Back to school: a wide range of graduate and undergraduate programs in real estate finance are being offered at universities around the country. Here's a rundown of some of them. (Education).

EDUCATION HAS ALWAYS BEEN IMPORTANT TO THE REAL ESTATE FINANCE INDUSTRY. Recent years have seen growth in university real estate courses at both the undergraduate and graduate levels. The development of complex funding instruments has provided still more fodder for academics and university programs. * Continuing education in all aspects of real estate finance also is in demand. Such programs are available through the Mortgage Bankers Association of America (MBA) and other industry groups. These targeted courses have become a mainstay for entry into both the upper echelons of mortgage management as well as into entry-level and middle-management positions. * "In the last 20 years, there has been a financial revolution in this country," says Peter F. Colwell, professor of finance and the director of the Office of Real Estate Research at the University of Illinois, Champaign-Urbana, Illinois. "And as a result, the education universe has had to adapt." * "There are a lot of structural changes that have been going on in the real estate industry," says Lynne Sagalyn, professor of finance and economics at Columbia Business School, New York. "You need a new set of tools."

The universities have responded to this new environment, Colwell says, by incorporating into academic programs such techniques as financial engineering and the use of options and futures. Educators, he says, are aware of the industry's need to create new contracts and to adapt existing mortgage structures. The result, according to Colwell, has been a richer and more challenging teaching environment. "It's not so easy, actually, to teach these new concepts," he says. "They're not always apparent."

The business of buying and developing property is now at the center of some of the great public issues of the day: managing growth, making the most efficient use of energy and conserving the environment.

According to Sagalyn, real estate is multidisciplinary. "Yes, we are in a business school," she says. "And yes, we are teaching a heavily finance- and investment-oriented view of real estate. But you can't look at real estate without paying attention to all of the social, cultural and institutional [context] in which real estate takes place."

MBA is involved in educational activities ranging from the publishing of books and the sponsorship of weeklong courses to Internet-based instruction, known as CampusMBA (www.campusmba.org).

CampusMBA has more than 28,000 students, according to Dan Thoms, MBA's vice president for education and business development. "We have just had some phenomenal growth," Thoms says.

According to Thoms, CampusMBA has a number of product lines. They include about 40 Web-based self-study courses, print-based correspondence courses, interactive audio programs designed to be presented in far-flung conference rooms, and classroom-based courses. Courses deal with such disparate subjects as appraisals, the basics of prequalifying and the skills loan officers and mortgage brokers should have. The program is also pushing into real estate finance.

CampusMBA's classroom-based courses tend to last from two-and-a-half to four days, in line with the preference of the participants. MBA also offers its week-long School of Mortgage Banking, in which, Thoms says, students are "totally engulfed." Thoms says MBA's classroom-based courses have key distinguishers: They have clear objectives and assessment procedures, they draw on the expertise of leaders in the mortgage industry and they "leverage the Internet in what we call a blended learning."

MBA also produces books and publications. Thoms says MBA has trimmed its book total from about 200 to about 80, getting rid of titles that were deemed to have lost their relevance. Thoms believes that content tends to have a shelf life of two to three years. And for material related to a new law, he says, the window could be as short as 6o days. "One of the biggest challenges is keeping our content updated and robust," he says.

USC's Lusk Center

The University of Southern California Lusk Center for Real Estate, Los Angeles, is one of the leading real estate institutions in the United States. "Real estate as an academic field has come of age in the last couple of decades," says Stuart Gabriel, director and Lusk chair at the center.

In Gabriel's view, real estate as an academic discipline owes much to the fields of economics and finance. And much of what occurs in the practice of real estate, he says, pertains to such areas as law, public policy, urban planning, architecture, geography and a whole set of related fields, "It very much is a multidisciplinary approach," Gabriel says.

The Lusk Center offers a number of options. An undergraduate student can study for a degree in business with a specialization in real estate investment or finance. A graduate student can work toward a master's in real estate development. And Ph.D. students can earn degrees in such areas as business economics and finance or urban planning. Across these programs, Gabriel estimates, there are 200 to 250 students a year, one-third of them undergraduates.

Students come from all over the world, Gabriel says, many of them from Asia. Some, he says, will take back skills and apply them to such projects as the construction of suburban housing outside Beijing. "Some of what we do is very specific, but also with enough generalizable content to it that there are lessons for other audiences," he says.

The University of Southern California also offers executive education in such topics as the regeneration of impoverished urban neighborhoods. Participants, Gabriel says, might be minority entrepreneurs or public-sector employees.

The Lusk Center is also making a commitment to the publicly built environment through the Keston Infrastructure Institute. Julie Bornstein, former head of the California Department of Housing and Community Development, has been appointed director of the Keston Institute. The Keston Institute, which was founded in 2002, deals with such issues as transportation, open space, water and power.

In a statement made upon her appointment, Bornstein, a real estate lawyer and a former member of the California Assembly, referred to a "growing consensus among Californians that we have not properly invested in our infrastructure, and that severely impacts our quality of life and our business climate."

Gabriel welcomed the appointment. "We are very excited about the idea that we can address the publicly built environment and have some way of impacting this policy stage as well," he says. "As far as we know, we are the only center and institute that is expressly devoted to this topic here in California--or perhaps nationwide."

Since 1954, MBA supported real estate education through its Research and Education Trust Fund. Although the fund is no longer active, it played an important role by awarding scholarships and fostering research in the area of real estate finance. Institutions that received assistance from the fund included Columbia University, the University of Illinois, Louisiana State University, Morehouse College, the University of Pennsylvania, the University of San Diego and the University of Wisconsin.

University of San Diego

Mark Riedy, director of the Real Estate Institute at the University of San Diego, says his background and continuing involvement in the real estate finance industry has helped shape the university's program. "I'm totally grounded in the real world, as opposed to in academia," says Riedy, who is also Ernest W. Hahn Professor of Real Estate Finance. (Riedy, in fact, was the top executive of the internal staff at MBA in Washington, D.C., at one point in his career.)

The University of San Diego's real estate curriculum is focused mainly at the undergraduate level, with seven courses. At the graduate level, students can study for an MBA degree, with an emphasis in real estate. The university has also developed graduate degree courses in real estate. Riedy says it is relatively easy to elevate much of the undergraduate content to the graduate level.

In July 2002, Riedy hired Elaine Worzala from Colorado State University as research director of the university's Real Estate Institute. Worzala, who had headed Colorado State's real estate program, is responsible both for teaching graduate and undergraduate courses as well as for the development of a Master of Science in Real Estate degree program within the School of Business Administration. The first class will begin in September 2004.

According to Riedy, increased press coverage in recent years has raised the overall profile of real estate. At the same time, donors to universities often want to earmark their gifts for specific activities. Students, Riedy says, have been attracted to real estate by the popularity of some teachers and by the chance to make valuable career contacts. For instance, faculty members can steer students toward internships and scholarships. And new graduates can look for a welcome from an industry that values practical, focused training.

Riedy says about half of his undergraduate real estate students are seriously interested in real estate as a career. Another one-quarter are exploring that possibility without having made a commitment. The rest see it as an elective for a finance major. "We have labored to expose more students to real estate," Riedy says.

After graduation, students can choose from a variety of career paths, Riedy says. They may work for developers, join the finance departments of construction companies or become residential or commercial loan officers. Some graduate students will augment their MBAs by simultaneously pursuing law degrees.

Riedy says the issues affecting the California real estate market--notably, housing affordability--work their way into the University of San Diego's curriculum. Also, some students are attracted initially to real estate courses to gain a better understanding of personal finance. "[W]e find ... a lot of them end up making it a career choice," Riedy says.

University of Pennsylvania

The Wharton School at the University of Pennsylvania, Philadelphia, has both undergraduate and graduate programs in real estate. "We offer a major for undergraduates and MBAs," says Joseph Gyourko, director of the Zell/Lurie Real Estate Center at the Wharton School. "They're fairly similar. You have to do real estate finance, real estate development."

Gyourko says there has been more focus given at Wharton to understanding the mortgage markets, both in the form of loans and securitized debt. On the mortgage finance side, Gyourko says, Wharton has recently introduced "an advanced real estate analysis course that gets into the commercial

side of the real estate debt markets." This has reduced an early concentration on the residential market. Wharton offers only a real estate major. It is not possible, Gyourko says, to major in housing finance. "Students must take real estate finance, real estate law and development courses, as we do not allow any more narrow a specialization," he says.

With seven standing real estate faculty, Gyourko says, Wharton covers the entire gamut of the subject. Students "can do everything from high-level mortgage finance to bricks-and-sticks development," he says.

According to Gyourko, Wharton's undergraduate real estate students are often still exploring career possibilities. He says he expects only a handful will go into the industry after graduation. About percent of a Wharton MBA class typically majors in real estate. Normally, MBA students work for five to six years before beginning their studies.

Gyourko says about 30 percent to 40 percent of the MBA students who major in real estate will go into finance jobs. Another one-quarter will be interested in development and may be taking the mortgage courses to learn about financing. The third category of students is made up of operational People--those who are likely to manage assets for the big owner-operators. Gyourko says the extensive job experience of Wharton students tends to mean they are more focused than other students.

Morehouse College

Morehouse College, Atlanta, offers real estate finance as part of its undergraduate concentration in finance. In addition to real estate finance, courses include appraisals and investments.

John E. Williams, Mills Lane professor of finance and dean in the Division of Economics and Business at Morehouse, says the college enrolls between 30 and 40 students per semester in the real estate finance course. "We offer a business administration degree with a concentration in finance, which includes an emphasis in real estate, corporate finance or banking," Williams says.

Morehouse usually has about 1,000 students who major in business. About 40 percent typically are finance majors, most of whom take both the appraisal elective and the real estate finance class. Morehouse's real estate graduates often go to work for major financial institutions.

According to Williams, real estate finance and investment classes have gained interest for students in recent years. He notes the attraction that real estate holds for the entrepreneurial-minded. Williams says the most recent enrollment in these courses is: 25 students in real estate appraisal, 40 students in real estate finance and investments, 45 students in investments and 50 students in the seminar on finance.

"Young people tend to romanticize the whole idea of studying real estate," Williams says. "Some of that romance is lost when they get in the classes, of course, when they realize that there are a lot of nuts and bolts there. But it's attractive to students for that reason.

Louisiana State University, Baton Rouge 

Louisiana State University, Baton Rouge, offers real estate courses at both the undergraduate and graduate levels. Kelley Pace, the Louisiana Real Estate Commission chair of real estate in the Department of Finance at the university's E.J. Ourso College of Business, says the program has been going since about 1980.

Pace says the undergraduate program has eight or nine sections a year, covering 400 to 500 students a year. He says that the graduate program has four of five sections, covering about 250 students. Graduate students can choose between an MBA and a master of science degree.

The Louisiana State program placed the emphasis on the legal aspects of real estate early on, Pace says. During the early 1980s, the faculty was expanded and its focus was broadened to include finance, particularly innovation in mortgage design. The university, Pace says, remains interested in product development. It also tries to keep up with changes in industry technology.

Many of the universities that have developed strong real estate programs are in areas where there has been rapid population growth in recent decades. Pace notes the migration that took place during the 1970s from the North into parts of the South. The development that resulted from this movement, Pace says, led some states to upgrade the qualifications required of real estate professionals. At the same time, he says, money was also put into educational programs.

According to Pace, real estate courses offer a good general background for undergraduate students, most of whom would not be expected to go into the real estate business. But he is generally able to place graduate students in the industry. Popular areas tend to be development, brokerages, real estate finance and banking.

The University of Louisiana has been able to attract industry support for its real estate program, says Pace. Local brokerages, for instance, have funded a few professorships. Local organizations are also a source of the internships that give students a taste of the business.

Pace says the industry has not been specific in suggesting what courses should be developed and offered. He concentrates on imparting a set of skills that will work throughout the industry--in brokerage, development and mortgage banking. Graduates should be able to understand cash flows and capital budgeting, Pace says. They should also be able to make the best use of data sources in order to assess projects. They should also be able to produce immediate results for their employers.

Texas A&M University

Richard Haney, professor of real estate and finance at Texas A&M University, College Station, Texas, says his department tries to encourage students "to give strong consideration to a career in mortgage lending." Haney says students' initial perceptions of real estate are likely to be influenced by memories of the agent who helped their parents buy or sell a house. It's not until they take a real estate survey course, he adds, that they become aware of the breadth of the options.

Haney says that MBA selected Texas A&M for a curriculum development grant in 2000 to make students aware of real estate financing career opportunities as early as possible. In turn, the university tries to keep the industry appraised of the students' overall progress. He regards such contacts as very important. "I don't think that we as academics have done a good enough job of selling what we're producing," Haney says.

Employers report back that students are better prepared than they had expected, according to Haney. "Texas Aggies are very diligent, hardworking, goal-oriented individuals," he says. "We find that this kind of a background and mindset produces an individual that's easy to place out there in the industry."

Haney says that a new graduate would be likely to seek employment with a mortgage lender, typically beginning at the analyst level. Jobs may involve a mix of income property and single-family residential. Haney says his students do not have unrealistic expectations. "They recognize that it's necessary to start at a certain level," he says.

Sometimes, Haney says, students won't realize what they want to do until they are close to graduation. Such people, he says, may opt for the graduate real estate program to obtain the tools for entry into the industry. The graduate program also attracts people with experience in the industry.

Texas A&M's year-and-a-half-long graduate program offers a master's degree in land economics and real estate. Haney says that the detailed training offered by Texas A&M's graduate program in the techniques of finance encourages students to move toward the income-property side of the business. The graduate program has about 35 students a year, versus about 75 on the undergraduate side.

Over the years, graduates of both programs have tended to stay in Texas, attracted by the opportunities afforded by a growing state, according to Haney. "There's a very strong network now of both undergraduates and graduates who have spent their entire careers in the mortgage business and have moved into substantial positions of responsibility," he says. But more students have begun to venture out of Texas, a trend that began about 15 years ago with graduate students, Haney says.

Massachusetts Institute of Technology 

Massachusetts Institute of Technology (MIT), Cambridge, Massachusetts, offers a 12-month master of science degree in real estate through its Center for Real Estate, which is administratively part of the School of Architecture and Planning. The goal of the center, says John Riordan, its chairman, is to find a balance between the fundamentals of development and finance. Riordan says graduate program courses at other institutions may be more likely to focus on the finance side.

The MIT program, Riordan says, is made up of students who are already real estate professionals. There are only 30 students in the program. But other students are likely to be doing joint degrees in such areas as business, architecture or urban planning. Students in a combined program would end up with two degrees.

MIT's emphasis is on the built environment. There is great attention paid to the growth-related initiatives at the municipal level geared at promoting more intelligent and more efficient use of land.

Riordan says graduates of the MIT program tend to go to work for companies active in real estate development or redevelopment. Some students are sons or daughters of families who own real estate companies and can be expected to return to the family business. Some students go out on their own as entrepreneurs. Others enter the public sector, working for cities and urban economic development organizations. The public-sector ethos is encouraged.

Riordan says, "We have a phrase here at MIT that says, 'Our students build the future. You can, too.'"

According to Riordan, employers may look to different schools for different things. He says graduates of the MIT program would prove attractive to organizations focused on activities such as acquiring the land for a project, obtaining the necessary permits, shaping the design and choosing the right partners. "I would say there's a very practical, applied bent to what we do," Riordan says. "And it figures; MIT is a very applied place."

Riordan, who came to MIT after 20 years as head of the International Council of Shopping Centers (ICSC), says the school maintains strong links with the industry. MIT is closely attuned to the public issues surrounding real estate development, he says. "Right now, we have a strong... sentiment in the United States that maybe we ought to do things a little differently," Riordan says.

"Folks are sort of fed up with certain things, traffic among them--how far we have to travel. There are other people who don't mind development, as long as it's somewhere else," Riordan adds.

Riordan says that higher-level education in mortgage finance is relatively new. He says that the MIT program, introduced in the 1980s, has been one of the programs that has led the way The benefits of this kind of education have yet to filter through fully to the public sector, according to Riordan. But he has seen more support for development and growth in the public sector, as local governments come to understand the importance of development to real estate tax bases.

Columbia University

The Columbia Business School real estate program also has a strong finance orientation. Sagalyn describes the course as "an MBA program that has a specialty in real estate. It's not a mortgage banking program." The program has 35 to 40 students a year, representing 4.5 percent to 5 percent of the graduating MBA class. Sagalyn says that MBA has given Columbia scholarship funds for a number of years.

The MBA scholarship is among the largest available to Columbia's real estate students, says Sagalyn. "We only give it to one person, so we choose to recognize somebody in that way as opposed to breaking it up," she says.

Sagalyn, who has participated in the process of awarding the MBA scholarship, says she looks for "the strongest student, and somebody who is likely to be a leader going forward. Many times it's been the president of the [university] real estate association."

Columbia's real estate students arrive with backgrounds in finance and economics. Typically, they will have three to four years of business experience. The course, which is fulltime over two years, deals with the basics of commercial real estate in terms of finance, investment and management transactions. Career paths tend to be toward such areas as investment banking, private equity investment, investment management, real estate development and consulting.

The Columbia curriculum, Sagalyn says, is not a product of fashion, "We're teaching basics," she says. "We're teaching basics of finance. We're teaching basics of accounting. We're teaching basics of problem-solving and entrepreneurial thinking. Those things don't change."

Columbia's real estate program relies on more than 50 cases. It is important, Sagalyn says, to integrate the qualitative and the quantitative. The school also has access to high-level people in industry, both as adjunct faculty and guest speakers. "We're in New York," Sagalyn says. "It's easy to get anybody to come to our classroom and teach."

Georgia State University 

Finance is a major component of both the undergraduate and graduate real estate programs at Georgia State University, Atlanta. Joseph S. Rabianski, professor and real estate department chair in the Robinson College of Business at Georgia State, says the university offers a semester-long course in real estate finance. Undergraduates, who take a real estate major with a bachelor of business administration degree, are instructed in the intricacies of the primary and secondary mortgage markets. They also study construction and development loans, equity participation agreements, amortization and the calculation of yields and costs.

Inevitably, Rabianski says, some graduates will change direction. Some may, for instance, be attracted from lending into brokerage or consulting because they see the potential to make more money. Others may be more comfortable with analytical jobs. And some salespeople, he says, eventually burn out. "My guess is that as people start to reach 40, they start to look for more stability in their life," he says.

Rabianski says that Georgia State's MBA program offers similar courses to the undergraduate level. But graduate students are exposed more to policy issues and the structuring of financial deals. The graduate students will be taught, for instance, how to use leverage syndication to maximum effect. Rabianski says that about 80 percent of the graduate students are full-time employees in the real estate industry in Atlanta. Typically, they would take one or two courses at night per semester. Students tend to be in their late 20s, but some are in their 40s.

The graduate program hosts an annual contingent of German exchange students, who add a master's degree in real estate to their European business degrees. These visitors, Rabianski says, "bring a thirst for knowledge."

According to Rabianski, a graduate with a bachelor's degree can expect to command a salary "from the low forties to approximately fifty" thousand dollars a year. Holders of master's degrees--who are already likely to be in the business--can look for salaries in "the low sixties with little experience to the eighties with a reasonable amount of experience," says Rabianski. "One guy told me that the MS was worth $25,000 a year to him. And I think, to a large extent, that's probably true--because most of the people come back to get the degree as a stepping stone to the next level in the company.

University of Illinois

The University of Illinois offers finance programs with real estate concentrations at three levels-bachelor's, master's and Ph.D. Colwell says employers are looking for candidates who are knowledgeable about both commercial and residential.

"You sometimes want a utility infielder," he says. "And it's smart sometimes to have people cross-trained."

Colwell says the main issues in residential mortgages revolve around pricing, notably the prepayment option.

While there is strong academic interest in the workings of the residential market, the best statistics are in the hands of the financial institutions, according to Colwell. "This is proprietary data," he says. "And they're not likely to be sharing this with researchers at universities."

Indeed, Colwell says, the institutions are more likely to hire their own researchers in order to extract maximum commercial advantage--for themselves--from the data. At the same time, he says, the universities have a role in pointing their students toward the large institutions.

Colwell says there is good rapport between academics and the industry. Not only is the industry more sophisticated than it once was, Colwell says, but given its access to high-quality data, it "may be more sophisticated than the universities." By contrast, Colwell says, the universities must rely on textbooks that might be several years old. "So we probably aren't as hip as we should be," he says.

Texas A&M's Haney finds a general improvement in the quality of real estate programs at U.S. universities. He says that the participants in MBA's curriculum development grant initiative gather in February to talk about what's going on. Also, he says, there are a couple of scholarly associations that meet once a year. "At these meetings, you get together and visit and chat, and compare and benchmark what you're doing with what others are doing, and get ideas about how you can improve your program from the work that others are doing," he says.

This cross-pollination between the industry and the academic environment is important to laying the groundwork for future generations of industry leadership. As the U.S. mortgage sector becomes ever more complex, education--in its varied forms--will remain vital to its success. MB

Robert O'Connor is an American freelance writer based in London. He writes on a number of topics, including finance and information technology, for publications in Europe and North America.