International School of Real Estate Finance & Development Training Week

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Attend this training week programme and save 15% on the combined price of: Real Estate Investment & Finance (days 1-3) Real Estate Development & Finance (days 4-5) A new modular, workshop-based course using spreadsheet models and inter-active case studies to explain and illustrate the fundamentals of Real Estate Investment, Asset Management and Development including structuring the finance for both income-producing properties and commercial construction projects. Module 1: Real Estate Investment & Finance A 3-day course giving a practical introduction to real estate markets, appraisal techniques, investment sourcing, due diligence, risk analysis, subsequent asset management and concluding wi…

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Attend this training week programme and save 15% on the combined price of: Real Estate Investment & Finance (days 1-3) Real Estate Development & Finance (days 4-5) A new modular, workshop-based course using spreadsheet models and inter-active case studies to explain and illustrate the fundamentals of Real Estate Investment, Asset Management and Development including structuring the finance for both income-producing properties and commercial construction projects. Module 1: Real Estate Investment & Finance A 3-day course giving a practical introduction to real estate markets, appraisal techniques, investment sourcing, due diligence, risk analysis, subsequent asset management and concluding with structuring the acquisition finance using an interactive hands-on case study and spreadsheet models. Module 2: Real Estate Development & Finance A 2-day course which can be an add-on to Module 1 or stand-alone workshop. Delegates entering the School just for the last two days are given a briefing overview of what has been covered on the 3-day module to provide context. This module gives a practical introduction to real estate development and finance, covering market analysis, appraisal techniques, risk management and concludes with structuring the debt and equity finance of a development using an interactive hands-on case study and spreadsheet models. As well as covering general commercial real estate, it will include features on hotels and residential assets. Who should attend? The course will be of interest to the following professionals and managers: • Real Estate Investors • Investment Bankers • Financers • Property Developers • Financial Advisors • Financial Consultants • Property consultants • Graduates & New Entrants to Real Estate Investment and Finance • Fund Managers • Investment Consultants • Valuers • Property Analysts • Property Fund Management Staff
Day 1 Module 1: Real estate investment & finance Introduction Structure of Module 1 Delegates’ objectives Real estate markets: macro View Markets & sectors - Niche markets logistics, residential, retail & hospitality - Emerging markets & the importance of transparency Property cycles: opportunities and threats. What to look for in different stages in the cycle. Appraisal & valuation fundamentals What should financiers and investors ask for? What should they look for? Worked examples Terminology & techniques Investment appraisal methods - Different methods for different assets & markets - Regulation & guidance Types of income How do lease terms affect value? Slicing the income and converting to capital Understanding yields and cap rates - Types of yield - Unbundling the all-risk yield What are the key drivers of value? Spreadsheet analysis: investment acquisition Setting up, analysing and comparing different appraisal approaches including income capitalisation & depreciated replacement cost Applying and adjusting cap rates and Income Using different types of cap rates Structuring the cash flow How to structure, avoiding common mistakes. Investor approach -v- financier’s concerns. Worked examples and practical issues Business plans A Cash flow primer: typical patterns of cash flows Discounted cash flow construction: key inputs, variables and outputs Projecting rents, operating expenditure and cap rates Lease roll-overs Net operating income: A line by line assessment from gross to net income Impact of depreciation & obsolescence Use of capital expenditure The exit: when, why, how? IRR & NPV: ratio analysis and diagnostics Solving the maximum price to pay / target sale price Day 2 Spreadsheet analysis: Investment cash flow model Setting out a dynamic cash flow. Shaping up the basic investment deal before finance - IRR, NPV, income and exit ratios. Assess uncertainty & the merits of the investment - Setting the target rate of return. What is an appropriate discount rate? - What else will show whether it is a good deal? - Considering the possible merits and limitations of the project - “What if” testing and adding sensitivity analysis Sourcing product & asset management From sourcing to closing Due diligence: identifying potential “red flags” Asset management techniques Adding and enhancing value Leasing strategies Case study: acquisition & due diligence process Participants will work in small groups to analyse a case study that considers the acquisition of a mixed use investment and the appropriate due diligence processes. Risk analysis in DCF appraisals Risk identification & management techniques Sensitivity analysis & data tables Scenarios Measuring risk Simulation: pros & cons Spreadsheet analysis: risk analysis in cash flow model Testing the uncertainty in the project cash flow - “What-if” testing and adding sensitivity analysis - Scenarios & probability testing - Simulation: a practical technique? Day 3 Structuring the finance Gearing up an investment acquisition (use of leverage). Key financial covenants, sizing the debt, understanding risks, pricing and risk mitigation. The quadrants of finance - Alternative opportunities to raise and structure finance - Corporate strategies - PropCo, OpCo and leasebacks Returns on NOI and returns on equity Typical financial covenants and points for negotiation Different structures, including amortisation Sizing the debt Applying financial covenants to the cash flow After debt cash flow & metrics Profitability -v- financial risk - Identifying and quantifying the risks in the loan Structuring for protection Case study: Investment aquisition and finance Financing a core investment acquisition. 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 structuring issues. Mezzanine and participating loans Stretched debt to quasi equity Structuring a package Stand alone or blended? Inter-creditor agreements Lookback IRRs, warrants and convertibles Worked examples Spreadsheet analysis: Extending the cash flow model to add the finance Analysing the impact of different levels of debt and equity in a cash flow context Adding the senior debt tranche: analyse and adjust a geared cash flow model Mezzanine finance: working through the capital stack including lookback and side by side participation in a risk return context, by adjusting key inputs to the model Review of module and further reading & references Day 4 Module 2: Real estate development & finance Introduction Structure of Module 2 Delegates’ objectives Development market analysis Data Analysis Trends & forecasts Development appraisals & viability Methods & approaches: From residuals to cash flows Down to affordable land cost or profit Line by line items Ratio analysis: What indicates a viable project? How is profit being generated? Spreadsheet analysis: development appraisals 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. Cash flow appraisal techniques: moving from residuals to cash flow Capital budgeting technique (NPV) Discounted cash flow, accumulated cash flow and draw-downs Structuring the cash flows Analysing the outputs: IRR & NPV issues Special topic: hotel development Hotel segments Feasibility Financial viability Implementation Marketing & operations Day 5 Structuring the development finance Pre-let or speculative? 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 Case study: Residential development finance Participants will work in small groups to analyse a case study that considers the risk and return profile of a residential development and consider appropriate methods of finance. Spreadsheet analysis: Development dinance 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. Joint ventures & private equity Landowner & developer JVs Traditional JVs and capital partners Different structures for different players Risk and return Priority of distributions Allocating risk & return Prefs, promotes & waterfalls Showing the exit and risk Spreadsheet analysis: JVs & private equity Spreadsheet models 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. Review of module and further reading & references Course summary and close
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