School of Real Estate Finance & Investment

Featuring: Investment cash flow analysis. Public and private real estate vehicles. Use of debt in real estate investment and development. Debt and investment strategy. Corporate real estate finance and structured leasebacks. Putting investment into a portfolio context. Risk analysis. Who should attend The programme will be of value to investors, analysts, financers, developers and advisors. Whilst its focus is primarily on European and African markets, the techniques and trends studied will also be of use to delegates investing in property markets in other regions. This course is aimed at professionals with several years' real estate development strategy or (real estate) finance/investment experience. The course puts participants on a steep learning curve, hence the fundamentals of each subject will be briefly outlined and reinforced before moving onto more complex areas. To gain maximum benefit from the course, participants should be familiar with the principles of discounted cash flow techniques and portfolio theory. Course Materials In addition to exclusive course documentation, participants will receive copies of Excel templates to support the cash flow analysis. Course Background This course is designed as an integrated series of modules which will increase participants’ understanding of today’s complex, sophisticated process of real estate investment and finance. It has been created by a course director with extensive practical understanding of global real estate markets who works in one of London’s top business schools. In addition to expert course tuition, delegates will benefit from networking and information-sharing opportunities. The programme’s main objective is to give insights to the latest thinking and innovation in analytical techniques. Participants will consider frameworks for decision rules on major capital expenditure commitments in public and private real estate markets, both at the asset and portfolio level. Real estate has become a larger, diverse, more sophisticated investable universe and one characterised by relatively low market risk. The growth of the indirect property sector with development of REITs, private equity vehicles and derivative products have significantly improved transparency and liquidity guided by the increasing stature of global industry bodies giving leadership and direction with policy and best practice procedures on a par with the other capital markets. There is an increasing awareness that public and private real estate both have a role in a multi-asset globally balanced portfolio. Essentially, each individual investor needs to have a strategy for and tactical appreciation of how real estate exposure can be accessed, financed and used in a balanced portfolio with a focus on any combination of the objectives of income generation, return enhancement, diversification or inflation hedging. Although some investors may still consider real estate as an “alternative” asset class with hedge funds and venture capital-related projects, it continues to attract institutional investors looking for asset backed income, diversification and liability matching. It is a cyclical asset, but for the well informed investor, property presents different opportunities at different stages of the cycle. Investment opportunities may include opportunistic strategies of buying distressed assets, the undervaluation of REITs or the provision of mezzanine capital. Clearly, however, capital market volatility has altered the investment landscape and financing domestic and cross border investment now involves stricter underwriting standards, which is having an impact on structuring real estate deals for both the investor and the financier. Accordingly, the recognition and analysis of risk is a component part of the programme.
Day 1 Real estate economics and analysis Overview - Structuring and developing flexible cash flow models for analysing real estate investments. At the end of this module participants will have an understanding of the component parts of a real estate cash flow model, the macro and micro influences and will have produced a working spreadsheet model. Structuring a real estate cash flow analysis - Investment valuation approaches - Discounted cash flow: key variables and outputs - IRR, income and exit ratios - NPV, discount rates and target rate of return - Projecting rents, operating expenditure and yields - Impact of obsolescence and depreciation Spreadsheet analysis: Modelling a real estate investment cash flow. Real estate markets - Lease structures - Transparency - Investment activity - Property cycles Day 2 Property investment vehicles Overview - Different types of investment instrument and structures are examined together with the way in which they are valued and traded. The module includes an introductory study of indirect private and public property vehicles and their comparability to direct property investment. Types of property vehicles and their analysis - Investment styles - Private vs. public - Unlisted vehicles - Closed ended vs open ended - Property companies and REITs Spreadsheet analysis: Private equity models. Case study: Residential investment acquisition. Property investment and fund vehicles - Developing a NAV (Net Asset Value) model - NAV case study - Spreadsheet analysis: Alternative valuation methods for real estate vehicles Day 3 Financing property investment & development Overview - This module considers methods of financing and funding of developments and existing investment. In particular, it provides an understanding of debt, quasi-equity and equity techniques and their application to real estate investment and development. At the end of this module participants will be able to apply financial techniques to real estate opportunities as well as assist and contribute to the finance and funding of real estate investments within investing institutions and/or advisory firms. Structuring property investment transactions - Gearing up an investment acquisition (use of leverage) - Typical financial covenants and points for negotiation - Methods for sizing the debt - Applying financial covenants to the cash flow - Mezzanine debt - Preferred equity - Optimising financial covenants & return on equity Case study: Financing a hotel investment. Structuring property development transactions - Speculative vs. prelet - Typical financial covenants and points for negotiation - Structuring the debt and equity Case study: Financing residential development. Day 4/5 Advanced property investment analysis & portfolio management Overview - This module considers the ways that appraisal techniques may be adapted to meet changing market conditions for single projects and portfolios. Corporate real estate portfolio issues are also covered: e.g. the decision-making process that corporates use when dealing with their property portfolios. In particular, factors that influence lease/buy decisions, and the scope for sale & leasebacks. At the end of this module participants will be able to analyse single assets and portfolios, both from the investor and corporate’s point of view, as well as gaining insight to associated corporate finance and risk issues. Capital budgeting techniques: the corporate view point - Interpretation of payback, discounted payback - Capital budgeting techniques - IRR and MIRR, NPV and choice of techniques Spreadsheet analysis: Capital budgeting techniques. Corporate finance decisions and corporate real estate portfolios - Opportunities & change - Buy or lease decisions - Modelling and analysis - From leasebacks to structured leasebacks - Releasing capital - Importance of flexibility Spreadsheet analysis: Buy, lease, leaseback and corporate JVs. Portfolio context: risk and returns - Efficient portfolio construction - Comparative risk/return between property and other investments Spreadsheet analysis: Portfolio risk and return - optimisation strategies Tactical and strategic asset allocation strategies - Tactical and strategic strategies - Top down vs. bottom up - Asset plans - Hold, repositioning strategies - Refinance & recapitalisation strategies - Derivatives Spreadsheet analysis: Asset plan strategies. Course summary and close