Real Estate Financial Modelling Certificate

Module 1

Economic Context

• Why Real Estate Asset Modelling is important
• Understanding the occupier, asset and development markets and the relevant modelling approaches for each
• Real Estate Sub-Sector Key Performance Indicators
• Introduction to conventional valuations and financial mathematics
• Understanding and minimising errors in Financial Models

Module 2

Cash Flow Fundamentals

• Understanding all the components of a basic cash flow model
• Understand why Corporate Finance Models and Real Estate Models are different
• Financial Model Design
• Making the link between valuations, income mathematics and discounted cash flows
• Internal Rate of Return, Net Present Value,Worth and other metrics
• Features and techniques to aid fast model building

Module 3

Developing the Cash Flow

• Understanding how leases vary with respect to rent over time: Rent Reviews, Break Clauses, Rent Free Periods, Lease Expiries etc.
• Developing the concept of a Rent Function in Excel
• Logic mathematics and Logic functions
• Projecting rent to adapt to different lease contracts and growth patterns
• Alternative solutions to Logic functions
• Comparative analysis of lease structures in different jurisdictions and adapting financial models

Module 4

Real Estate Data

• Key Property market indicators
• Characteristics and application of key input metrics for Real Estate Appraisals
• Understanding the eight components of Real Estate Price Dynamics
• Awareness of the different sources of data
• Reading and using general property market reports
• Constructing basic time series models and recognising basic patterns

Module 5

Development Appraisals

• Understanding the key components of a development project
• Understanding the difference between development and investment appraisals
• Residual Appraisals and Profit Calculations
• Cost orientated cash flows and phased sales
• Cumulative construction cost patterns: incidental, fixed, loaded and S-curve
• Development return metrics and Modified IRRs

Module 6

Multi-let Cash Flows

• Multi-let and portfolio model design principles
• Building complex date functions and date series
• The three multi-let rent projection techniques
• Perpendicular Rent Functions
• Incorporate advanced rent adjustments into the Rent Function
• Incorporate sector and period varying rental growth rates
• Simplifying OPEX and CAPEX projections
• Discounting techniques on complex and volatile cash flows

Module 7

Project Finance

• Revision of the Mathematics of amortisation and debt finance
• Basic senior debt models and geared net cash flow
• LTV, IRR and Interest Rate Dynamics
• Flexible term, repayment options and deferred interest
• Loan covenant tests
• Understanding different tranches of debt
• Understanding how complex debt structures impact the returns to different parties

Module 8

Model Interpretation and Risk Analysis

• Understand how to read models and develop an investment narrative
• Visualise model outputs using graph functions, conditional formatting, dynamic symbols and dashboards
• Learn how to use built-in Sensitivity, Scenario Analysis tools and third-party add-ins
• Learn how to construct varied project scenarios in a systematic way
• Introduction to Monte Carlo Analysis and VBA
• Optimising sale dates and other parameters
• Create well written, attractive and persuasive reports