of Lease Terminology
Chapter 4: Lease Analysis
- Lease Negotiations
- Lease Review
- Sample Leases
- Sample Lease 1: Shopping Centre
- Sample Lease 2: Office Unit in Traditional Office Building
- Sample Lease 3: Gross Lease with Operating Cost Adjusting Clause
Chapter 5: Appraisal of Income-Producing Properties
- Income Capitalization
- Discounted Cash Flow: Appraisal with Multiple Periods’ Income
- Income Approach in Practice
- Case Study 5.1
- Case Study 5.2
- Appendix 5.1: Analyzing the Implicit Assumption of the Direct Capitalization Model
- Appendix 5.2: Case Study 2: Year 1 Calculations of Actual Rent and Recoveries
Chapter 6: Valuation of Leasehold Interests
- Identification of Interests in a Leased Property
- What Creates Leasehold Value
- Selection of Discount Rates for Various Interests
- Illustrations of Market and Contract Rents
- Percentage Leases
Chapter 7: Taxation of Real Estate Investments
- Canadian Income Tax System
- Sources of Income
- Rules in Computing Taxable Income
- Capital Cost Allowance (CCA)
- Development of Real Estate: Soft Costs
- Disposition of Assets
- Adjusted Cost Base - Partnerships
- Using Real Estate to Reduce Taxable Income
- Implications for Real Estate Valuation and Investment
- Goods and Services Tax/Harmonized Sales Tax (GST/HST) and Real Estate Transactions
- Other Taxes
- Appendix 7.1: Taxation of Non-Resident Income from Canadian Real Estate Investments
- Appendix 7.2: Victoria Medical Centre
Chapter 8: Real Estate Investment Analysis
- Investor’s Investment Criteria
- Single-Period Measures
- Case Study: Kelowna Office Complex
- Discounted Cash Flow analysis
- Appendix 8.1: Kelowna Office Complex Analysis
- Appendix 8.2: Calculator Steps for Select Illustrations
Chapter 9: Mortgage-Equity and Residual Valuation Techniques
- Part I – Mortgage-Equity Valuation Techniques
- Part II – Residential Valuation Techniques: The Capitalization of a Dual Stream of Income
- Applying Residual Techniques
- Application: Developer’s Residual Method of Appraisal
- Appendix 9.1: Modified Band of Investments À La Ellwood
- Appendix 9.2: Calculation of Mortgage Constant and Other Variables
- Appendix 9.3: Mortgage-Equity Capitalization Techniques: An Indirect Estimation of Value
- Appendix 9.4: Calculator Steps for Select Illustrations
Chapter 10: Risk Determination, Measurement, and Analysis
- The Anatomy of Risk Taking
- Risk Measurement
- Single Project Risk Analysis
- Appendix 10.1: Degree of Total Leverage Example
- Appendix 10.2: Standard Normal Distribution Area
- Appendix 10.3: How to Read a Standardized Normal Curve
- Appendix 10.4: IRR and Probabilities
- Appendix 10.5: Calculator Steps for Select Illustrations
Chapter 11: Real Estate Ownership Structures
- Co-Ownership
- Divided Ownership
- Corporate Ownership
- Trusts
- Partnership
- Joint Venture
- Implications of Organizational Form
- Partnership Option
- Syndication
- Real Estate Investment Trusts in the Canadian Context
- Appendix 11.1: Real Estate Syndication
Chapter 12: Real Estate Investments: Portfolio Analysis and Management
- Investor Objectives
- Portfolio Returns and Risks
- Real Estate Portfolios
- Real Estate in a Mixed-Asset Portfolio