Way Beyond Location

AUTHOR: Lachlan Calquhoun   DATE: 14.12.06   ISSUE 2, 2006

Accurate evaluation is at the heart of finance and AGSM students are applying those skills to the real estate sector through the new Centre for Real Estate Research (CRER).

MBA students are undertaking the course,’Real Estate Investment and Financing Decisions’, which is offered through the CRER and taught by former Asian property analyst Dr Pantisa Pavabutr, who is now CRER’s research fellow. The course uses concepts introduced in the core finance syllabus and applies them to real estate valuation, and takes students through the property development process in stages from feasibility analysis and project financing through to portfolio allocation and assessment.

The case studies give students a different perspective of the real estate industry, ranging from a role as a private developer to a bank lender and loan underwriter.

Illustration: Gregory Baldwin

Bringing together both fulltime MBA and MBA (Executive) students, the course is highly applicable to anyone with or without a direct interest in property because it covers a lot of financial modelling and in-depth analysis of financial valuation, says Dr Pavabutr.

“Regardless of whether you are valuing buildings or anything else those skills are incredibly useful.

“The course is highly interdisciplinary as it involves valuation of property from the perspective of an active investor as well as investment asset allocation from the view of passive investors. I think these will really add to what students have learnt in the core corporate finance class.”

Dr Pavabutr competed her PhD in Finance in the US, at the University of Texas, and is currently Assistant Professor of Finance in the School of Business at Thammasat University, Bangkok. She spent much of the 1990s working as a property analyst in Asia, including a stint with investment bank Morgan Stanley, describes her teaching style as “very hands on”. One of her priorities is ensuring that some of the class time is allocated to working on spreadsheet modelling.

Combining fulltime and MBA executive students in one class makes for a very diverse and dynamic learning environment.

“I encourage the students to bring in their notebooks so we can have very active discussions over modelling as we go through that process,” Dr Pavabutr says. Combining fulltime and MBA executive students in one class makes for a very diverse and dynamic learning environment. “We also talk about risk in terms of the modelling and from an asset allocation perspective, and take the group through some case studies.”

The case studies give students a different perspective of the real estate industry, ranging from a role as a private developer to a bank lender and loan underwriter.

In another case, students take the role of a pension fund manager going through the process of real estate asset allocation.

Case studies are undertaken either individually or in groups of three or four, with the assignments prepared after intensive in-class discussion. “You don’t have to be a developer to use or need any of these skills, because they are widely applicable,” says Dr Pavabutr.

“Whether you are a securities analyst valuing a property firm or an investment banker working on an initial public offerings case or looking at a target firm in a merger and acquisition situation, appraisal tools can be applied.”

CRER was launched late last year and was formed by AGSM and the US-based McCombs School of Business in Austin, Texas, with support from leading corporates AMP Capital Investors, Westfield Holdings, GPT, UBS, Stockland, Macquarie Bank, Jones Lang Lasalle, the Australian Stock Exchange, Mirvac and Colliers.