School of Real Estate Finance

Euromoney Learning Solutions

Euromoney Learning Solutions

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Who should attend

This course is particularly appropriate for anyone who would like to understand real estate investment (debt and equity), and would be appropriate for:

  • Analysts and underwriters
  • Portfolio managers
  • Investment and commercial bankers
  • Fixed income professionals
  • Bank relationship managers
  • Real estate developers and investors

About the course

Understand the complex process of real estate investment & finance

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 advanced programme is designed as an integrated series of modules which will increase participants' understanding of today's complex and sophisticated process of real estate investment and finance. In addition to expert course instruction, delegates will benefit from a collegial atmosphere, with networking and information-sharing a valuable part of the course.

The programme's main objective is to give a thorough understanding of the most popular financing and investing structures, as well as the latest thinking in analytical techniques, in a changing capital markets context. 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.The recognition and analysis of risk will be a component part of the program. The program covers many techniques and tools that can be applied to dealing with and resolving practical, everyday problems.

This is an intermediate level program covering:

  • Investment cash flow analysis
  • Public and private real estate vehicles
  • Debt and equity securitization and investment strategy
  • Corporate real estate finance and structured leasebacks
  • Risk and mitigation analysis
  • Use of debt in a real estate investment context

A 5-day practical programme with case studies and integrated cash flow modelling for analysts, investors, financiers, developers and advisors.

Featuring:

  • Property performance measurement and analysis
  • Evidence of cycles in property markets
  • Developing cash flow models
  • Investors' approach to different types of property vehicle
  • Core vs. developing vs. emerging markets
  • Sector analysis: office vs. retail vs. leisure
  • Calculating EVA and residual income
  • Corporate finance decisions and real estate
  • Lease/buy leaseback/structured leaseback decisions
  • Single asset returns in a portfolio context
  • Tactical and strategic asset allocation
  • Impact of gearing and debt finance

Course level

This course is aimed at people with several years' real estate development strategy or finance/investment experience. The course puts participants on a steep learning curve, hence the fundamentals of each subject will be covered rapidly before moving onto more complex areas.

By the end of the five days, participants will be able to:

  • Understand the interpretations of industry and property cycles
  • Know how to interpret lease contracts
  • Choose an appropriate legal structure
  • Assess the cash flow adequacy of projects
  • Create a viable capital stack for a project
  • Identify risks and create a risk mitigation analysis

Agenda

Day 1

Session 1

Real estate economics and analysis

  • Supply and demand and market equilibrium
  • Vacancy rates and absorption rates
  • Expense rates and taxes
  • Forecasting input variables for different types of real estate

Exercise: Where are we now?

Session 2

  • Real estate investment vehicles
  • What legal form is best?
  • Matching investment styles
  • Private vs. public entities Exercise: How would you choose?

Session 3

Leases * Different lease forms * Economics of leasing * Tenant credit analysis

Exercise: A proposed lease

Session 4

Real economics and analysis (cont.) * Property life cycle * Value vs. price

Session 5

Putting it all together: Creating an Excel model for different types of real estate

Day 2

Session 1

Income statement creation and analysis

  • Rent roll evaluation through the analysis of base rent, reimbursements, etc.
  • Revenue and expense projections
  • Obsolescence and depreciation
  • Capital expenditures vs. maintenance
  • Before and after tax cash flow for different types of real estate
  • Typical analytical ratios used

Session 2

Capitalization of real estate investments * Debt * Mezzanine * Equity * The WACC and return to investors

Exercise: WACC and the capital stack Session 3

The effect of leverage:

  • Understanding components
  • Analyzing the discount rate
  • Partitioning the IRR

Exercise: Creating a viable capital stack Session 4

Commercial mortgages

  • Different types of mortgages
  • Interest rate risk
  • Default risk
  • Prepayment restrictions
  • Underwriting ratios and leverage amounts
  • Refinancing

Session 5

Putting it all together: Creating an Excel model for different types of real estate   ** Day 3**

Session 1

Project finance – the decision methodology

  • Capitalization rates: derivation and use
  • Time value of money: DCF, IRR, PV and NPV
  • Adding uncertainty:
  • Scenario analysis
  • Sensitivity analysis
  • Behavioral real estate decisionsExercise: What are the possible risks?

Session 2

Risk and mitigation

  • How to identify the risks
  • Structuring mitigatesExercise: Risks and their mitigation

Session 3

Corporate finance decisions

  • Buy or lease decisions
  • Accounting issues: finance or operating lease?
  • Sale/leasebacks
  • Role of capital markets

Session 4

Analyzing and structuring covenants, reps and warranties

  • What effect do these have?
  • How should they be structured?Exercise: Creating a covenants, reps and warranties package

Session 5

Putting it all together: Creating an Excel model for different types of real estate 

Day 4

Session 1

  • Joint ventures
  • Joint ventures and capital partners
  • Landowner ventures
  • Risk and return

Session 2

Ground leases What are they? Risk and return How can they be used?

Exercise: Does it make sense?

Session 3

Understanding the financiers’ perspective – private equity structure and return waterfalls

  • Legal and organizational structure
  • Public vs. private equity

Fee structure:

  • Management fees
  • Incentive allocations:
  • Capital raising fees
  • Cash flow waterfalls Exercise: Analyzing a cash flow waterfall

Session 4

International investment considerations

  • Cross-border investment strategies and considerations
  • Europe, Middle East, Africa, Asia

Session 5

Putting it all together: Creating an Excel model for different types of real estate

Day 5

Session 1

Putting it All Together: YOU determine the answer! * Participants will be divided up in groups representing buyers, sellers, and financiers. Each group will prepare a scheme on how to buy, sell, and provide financing, respectively, for a given property.Presentation of each group’s analysis and recommendations will be made. Groups will be evaluated based on reasonableness of their and creativity in finalizing the deal.

Session 2

Real estate economics – an update

  • The new presidency in the USA – what impact is this having?
  • Will there be a boom or a crash?
  • What about developments in Europe, such as Brexit, Asia and the Middle East?

Session 3

Real estate economics – looking local * What’s happening? * Open discussion about your region

Session 4

Summary and conclusions

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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School of Real Estate Finance at Euromoney Learning Solutions

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