What's a good CRE investment analysis book?
I was looking at the PKG COMMERCIAL REAL ESTATE ANALYSIS & INVESTMENTS W/CD 3rd Edition by Geltner on Amazon. Is there another free alternative to something like this? Or what would the best way to get started if I wanted to get into CRE investment analysis? I have no background and I'm a CFA Level 1 candidate. There's a job opportunity in my area, but I don't have any experience in valuing commercial property. I wanted to get started and get ahead to be more valuable in the industry.
Thanks!
Linneman's textbook is solid
Agreed.
Do you have a title? Did a little google search, are you referring to: Real Estate Finance and Investments: Risks and Opportunities 4th Edition?
That's the one. Worth the price and then some, it's the gold standard for CRE finacial analysis knowledge.
The Real Estate Game by Poorvu. Teaches you how to think about deals qualitatively, which in a business that is not rocket science by any means, is more important than being a financial analysis and modeling whiz.
Thank you! I'll take a peek at it.
Agreed. My favorite
CRE Finance Literature (Originally Posted: 04/14/2016)
I'm finishing up my last term at a state school in the northwest. I have accepted a FT offer in CMBS origination for a BB firm (think GS, JP, Wells) and with a very light course load, I'm looking to sharpen my skills before hitting the desk in July. I interned for a broker (think HFF, Eastdil) after my sophomore year and I interned after my junior year for the shop I'm working when I graduate. During that time I was told to read Poorvu's "The Real Estate Game" and Gallinieli's "What Every Real Estate Investor Needs to Know About Cash Flow". I read both and enjoyed them, so I'm looking for good suggestions on books related to Real Estate Finance comparable to these. Everything in the spectrum from writing about anecdotal deals to dry textbook material would be great, just no get rich quick junk. Thanks in advance.
The Handbook of Commercial Mortgage Backed Securities (Fabozzi), while outdated, is a worthwhile read for someone in your seat and will give you some appreciation for this relatively young security's heritage.
Other People's Money (Bagli), while not strictly about CMBS, is a fun read if you're anything of a deal junkie. It's all about the Tishman takedown of Stuy Town, which as you may know received a gargantuan CMBS loan (and just made CWCapital, the special, a bushel of $).
Commercial Real Estate Restructuring Revolution: Strategies, Tranche Warfare, and Prospects for Recovery (Meister) tends to wander and has one or two political rants from the author that might have better served the book if excluded, but net net is a worthwhile read for your purposes.
I wouldn't say any of these will "sharpen your skills," per se. For better or worse, I'm not aware of anyone having written a book on CMBS originations analyst tasks (i.e. stripping apart OMs, populating sizers, writing ASRs, etc.), but having a grasp of the industry's history and participants plus some esoteric deal anecdotes will show that you're serious, assuming you're doing everything else on par.
Great advice, thanks for the input. I will be sure to check these out.
Wharton puts out a handful of CRE articles that are accessible via google. Search a topic of interest and add "wharton" afterwards and you'll find great PDF articles. Learned a lot on my own this way.
If you want to sharpen your technical skills learning how to put together an excel model is a good start.
I have always found this book helpful: Foundations of Real Estate Financial Modeling by Roger Staiger. I believe towards the end of the book they show how to underwrite a portfolio of multi-tranch loans.
Congratulations. CMBS is a great place to see a great number of deals; I wish I had started here after school. Where I sit in my team, I get to look at many deals, problem solve deals, negotiate with clients and internally, and ultimately underwrite and securitize loans.
Learn how to read a lease. I have said this many times over. Understanding the important parts of a lease is the main thing. Term, reimbursement type, termination options, go dark provisions, co-tenancy clauses, TI packages, and so on. There are many draft leases to on-line which are free to research. They are boring and terrible reads, but are the heart of real estate.
Secondly, I would very much recommend understanding the different asset types that CMBS lenders lend on. Traditionally, they are retail, office, industrial (generally portfolios), multifamily/manufactured housing, and hotels. This is stuff like what is the difference between an anchored neighborhood center and a regional mall. This you can find on the internet.
Materials? Read Linnenman's book. That is all you need. Honestly, there aren't any that I would recommend that are free. The CMBS E-Primer is a good source, but I believe you have to pay. The issue with CMBS materials is that your job sits in the middle of a traditional loan and a bond. Most materials will teach you things about real estate and creating value but not elaborate on the bond part. The rest of the materials are based upon bond stuff which isn't really that important to you if all you're doing is sizing deals.
As for creating models? Your bank will have a model for you, and honestly, at first, your job will most likely begin with entering rent rolls and cash flows from Brokers. You will not be performing that much "modeling". Even after the beginning, CMBS originations is not really about projecting cash flows. Since you are essentially creating bonds, it is all about creating sustainable cash flows.
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