Courses

    The goal of this mini-course is (i) to introduce students to the structure, economics and key participants in financing transactions involving income-producing property in the U.S. capital markets, (ii) to identify and explain the factors which caused the recent economic turmoil in the capital markets, (iii) to review the U.S. Government’s recent actions in seizing control of certain financial institutions active in the capital markets, and (iv) to review briefly the U.S. Government’s efforts to stabilize and regulate the U.S. capital markets. This mini-course will also review factors which recently caused major disruptions to certain parts of the U.S. capital markets, including losses on investment derivatives, the loss of confidence and liquidity among the participants, the seizure of Fannie Mae, Freddie Mac and AIG Insurance, the sales of Bear Stearns and Merrill Lynch, and the bankruptcy of Lehman Brothers. It will discuss economic return, how it is determined, how it is shared by the participants, and how it drives fundamental legal structures and negotiations. It will also cover basic concepts of cash flow, leverage, and tax sheltering of income. It will introduce the economics of asset-based financing, including loan-to-value ratios, interest rates, amortization and residual value and how they are incorporated in the business and legal structure. It will cover leasing of personal property as a financing technique and the legal structure of securitized finance, in which loans are pooled and interests in the pools are sold as securities. Emphasis will be given to structuring public and private funding of real estate. The mini-course will be a survey of complex financing techniques and will not emphasize math, but rather practical solutions and concepts involving the business and legal framework for financing income-producing property.