Euromoney Learning Solutions

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About the course

Understand the impact of REITs on the real estate industry

Regardless of whether you are a real estate professional, occupier, owner, developer or investor, the impact of Real Estate Investment Trusts (REITs) on the real estate industry cannot be ignored. This course is designed to provide a broad understanding of REITs. Beginning with an overview and history of REIT structures in the U.S. (where REITs were initially formed in 1960 and probably have the most structured alternatives), the course then continues to provide an overview of various other global REIT structures in a comparative format. The course discussion compares REITs to other investment structures in the capital markets identifying any correlation.

Once this overview is provided, the course delves into the details of structuring, underwriting and valuing a REIT. We discuss common financial metrics used to analyse REITs for debt underwriting and principal investment, as well as methods to determine REIT valuations. Motivations and considerations for choosing different REIT structures will be discussed. Case studies and class exercises will proliferate throughout the course.

Objectives

By the end of the course, participants will be able to:

  • Be conversant with REIT terminology, basic concepts and structure
  • Understand how and why REITs came into existence
  • Be aware of the benefits and detriments of a REIT structure
  • Understand key REIT differentiators, REIT organisational and corporate structures
  • Be able to calculate and interpret REIT valuations
  • Appreciate the market dynamics that impact REIT’s
  • Understand asset and property management for REITs
  • Analyze the financial statements of REIT’s
  • Know process for listing a REIT or becoming private

Course prerequisites

This program presumes familiarity with basic accounting and corporate finance principles as well as a basic understanding of real estate investment concepts.

Agenda

Day 1

Session 1 History, purpose and types of REITs Relationship Management

  • What is a REIT?
  • The beginnings of REITs
  • The failures and successes
  • Types of REITs
  • Case studies/examples

Session 2 How does a REIT differ from in a REOC?

  • What is a REOC?
  • Public versus private ownership
  • Investment characteristics
  • Case studies/examples

Session 3 REITs around the world

  • Growth of the REIT structure around the world
  • Examples and comparisons of REITs around the world
  • How are REITs proceeding and succeeding around the world?
  • Case studies/examples  

Day 2

Session 1 Typical qualifications to be a REIT

  • Financial, management and ownership qualifications
  • Maintaining and monitoring the qualifications
  • Limitations and rationale for choosing a REIT election
  • Case studies/examples

Session 2 REITs and their correlation with the capital markets

  • The debate
  • Use in investment portfolios
  • Case studies/examples

Session 3 Managing a REIT business from the inside

  • Operations
  • Asset and portfolio management
  • Joint ventures

Day 3

Session 1 Common REIT financial metrics

  • Management review
  • Common REIT financial measures
  • Review of their financial statements
  • Case studies/examples

Session 2 REIT Valuation

  • Traditional valuation methods aren’t relevant
  • Calculating net asset values (NAV)
  • Pros and cons of valuation metrics
  • REIT dividends
  • Case studies/exercises

Session 3 Underwriting a REIT

  • Balance Sheet and Income statement analysis
  • Bottom-up or top-down analysis
  • Structuring and credit underwriting for REITs
  • Examples/exercises  

Day 4

Session 1 Listing a REIT

  • Assessing the market interest
  • IPO process
  • Reversing a listing
  • Case studies/examples

Session 2 REIT M&A

  • REIT M&A, governance and activism
  • Do they make sense?
  • When should they be done? Avoided?
  • Case studies/examples

Session 3 Comprehensive Group Case Study

The class will have broken into discussion and work groups. A case will be given to the class. Each group will be given a particular set of goals to be reached and questions to be answered. Each group will present their conclusions to the class.

Session 4 Investment and lending trends for REITs

Session 5 Conclusion and Summary

Trust the experts

Stephen Peca

The course instructor has extensive professional experience ranging from banking and finance to capital markets, private equity, project management, risk management and executive education.Stephen formed and is managing director of Concourse Realty Group which provides transaction, asset and port...

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