This program is designed to increase your understanding of the increasingly complex and sophisticated process of real estate investment and finance. In order to take advantage of profitable property finance opportunities, it is essential to be equipped with investment skills and essential financing techniques. At the end of this course participants will have an understanding of the key drivers of real estate finance and how to select, assess and model appropriate financial alternatives in a risk / return context.
This course combines action learning, practical insights, and leading edge theoretical concepts.
This course is targeted at:
- Property Analysts
- Property Developers
- Corporate Asset Managers
- Real Estate Investors
- Fund Managers
- Insurance Professionals
- Valuers / Surveyors
DAY 1 & 2
Measuring Real Estate Investment Returns
- A capital market’s approach?
- Types of income
- How do lease terms affect value?
- Slicing the income and converting to capital
- Unbundling the all risk yield
- Types of yield
- What are the key drivers?
Spreadsheet Analysis: Investment Valuation & Appraisal
- Income Capitalisation approach: Applying and adjusting Yields and Income
- Using different types of yields
- Cost approach: Depreciated Replacement Cost
Developing the Business Plan
- A Cash Flow primer: typical patterns of cash flows
- Linking lease terms to appraisal styles
- Lease-up, from gross to net income
- Construction & key inputs
- A line by line assessment down to the net operating income
- Projecting cash flows: expenses v growth
- Capital expenditure
- The exit
- Ratio analysis and Diagnostics
- Solving the maximum price to pay
Spreadsheet Analysis: Case Study I – example cash flow model
- Setting up an investment acquisition cash flow appraisal
- Shaping up the basic deal
- Adding IRR, NPV, income and exit ratios
- Considering uncertainty and the merits of the investment
- What is an appropriate discount rate? What about the target rate of return?
DAY 3 & 4
Financial Structures – Existing Investments
- Gearing up an investment acquisition (use of leverage)
- Typical financial covenants and points for negotiation
- Sizing the debt
- Applying financial covenants to the cash flow
- Interest only, partial & full amortisation
- After debt cash flows
- Identifying and quantifying the risks in the loan
- Profitability and Financial Risk
- From sensitivity to scenario analysis
Spreadsheet Analysis: Case Study II – Extending the cash flow model
- Adding the senior debt tranche
- Analyse and adjust a geared cash flow model
Case Study: Financing a Core Investment Purchase
- Participants will discuss terms for a loan for an investment opportunity. Examples of Term Sheets will be used to focus the discussion on suitable terms. On completion, a spreadsheet model will be used to illustrate the cash flow implications and key points.
Mezzanine and Participating Loans
- Stretched debt to quasi equity
- Structuring a package
- Stand alone or blended?
- Intercreditor agreements
- Look back IRRs, warrants and convertibles
- Understanding the risk and reward structures for the parties to the deal
Spreadsheet Analysis: Mezzanine Finance
Templates will be used to demonstrate a mezzanine cash flow model. It will illustrate different structures, such as Look Back and Side by Side participation in a risk return context, by adjusting key inputs to the model.
DAY 5 & 6
- From residuals to cash flows
- Line by line items down to profit
- Ratio analysis
- How is profit being generated?
Spreadsheet Analysis: Development
- A spreadsheet model will be used to demonstrate the set up of development proposal. Ratio analysis & risk analysis techniques will be used to show the implications of changing market conditions.
- Pre-let or speculative?
- A banker’s point of view
- Construction loan mechanics
- Main Underwriting Criteria
- Project Monitoring issues
- Exit strategies
- Forward sale and full forward commitment
- Matching the loan to the cash flows and the risks
Development Case Study: Participants will work in small groups to analyse a case study that considers the risk and return profile of a development and consider appropriate methods of finance
Spreadsheet Analysis: Development Finance
- Spreadsheet models will be used to demonstrate the impact of finance on Pre-let and Speculative schemes. Debt and Equity issues will be considered and analysed.
DAY 7 & 8
- JVs and capital partners
- Landowner / developer JVs
- Different structures for different players
- Risk and return
- Priority of distributions
- Structures & styles
- Public vs. private equity
- Allocating risk and return
- Prefs, Promotes and waterfalls
- Showing the exit and risk
Spreadsheet Analysis: JVs and Private Equity.
- A spreadsheet model will be used to demonstrate the set up of Joint Ventures, ground leases and private equity models. Delegates will test possible outcomes on the templates provided.
Structured Sales and Lease Backs
Enabling corporate occupiers to release capital to retire expensive debt or repay shareholders
- Market trends and activity
- PropCo, OpCo and Portfolio deals
- Enabling flexibility and cash flow profiles
- Concentration risk and residual value risk
- Case studies
- Stapled Finance
- Future directions?
Spreadsheet Analysis: Leasebacks
- Comprehensive group exercise
- Spreadsheet models will be used to illustrate basic leaseback structures
Program summary and closing
An eight day practical program where you will learn how to evaluate the financial feasibility of real estate deals, you will cover:
- The component parts of a real estate cash flow model, IRRs and Equity Multiples
- Senior debt and equity financing structures and techniques
- The use and application of mezzanine finance
- Development appraisals, cash flows and financing alternatives
- Joint Ventures and Private Equity structures
- Analysing the risk of real estate projects
- Structured Sale and leasebacks
This seminar is designed to be highly interactive, using a mix of case studies, role-play exercises, self-assessment questionnaires, presentations and group discussion to develop the themes around participants’ own experiences and needs. It presents an opportunity for delegates to practice the skills taught using a variety of hands-on Real Estate Finance exercises that stress participation and that reinforce and build on the comprehensive course materials. This training methodology allows delegates to significantly improve their real estate finance skills and to have all their questions answered by the highly experienced negotiation practitioner who leads the course.
Program Name: Real Estate Finance Workshop in Tokyo, Japan
Program Dates: 14 - 21 December 2020
Registration Closes on: 30 October 2020
Venue: Hotel Niwa Tokyo
Program Fee: $4950
Fee Covers: Visa Assistance (complementary), Participant Assessment, Airport Pickup, Accommodation, Wi-Fi, Breakfast, Workshop Kit, Interactive workshop, Program Materials, Local Expert, Practical Activities, Lunch, Refreshments, City Map, Field Visit, Certificate & Boat Tour.Register Online
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