This course will cover the art and science of commercial property valuation, from information gathering, the due diligence process, the core valuation methods used for commercial property, and how to create simple valuation models for commercial property using Microsoft Excel as a calculation tool. The course will explain the timeline of a valuation, using an example. Each step will be discussed and explained so learners will understand the WHY of the valuation elements. This builds confidence so learners will be able to justify every aspect of their own valuation and make sound decisions based on evidence.

We then look at climate risk, how it drives valuation, and risk modelling tools in Excel to assess how climate change should impact investment strategy and decision-making. We apply skills learned earlier in the course to assess the climate risk impact on the long-term value drivers at both the asset level and the market level. We will explore how climate risk will cause risk premiums to increase in many real estate markets; and, how asset-level valuation factors may be impacted, and how to build this into your valuations.

Who should attend this course?

This course is designed to give delegates the background, methodology and practical tools to understand and produce commercial property valuations and to study the impact of climate risk. Ideal for anyone who needs to produce, interpret or make decisions based upon valuations for commercial property.

  • finance directors
  • valuers
  • risk managers
  • sustainability experts
  • investment strategists

We will cover the main purposes, bases, and methods for commercial real estate valuation, producing a valuation using Excel as a calculation tool. Delegates will be able to confidently use spreadsheets to assert market values, while at the same time following best practices in spreadsheet modelling and valuation methodology

Commercial real estate valuation is a skill set that is always in demand. Many valuers lack the technical abilities to produce these on a spreadsheet, instead heavily relying on third-party, black box software to produce values. Strong valuation knowledge coupled with technical expertise is now a requirement for a successful valuation surveyor.

We will also cover what climate change is, how it is material to the real estate sector, approaches to evaluating climate risk exposure, quantifying climate risk in financial terms, regulatory responses and disclosure guidelines, how to incorporate climate risk in real estate investment models, and implications for investment strategy and decision-making. The course will be highly interactive with the use of case studies and breakout groups for deeper discussion and learning.

This course is designed to give participants a solid grounding in commercial property valuation and an understanding of how climate change should be factored into decision-making, at the strategic level, for active risk management, and as part of valuation and investment decisions. The combination of understanding the theory and technological skills required to produce a commercial property valuation and putting them into practice by focussing on climate risk is an excellent grounding in commercial valuation and is right up to date. Ideal for anyone who carries responsibility for valuation, strategy, risk management, or portfolio management.

Learning Outcomes:

At the end of the course, you will:

  • Feel confident at explaining the holistic overview for commercial valuation
  • Be able to articulate the valuation process from beginning to end.
  • Master the key RICS valuation standards
  • Understand the analysis that supports valuation inputs
  • Create your own valuation model
  • have a basic understanding of what climate change is and how it presents risk to the real estate sector
  • Understand what market-level climate risk is and how asset-level risk drives valuation
  • Be able to model and analyse climate risk for property investments using sensitivity, scenario analysis and simulations in Microsoft Excel
  • Understand regulatory requirements relating to climate risk for Europe, including ECB Guide on Climate-Related and Environmental Risks, the EU Taxonomy, and disclosure requirements
  • Understand how to incorporate climate risk into strategy, risk management, and decision-making

Details

  • Duration:– Online: 8 days, 9am to 1pm
  • Location: Online
  • CPD Hours: 28
  • Level: Basic
  • Maximum number of delegates: 12
  • Course fee: £? + VAT (Payment Plan available)
  • Next Dates: 1-4 & 9-12 March 2021

Content


Online: Sessions 1 and 2


Preparing to Value

• The concept of valuation
• Valuation steps
• Due diligence
• On site investigations – inspection & measurement
• Market sentiments
• Ascertain value significant lease terms in a tenancy
• Rental analysis

Property Yields

• Input versus output yields: initial, reversionary, exit and equivalent yields
• Calculation of output yields, including the equivalent yield in the Traditional Method and Discounted Cash Flow
• What are yields telling you about the property?

Valuation Methods

• Identifying the appropriate method of valuation and yields


Online: Sessions 3 and 4


Basics of Excel Spreadsheet Modelling

• Golden rules for creating valuation models
• Setting up a valuation model and maintenance
• Excel short-cuts and how to become an efficient Excel user
• Data management and housekeeping in Excel

Traditional Investment Methods

• Under- and Over-rented scenarios
• Term & Reversion
• Hardcore & Layer Method
• Hardcore & Top Slice Method
• Years’ Purchase (YP) calculations and yields

Discounted Cash Flow Method

• Setting up the cash flow model using Excel functions
• Present Value (PV), Future Value (FV) and the Net Cash Flow (NCF)
• Calculation of exit value
• Capital value and returns calculations using Excel functions

Development Residual Method

• The Profits Method
• Gross Development Value (GDV) vs Net Development Value (NDV)
• Development costs calculations
• Financing costs calculations
• Residual Land Value calculation based on Profit on Cost (POC) and Profit on Gross and Net Development Values
• Land value based on different development options

Sensitivity Analysis

• Setting up sensitivity data tables
• Creating sensitivity charts


Online session 5


Basic concepts property valuation

by Cambridge Finance
  • The concept of valuation
  • Valuation steps
  • Conventional valuation methods
  • Market sentiment

Online session 6


How does climate change affect property valuation

by Climate Risk Services
  • What is climate change
  • Identifying risk channels
  • Understand asset-level climate risk
  • Understanding market-level climate risk

Online session 7


Discounted Cashflow Method

by Cambridge Finance
  • Setting up the cash flow method using Excel functions
  • Present Value (PV), Future Value (FV), and Discounted Cash Flows (DCF)
  • Calculation of Exit Value
  • Capital Value and returns calculations using Excel functions

Online session 8


Integrating Climate Risk into DCF Model

by Climate Risk Services
  • Identifying main risk drivers
  • Assign probabilities and damage curves
  • Develop Monte Carlo and Bayesian probability distributions of financial impact
  • Update Risk Management Framework