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.
Who should attend this course
Investment surveyors, real estate finance professionals and property consultants.
Details
Duration: 2/3 days
Location: Online/ Hard Rock Hotel, London
CPD Hours: 12/18
Level: Intermediate/Advanced
Course fee:
Payment Plans available
The course fee includes training, course materials and post course support.
Dates
- 13-14 & 17 February 2023
- 24-25 & 28 April 2023
Content
Day 1
Residual Valuation Appraisal
Property Yields
Land Value
Profit Appraisal
Gross and Net Development Values
Return on GDV, Cost and Equity
Pro-forma 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 & risk analysis
Data tables & sensitivity analysis
Risk visualisation techniques
Case study: un-geared office redevelopment in the UK
Day 2
Development finance
- Debt & Equity Structures
- Senior Debt
- Mezzanine Loan
Geared cash flow
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
Day 3
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
What our customers say:
“I participated in Cambridge Finance’s two-day, real estate development modelling course and benefited immensely from:
- An extremely well-structured course;
- An interactive class, taught at pace;
- A highly knowledgeable and engaging instructor; and
- Excellent course material.
Ultimately, I came away from the course more confident in my modelling and equipped with the tools (handy excel shortcuts included) to build a robust but organised development model.
I highly recommend the Cambridge Finance team and for any entry level or intermediate employees looking to refine their skills.”
Laura, Real Estate Finance professional.