Real estate finance is now available from banks, insurance, pension and private equity funds, with appropriate gearing allowing real estate investors and developers to have access to larger opportunities and to leverage returns.
Some commercial real estate investments use very low debt levels whereas some other have a very high debt ratio, but overall an adequate balance between equity and debt can be beneficial on a risk adjusted basis in order to support sustainable real estate – and economic – growth.
Despite debt finance being of fundamental importance to the real estate markets, its characteristics are not well understood by the surveying community, especially the effect of debt on the risk and return profile of real estate returns and how debt could eventually lead to distressed assets.
On this course, participants will build up knowledge about capital structure, how debt impacts the risk and return profile of investments, ways to access the debt markets as well as the main characteristics of debt facilities. They will learn about financial covenants and how leverage buy-out schemes work in practice.
By enhancing the knowledge and skills in real estate debt finance, participants will be enabled to improve their performance when raising debt and interacting with clients from the finance and investment community.
This course is delivered in partnership with
Duration: 3 sessions of 1.5h each
CPD Hours: 4.5
- Motivations to use debt
- Capital Structure
- Sources of debt
- Understanding loan terms
- Understanding financial covenants
- Current market considerations
- Types of debt facilities
- Cost of debt
- Interest rate risk and hedging instruments
- Recourse vs. Nonrecourse Debt
- Real Estate debt underwriting: main points to be considered
- Distressed Real Estate and Non-Performing Loans (NPLs)