Construct a robust real estate financial model from scratch and use it to assess the financial risk and return profile of an investment project.
This course is aimed at banking and lending analysts for real estate, investment surveyors, real estate finance professionals and property consultants seeking a best practice approach to building robust real estate financial models.
Delegates will learn to construct a discounted cash flow model for single-tenant and multi-tenant buildings and perform sensitivity analysis for the investment decision. Delegates will also learn real estate finance fundamentals which will enhance their property investment analysis and underwriting processes.
Who should attend this course:
The Real Estate Investment and Financial Modelling in Excel courses are suitable for anyone seeking to develop their modelling skills. From entry-level graduates, APC candidates to experienced professionals and modellers, the fundamentals and techniques taught in our courses will help anyone improve their financial modelling expertise and reduce modelling errors.
Best practices in financial models
Simple tips to help you become an efficient financial modeller
How to avoid errors and present your models in a persuasive way
Defining term and reversionary yields
Calculating the equivalent yield
Value calculation using conventional valuation methods
Build your cash flow from scratch
Inputs: passing rent, estimated rental value, initial and exit yields, market growth, review cycles and most importantly, target returns
Outputs: internal rate of return, net present value and worth
Annual and quarterly discounted cash flows: modelling purchase price, passing rent, rent reviews, exit rent and exit price
Gearing: adding senior debt “bullet” loan
Analyse the results
The maximum bidding price
Data tables & sensitivity analysis
Risk visualisation (charts)
Case study: single-tenant office building in the UK
Dating the cash flow
The dating problem
Modelling tenancy schedules: rent reviews, upward-only, break options, lease expiry
Modelling hypothetical second leases: void period, rent free and estimated rental values
Time-varying rental growth
Net Operating Income Forecast
Modelling capital expenditure for refurbishment and operating costs (letting fees, void costs, empty rates)
Risk versus return analysis