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Who should attend
- Lending and Finance Bankers
About the course
3-Day Investment Module
- Interactive case studies based on actual projects with spreadsheet analysis
- Real estate markets: Macro View
- Evidence of cycles in property markets
- Appraisal & valuation fundamentals
- Sourcing product & asset management
- Developing cash flow models: Avoiding common mistakes
- Implications of gearing and debt finance
- Mezzanine & Participating Loans
- Modelling the impact of debt, quasi equity and sponsor equity
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. Delegates are required to bring their own laptop equipped with Excel 2007 or above and USB port for data and spreadsheet templates transfer.
Real Estate continues to attract the attention of funds, banks, corporates and investors looking for diversification and liability matching. However, cross border investment and financing brings risks as well as opportunities. This programme is designed as an integrated set of modules which will increase participants’ understanding of the complex and changing process of real estate investment, development and finance. In addition to expert course tuition, delegates will benefit from a collegial atmosphere, with networking and information-sharing a valuable part of the course.
The programme’s key objective is to give a clear understanding of the most typical financing and investing structures, as well as the latest thinking in analytical techniques, in a shifting capital markets context.
The recognition and analysis of risk will be a component part of the programme. It covers several techniques and tools that can be applied to dealing with and resolving practical, everyday problems.
- Module 1 - Real Estate Investment & Finance (Days 1 - 3)
- Module 2 - Real Estate Development & Finance (Days 4 & 5)
Real Estate Investment & Finance
- Structure of the Module
- Delegates’ objectives
Real estate markets: Macro View
Markets & Sectors
- Traditional & Niche markets
- Emerging Markets & the Importance of Transparency
Property Cycles: opportunities and threats. What to look for in different stages in the cycle.
Appraisal & Valuation FundamentalsWhat should financiers and investors ask for? What should they look for? Worked examples
- Terminology & Techniques
- Appraisal methods
- Types of income
- Lease terms & impact on value
- Understanding yields and cap rates
- Unbundling the yield
- Key drivers of value?
- Investment Acquisition
- Setting up, analysing and comparing different appraisal approaches
- Applying and adjusting Cap rates and Income
- Using different types of Cap ratesStructuring 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 up, lease expiries & roll-overs
- Net Operating Income: A line by line assessment from gross to net income
- Use of Capital Expenditure
- The Exit: When, Why, How?
- Ratio Analysis and Diagnostics
- Solving the for the target rate of return
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: Bid Strategy & Due Diligence
Participants will work in small groups to analyse a potential purchase that considers the acquisition of an investment and the appropriate due diligence processes. How does risk affect the bid strategy?
SPREADSHEET ANALYSIS: Risk Analysis in Cash flow models
Testing the uncertainty in the project Cash Flow.
- What-if testing and adding sensitivity analysis
- Scenarios & Probability testing
- Simulation: A practical technique?
Structuring the Finance
Gearing up an investment acquisition (use of leverage). Key financial covenants, sizing the debt, understanding risks, pricing and risk mitigation.
- Quadrants of Finance
- 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
- Lender Structuring for protection
Acquisition and Finance
Financing the investment acquisition of an existing asset. 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 & 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
- 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...
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