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School of Real Estate Finance & Investment

Euromoney Learning
Course summary
5 days
4,995 GBP, 5,595 USD excl. VAT
Dubai, Singapore
Next available date: Request information for dates and locations - Dubai
Open / Scheduled

Course description

School of Real Estate Finance & Investment

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.

Delegates are required to bring their own laptop equipped with Excel 2007 or above and USB port.

Course background

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 tuition, 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 programme. The programme covers many techniques and tools that can be applied to dealing with and resolving practical, everyday problems. An intermediate level programme covering:

  • Investment cash flow analysis
  • Public and private real estate vehicles
  • Debt and equity securitisation and investment strategy
  • Corporate real estate finance and structured leasebacks
  • Risk analysis, simulation and real options pricing
  • Putting investment into a portfolio context
  • Use of debt in a real estate investment context

Suitability - Who should attend?

Who should attend?

  • Investors
  • Analysts
  • Lending and Project Finance Bankers
  • Financiers
  • Developers
  • Advisors

Whilst its focus is primarily on European markets, the techniques and trends studied will also be of use to participants investing in property markets in other regions.

Training Course Content

Day 1

Module 1: Real estate investment & finance
Introduction

  • Structure of Module 1
  • Delegates’ objectives

Real estate markets: macro View

  • Markets & sectors
    - Niche markets logistics, residential, retail & hospitality
    - Emerging markets & the importance of transparency
  • Property cycles: opportunities and threats. What to look for in different stages in the cycle.

Appraisal & valuation fundamentals

What should financiers and investors ask for? What should they look for? Worked examples

  • Terminology & techniques
  • Investment appraisal methods
    - Different methods for different assets & markets
    - Regulation & guidance
  • Types of income
  • How do lease terms affect value?
  • Slicing the income and converting to capital
  • Understanding yields and cap rates
    - Types of yield
    - Unbundling the all-risk yield
  • What are the key drivers of value?

Spreadsheet analysis:investment acquisition

  • Setting up, analysing and comparing different appraisal approaches including income capitalisation & depreciated replacement cost
  • Applying and adjusting cap rates and Income
  • Using different types of cap rates

Structuring 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 roll-overs
  • Net operating income: A line by line assessment from gross to net income
  • Impact of depreciation & obsolescence 
  • Use of capital expenditure
  • The exit: when, why, how?
  • IRR & NPV: ratio analysis and diagnostics
  • Solving the maximum price to pay / target sale price 

Day 2

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:acquisition & due diligence process
    Participants will work in small groups to analyse a case study that considers the acquisition of a mixed use investment and the appropriate due diligence processes.

    Risk analysis in DCF appraisals

    • Risk identification & management techniques
    • Sensitivity analysis & data tables
    • Scenarios
    • Measuring risk
    • Simulation: pros & cons

    Spreadsheet analysis:risk analysis in cash flow model

    • Testing the uncertainty in the project cash flow
      - “What-if” testing and adding sensitivity analysis
      - Scenarios & probability testing
      - Simulation: a practical technique?

      Day 3

      Structuring the finance

      Gearing up an investment acquisition (use of leverage). Key financial covenants, sizing the debt, understanding risks, pricing and risk mitigation.

      • The quadrants of finance
        - Alternative opportunities to raise and structure finance
        - Corporate strategies
        - PropCo, OpCo and leasebacks
        • Returns on NOI and returns on equity
        • 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
        • Profitability -v- financial risk
          - Identifying and quantifying the risks in the loan
        • Structuring for protection

        Case study:Investment aquisition and finance
        Financing a core investment acquisition. 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 and 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

        Review of module and further reading & references

        Day 4

        Module 2: Real estate development & finance
        Introduction

        • Structure of Module 2
        • Delegates’ objectives

        Development market analysis

        • Data
        • Analysis
        • Trends & forecasts

        Development appraisals & viability

        • Methods & approaches: From residuals to cash flows
        • Down to affordable land cost or profit
        • Line by line items
        • Ratio analysis: What indicates a viable project?
        • How is profit being generated?

        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.

        Cash flow appraisal techniques: moving from residuals to cash flow

        • Capital budgeting technique (NPV)
        • Discounted cash flow, accumulated cash flow and draw-downs
        • Structuring the cash flows
        • Analysing the outputs: IRR & NPV issues

        Special topic: hotel development

        • Hotel segments
        • Feasibility
        • Financial viability 
        • Implementation
        • Marketing & operations

        Day 5

        Structuring the development finance

        • Pre-let or speculative?
        • Construction loan mechanics
        • Main Underwriting criteria
        • Project monitoring issues
        • Exit strategies 
        • Forward sale and full forward commitment
        • Matching the loan to the cash flows and the risks

        Case study:Residential development finance
        Participants will work in small groups to analyse a case study that considers the risk and return profile of a residential development and consider appropriate methods of finance.

        Spreadsheet analysis:Development dinance
        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.

        Joint ventures & private equity

        • Landowner & developer JVs
        • Traditional JVs and capital partners
        • Different structures for different players
        • Risk and return
        • Priority of distributions
        • Allocating risk & return
        • Prefs, promotes & waterfalls
        • Showing the exit and risk

        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.

        Review of module and further reading & references

        Expenses

        The cost of this course may vary by location. See above or request information for prices.

        IN-HOUSE TRAINING

        Euromoney Financial also delivers in-house training for finance teams and departments, giving companies the opportunity to save up to 50% on training costs.

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        Euromoney Learning

        8 Bouverie Street,
        EC4Y 8AX, London

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        https://www.euromoney.com/learning


        Reviews

        Hajah, Brunei Investment Agency
        (5)
        My participation in the training was last minute, however Euromoney was able to accommodate me and organize everything.
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