Real Estate Investment & Finance

Part of the International School of Real Estate Finance & Development Training Week Part 1: Real Estate Investment & Finance Part 2: Real Estate Development & Finance Book both parts together to benefit from a 15% saving on the total course fee. For more information please contact enquiries@euromoneytraining.com 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. 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 Introduction Structure of course 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 Course summary and close