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Learning about REITs

A class about Real Estate Investment Trusts encourages students to think critically and hone their investing skills

September 19, 2022

USC Marshall students learn about REITSIn keeping with USC Marshall’s priority of offering students innovative hands-on learning opportunities, the school created a new student investment fund.

Real Estate Investment Trust Analysis, taught by Chris Parsons, professor of finance and business economics, introduced students to principles of financial analysis and fund management. In another innovative move by Parson, the course was offered to both undergraduates and MBA-students.

And there was real money involved.

With a $1M Marshall Real Estate Fund (MREF) on hand, the class set out to train effective fund managers who could make informed investment decisions and create an active REIT portfolio that would, ideally, outperform the unmanaged Bloomberg REIT index.

“The class is mostly about getting them to think critically,” said Parsons, who co-teaches the class with Marco Giacoletti, an assistant professor of finance and business economics. “The goal is to find investments in this space and help student hone their investing skills.”

 

“At the end of the day, you’re using real money and you have to be able to stand by your investment recommendation. This class provided a great lens on ways to analyze data and trends and form a position with confidence.”— Eric Keta '23

Students are broken into teams of analysts and managers, with the MBA students overseeing the undergraduate “analysts.” This hierarchy is meant to replicate the dynamic of teams in real estate, investment, banking and consulting industries. Over the weeks students identify and research possible investments, honing their strategy as they go. Companies are weighted. Risks assessed. Students learn how to view the entire sector and how to identify trends. “I’m there to listen to their investment strategy rationales and try to poke holes in their logic,” said Parsons.

Then comes the final presentation before the professors and managers, and, if accepted, an active trade is then executed.

“At the end of the day, you’re using real money and you have to be able to stand by your investment recommendation,” said Eric Keta ’23, an undergraduate whose Emphases is real estate finance. “This class provided a great lens on ways to analyze data and trends and form a position with confidence.”

Parsons, along with his co-professor Marco Giacoletti, draw students into granular discussions about the sector. “I think the professors are a necessary part of what makes this course so great,” said Keta. “They’re passionate about their research, and great at leading students into discussing and asking the right questions.”

Students describe the class as an ideal blend of technical and conceptual learning. “It was apparent in his teaching that he [Parsons] is always curious,” said Matthew Harrison, who took the class as a senior and is currently in Marshall’s Master of Science in Entrepreneurship and Innovation (MSEI) program. “Some days were more technical and mathematically nuanced, and you had to get through that. Other days we’d have discussions that could go on for 40 minutes. It's pretty amazing the amount of work that went into making our investment recommendations. I learned so much.”

Both Keta and Harrison say their experience in the class helped them identify their future goals in the real estate investing world. “Real estate is a monster conglomerate,” said Keta. “And even if I don't necessarily want to work in the REIT world, this class helped open my eyes to where I do fit into real estate.”

The money invested last spring is now awaiting the new cohort of students in spring 2023. Parsons would like to see the class become year-long. “Our fund has been sitting there unmanaged,” he said. “I’d like to see it actively managed by students all year.”