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
Gearing / Leverage
- Adding senior debt “bullet” loan
Analyse the results
- IRR, NPV and maximum bidding price
- Data tables & sensitivity analysis
- Risk visualisation (charts)
Case study:
- Single-tenant office building in the UK
Rent Forecast of Multiple Tenant Properties
- Modelling tenancy schedules
- 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
Case study: multi-tenant office building in the UK
