Comprehensive course analysis
Who should attend
- Lending and Finance Bankers
About the course
Understand the complex process of real estate development
2-Day Development Module
- Interactive case studies based on actual projects with spreadsheet analysis
- Development analysis and appraisal
- Setting up and modelling a development project
- Cash flow appraisal techniques in development
- Structuring the development finance
- Structuring mezzanine, JV and private equity deals
- Modelling sample waterfall structures
The modules are principally aimed at delegates with previous experience in investment/finance or development strategy, but as the course puts delegates on an interactive learning curve to cover fundamentals of each topic, before moving on to more advanced techniques and applications, it allows delegates from both a junior and more senior experience level to participate together. Articles. papers and further references and reading in the Course
Handbooks provide further information, expand and show potential applications for many of the topics included to give a more rounded understanding.
Development appraisal techniques, risk analysis, tests of profitability and viability, sources and types of finance for development
Day 1: Real Estate Development Appraisals & Viability
- Methods & Approaches: From residuals to cash flows
- Line by line items down to affordable land cost or profit
- Refurbishment & repositioning e.g. conversion to co-working or residential
- Ratio analysis: What indicates a viable project?
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.
Appraisal: Residuals to Cash Flow
- Capital Budgeting Technique (NPV)
- Accumulated cash flow and Drawdowns
- Project Discounted Cash Flow
- Structuring the Cash Flows
- Analysing the Outputs: IRR & NPV issues
Case Study: Structuring a Development project
Appraisal of a new development project. Participants will discuss issues include the risks associated with this project (how should they be measured?), the projected yield on cost ,reasons why this project could be successful or a failure, right price for the land, and pros and cons of how the finance should be structured.
Day 2: Real Estate Project Finance and JVs
Structuring the Development Finance
- Pre-let or speculative?
- Construction loan mechanics
- Main Underwriting Criteria
- Project Monitoring: What do Investors & lenders want to know?
Joint Ventures & Private Equity
- Landowner & Developer JVs
- Traditional JVs and capital partners
- Priority of distributions
- Allocating risk & return
- Prefs, Promotes & waterfalls
- Showing the Exit and Risk
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.
Case Study: Development JV
Participants will work in small groups to consider a deal with a new development partner, the suitability of the development, potential risks & returns and consider appropriate JV terms to achieve alignment of interests of the parties involved.
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.
Further Reading & References
The course director is a Chartered Surveyor whose career has spanned both private and public sector work, including large-scale development schemes, urban regeneration projects, project finance and Private Finance Initiatives (PFI). He has undertaken research and consultancy projects in developme...
Videos and materials
Because of COVID-19, many providers are cancelling or postponing in-person programs or providing online participation options.
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