Course Content
Best practice in financial models
- Simple tips to help you become an efficient financial modeller.
- How to avoid errors and present your models in a persuasive way
Implicit investment valuation methods
- Term & Reversion
- Layer / Hardcore
- Property yields
- Defining term and reversionary yields
- Calculating the equivalent yield
Build your cash flow from scratch
- Inputs: passing rent, estimated rental value, initial and exit yields, market growth, review cycles and most
- importantly, target returns
- Outputs: internal rate of return, net present value and worth
- Annual and quarterly discounted cash flows: modelling purchase price, passing rent, rent reviews, exit rent and exit price
Analyse the results
- IRR, NPV and Worth
- Data tables & sensitivity analysis
- Risk visualisation (charts)
Case study
Single-tenant office building in the UK
Multi tenant properties
- Modelling tenancy schedules and rents forecast
- Rent reviews, upward-only, break options, lease expiry
- Modelling hypothetical second leases
- Void period, rent free and estimated rental values
Time-varying rental growth
Net Operating Income Forecast
- Modelling capital expenditure for refurbishment and operating costs (letting fees, void costs, empty rates)
Investment decision
- When to accept the project and make investment recommendation
Case Study
- Multi-tenant office building in the UK
Capital Structure, sources of debt funds & lending criteria
- Capital structures: debt & equity
- Explanation of different debt & equity structures
- Sources of debt fund & lending criteria
Debt Covenants & calculations
- Operational Covenants: asset maintenance, disclosure requirements, insurance and credit line
- Financial Covenants: interest cover ratio, debt service coverage, loan to value, debt yield
Senior debt repayment modelling
- Interest Only
- Constant Amortisation
- Fully-Amortising Constant Payment
- Partially-Amortising Constant Payment
- Rolled-Up (Capitalised) Interest
Pro-forma cash flow development modelling
- Site Purchase
- Gross Development Value (GDV) versus Net Development Value (NDV)
Development Timeline Modelling: Phases and Duration
Development Costs Modelling: Hard Costs and Soft Costs
- S-Curve
- Straight-Line
- Known Costs
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Modelling mezzanine structures
-
Mezzanine interest and fees
Debt Prioritisation
- Modelling cash flow waterfall
- Coupon and capital repayment schedule
Analysis
- Maximum loan amount based on financial covenants
- Credit Analysis
- Stress test
- Capital adequacy calculations
Case study:
Office development lending
Real Estate Risk
Sensitivity Analysis
Data Tables
Scenario Analysis
Automatic scenario modelling
Simulation Analysis
Monte Carlo analysis
Case Study:
Learn how to add a real life tenancy schedule and debt facilities into the models. Analyse any investment-grade commercial property transactions in the European markets.
