Real Estate Development, Value Add Strategies & Financial Modelling

Summary

Learn how to construct a robust real estate financial model to assess the financial risk and return profile of development, re-development, refurbishment and value-add investments.

Break down the complexities of real estate value-add strategies and create an elegant cash flow with best practices and up-to-date excel functions.

Master sensitivity analysis which will enhance your real estate financial analysis, error checking skills and improve your underwriting processes.

Course Content

Residual Valuation Appraisal

Property Yields

Land Value

Profit Appraisal

Gross and Net Development Values

Return on GDV, Cost and Equity

Proforma Development Cash Flow

Inputs:

  • Timings: purchase date, works start date, planning, lead in, construction and refurbishment, void period, lease start, sale date
  • Revenue: sales proceeds, estimated rental value per sqf, net internal areas, rental growth and target returns
  • Development Costs: construction and refurbishment, site purchase and vacant possession value, contingency, professional fees, statutory costs, allowances and rights 
  • S-Curve vs. Straight Line

Outputs:

  • Internal Rate of Return (IRR)
  • Net Present Value (NPV)
  • Maximum Bidding Price
  • Total profit, profit on cost and equity multiple

Financial Viability Testing & Analysis

Data tables & sensitivity analysis

Risk visualisation techniques

Case study: Un-geared office redevelopment in the UK

Development finance

  •           Debt & Equity Structures
  •           Senior Debt
  •           Mezzanine Loan

Geared Cashflow

Debt Types

  •          Rolled-up interest senior debt
  •          Equity first capital deployment waterfall
  •          Debt repayment structures for development finance

Joint-venture structures

  •          Equity waterfall structure
  •          Preferred returns
  •          Promote Cash Flow

Capitalised interest & circularities

Case Study: Geared office redevelopment in the UK

Details

  • Current in-place leases, operating expenses – vacancy costs, including rates and empty costs
  • Site acquisition including options, pre-development and planning costs
  • Equity and debt drawdowns, including mezzanine finance

Construction period

  •      Development hard and soft costs using S-curve, Straight line and Known curves
  •      Construction finance drawdowns following an equity-first model

Lease-up and stabilisation period

  •       New leases with gross and net lease clauses
  •       Tenant incentives such as rent-free and capital expenditure contributions
  •       Operating expenses – delayed rates, letting fees, service charges and void costs

Investment options modelling

  •      Lease re-gearing, hold or sell
  •      Re-develop, refinance and hold
  •      Re-develop, stabilise and sell

Sources of funds

  •      Calculating debt and equity peaks
  •      Modelling the debt repayment waterfall
  •      Calculating total cost of debt (interest and fees)

Carried Interest / Promote Structures

  •              Profit shares and preferred equity returns
  •              Equity returns based on different IRR tiers

Risk modelling and presentation

  •       Sensitivity analysis (2-way data tables)
  •       Scenario analysis
  •       Financial ratios: IRR, NPV, Residual Land Value, Profit on Cost, Profit on GDV, Equity Multiple

Investment surveyors

Real estate finance professionals

Property consultants.

Francy Chavez

"Attending the Real Estate Development Financial Modelling Course was the best decision I've ever made. Maria was very helpful and super thorough. Every single thing I learned on the course I am applying to my job everyday."

Francy Chavez
Finance Director
MACE
Firas Al-Ayyoubi

"I really like the structured approach Maria has to financial modelling which helped demystify the modelling practices that I was introduced to on the job. And with this course it was building on the complexities especially in the Value Add Strategies course where you able to successfully model complex scenarios."

Firas Al-Ayyoubi
Finance Director
Gatehouse Capital
Dates & Prices
DurationDuration CPD HoursCPD Hours LocationLocation LevelLevel DatesDates
3 days 21 The Cumberland, London/Online Intermediate - Advanced

3 day Virtual Live

3 day In-Person

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