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REAL ESTATE PORTFOLIO

MANAGEMENT & ASSET

ALLOCATION

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“BIBF plays a vital role in the

training and development of

human capital in the Middle

East and North Africa. Our

commitment to excellence has

strengthened our position as

the leading educational provider

across all major business

disciplines. We serve as a

partner to numerous world-class

institutions; delivering thought

leadership, assessment and

training in the areas of Banking,

Islamic Finance, Executive

Development, Accounting &

Finance, Academic, Leadership

& Management, Insurance,

Information Technology and

Communication; resulting in a

complete business solution”.

Course objectives

The workshop “Real Estate Portfolio Management and Asset Allocation” deals with real estate as an asset class and how to achieve an optimal risk/return relationship when including real estate - and infrastructure as a sub-asset class - in asset allocation. The course is structured to also present a recap of modern investment management but with a concentration on the mathematical aspects of asset allocation. Focus of this workshop is the practical application of the learned concepts and the interpretation of the results. The workshop presents first the necessary performance and risk measures in order to understand the ideas of modern portfolio management like diversification, efficient frontier and capital asset pricing model (CAPM). Thereafter, it will present the various forms of real estate investments in detail, looking at their characteristics and risk/return properties. Finally, we look into asset allocation using real estate and infrastructure as asset classes.

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Why take this course?

How to construct an investment portfolio in the best possible way is the key question of each investor, be it be a private individual or an institution. But what does “best” mean and how can the “quality” of a portfolio be measured? The workshop will deal with these questions in detail, focusing on real estate investing and starting with the idea of the risk and return of an investment.

When including real estate investments into a portfolio, this asset allocation decision follows the Markowitz approach which will be presented with applications. The centre of this workshop, real estate investments, will be embedded into this asset management concept and will show how the various forms of real estates can benefit the overall portfolio. The analysis of implied risks, and how they can be measured in the real estate space will also be a key part of this workshop. Finally, a short introduction to infrastructure investments will be provided as a popular way to invest in real assets.

Workshop background

The workshop will enable participants to:

• Apply the idea of risk and return to the asset class “real estate” and to asset allocation studies

• Understand the key terminology in real estate asset management, and how they are linked

• Learn the mathematical concepts to construct optimal portfolios which include real estate as an asset class via the Markowitz optimisation approach

• Get familiar with the idea of diversification between the different asset classes

• Acquire a thorough understanding of the key risk and return characteristics of public and private real estate and the various ways of investing in them

• Look into the characteristics of residential and commercial real estate

• See how REITs work and what their risk/return attributes are

• Understand the key ideas of infrastructure investing

Benefits of the workshop

The workshop is designed for middle and senior level managers working in finance, asset and risk management who want to get a structured introduction to real estate portfolio management.

This workshop is very interactive. This means that the concepts will be presented with many applications which are explained by the trainer and by using many exercises that have to be solved by the participants with the trainer’s support. Case studies will be used to enhance the learning effort

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This workshop is on an intermediate to advanced level. No prior knowledge on the subjects is required but a sound interest in investment management is needed. All mathematical knowledge to understand the presented formulas will be introduced. However, a moderate level of mathematics and some familiarity with Excel formulas and calculations is highly recommended in order to understand the ideas for single parts of this workshop.

The workshop covers the concepts of real estate portfolio management in its various aspects and in the context of asset allocation. During these 2 days, real estate investments will be presented in detail along with how they can be included in a portfolio management and asset allocation framework.

09.00 – 09.15 Introduction and course description

09.15 – 10.45 Key terminology used in asset management and real estate including:

• Index, benchmark and market • Capitalisation

• Styles

• Track record

• Open-end, closed-end

10.45 – 11.15 Coffee break

11.15 – 12.45 Performance and risk measurement:

• Measures for absolute return strategies

• Return calculation

• Volatility

• Covariance, correlation

• Sharpe ratio

• Measures for relative return strategies vs. index:

• Alpha • Tracking error • Information ratio • Beta 12.45 – 14.00 Lunch break

Prerequisites

Workshop agenda

Day 1 – Sunday, 13th December 2015

14.00 – 15.30 The Markowitz approach in asset allocation:

• The idea of diversification • Efficient frontier

• Minimum variance portfolio • Capital asset pricing model (CAPM)

• The math behind: how to calculate an efficient frontier and to determine the optimal asset allocation

15.30 – 16.00 Coffee break

16.00 – 17.00 Introduction to real estate:

• Real estate as an asset class • Categories of real estate • Ways of investing in real estate • Real estate investment styles

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Dr. Schulmerich has 15 years of experience in the asset management industry.

His professional experience covers positions in equity portfolio management, fixed income portfolio management, risk management and product management.

He started his professional career at the asset management entity of Commerzbank (now part of Allianz Global Investors, AGI) and PIMCO.

Dr. Schulmerich is the Global Portfolio Strategist at State Street Global Advisors (SSgA) in the EMEA region (Europe, Middle East and Africa). He is responsible for having actively managed quantitative equity portfolios and absolute return strategies. SSgA is the third largest institutional asset manager in the world. For SSgA he also conducts various internal training as well as external training for key clients in the EMEA region, Asia and South America, with a focus on Sovereign Wealth Funds and Central Banks.

Dr. Schulmerich holds a Doctoral Degree from the EBS University in Wiesbaden/Germany, an MBA from the M.I.T. Sloan School of Management in Cambridge, MA/USA and an M.Sc. in Mathematics from the University of Mainz/Germany. Since 2005, Dr. Schulmerich has been a guest lecturer for Derivatives, Portfolio & Risk Management, Alternative Investments and Financial Engineering at the EBS-Business School in Wiesbaden/Germany, one of the top business schools in Europe. He has published extensively on portfolio management, risk management, interest rate modelling, real options valuation and behavioural finance. He is also a frequent speaker at international conferences.

09.00 – 09.15 Recap of day 1

09.15 – 10.45 Case study “U.S. housing bubble “ 10.45 – 11.15 Coffee break

11.15 – 12.45 Real estate investment trusts (REITs): • What are REITs?

• Advantages of REITs • Disadvantages of REITs • Basic investment types of REITs • REIT structures

Real estate indices:

• Introduction

• Valuation Methods • Featured Indices

12.45 – 14.00 Lunch break

14.00 – 15.30 Infrastructure as an asset class

• Introduction

• Infrastructure investments

• Performance

15.30 – 16.00 Coffee break

16.00 – 17.00 Case study “asset allocation”:

Construction of an Excel sheet to apply Markowitz optimisation in an asset

allocation case study that includes real estate, infrastructure and other asset classes.

Day 2 – Monday, 14th December 2015

Instructor Profile:

Workshop: Dates & Cost

DATE DURATION LOCATION PRICE December 9-10, 2015 2 Days BIBF BHD 300

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Leading Excellence in Banking

For more information and Registration

Please contact the Centre of Banking @ Tel: (+973) 1781 5555 Ext: 6320

References

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