Real Estate Financial Modeling

Introduction

Learn the fundamentals of building a real estate financial investment model using Excel. Discover how to organize and to present data in order to analyze real estate investments more efficiently.

Course Objectives of Real estate financial modeling

Implement cash flows in excel throughout the whole week.
In the first two days you will learn how to develop rent functions and net operating income. We will show you how to value and appraise property investments and analyses the results.
On the third and fourth day you will learn how to model and analyse development projects using both residuals and cash flow methods. It will show you how to interrogate and compare alternative return metrics such as profit-equity multiples, profit and cost, net present value, worth and internal rate of return. You will also learn how to model cash flow from different sector office, retail and leisure.
On the fifth day debt structures will be covered as well as joint ventures and partnership financing. You will also learn how to implement the full spectrum of the risk analysis from sensitivity to Monte Carlo.

Real estate financial modeling Course Outlines

Day 1
Real Estate Analyst I

Term & Reversion and Layer Method Valuation (Intro to Excel)
Equivalent Yield (Solver, Scenario and Goal Seek functions)
Single-Let Discounted Cash Flow
Cash Flow inputs (Rents, Yields, Growth Rates, Target Returns)
Analysis and use of date series
Internal Rate of Return (IRR) and Net Present Value (NPV)
Comparing Value, Price and Worth
Adding borrowing and analysing geared returns
Introducing Rent Reviews and other ‘events’ into cash flows
The ‘Rent Function’ concept and Logic functions (IF,OR,AND)
Sensitivity analysis

Day 2
Real Estate Analyst II

The ‘Rent Function’ and Multi-let cash flows
The ‘date problem’ and assumptions in property asset cash flows
Reducing the rent function, intermediate calculations and modelling theory
Modelling lease expiries, break clauses, voids, and upward only covenants
Incorporating time-varying rental growth rates
Analysing multi-let cash flows to see if the leases are sufficiently diversified
Further IRR analysis (XIRR, MIRR)

Day 3
Real Estate Investor I

Modelling international variations in real estate income streams i.e. Includes indexation patterns, rent caps, discounts / premiums to indexation, rent free periods, as well as how to deal with costs during vacancy
Modelling sector variations in real estate income streams i.e. Office versus industrial, retail & leisure
Further senior debt covenants
Advance Rent Function techniques to manage feature rich lease structures

Day 4
Real Estate Investor II