At OTC we believe in tailoring our courses to meet each client’s specific requirements.  The illustrative course outline below gives an indication of the type of course content that we’ve been asked to deliver. For more information call us on +44 20 7700 3330 or email info@ockendontraining.com

Strategy & Leadership Finance & Commerce Investment Banking

Structured Real Estate Finance

What is covered?

By the end of this course, participants will be able to evaluate a commercial real estate transaction by assessing key risks and differing approaches to valuation and sensitivity analysis and looking at the issues of risk mitigation and debt structuring.  The course also covers the ideas of value creation and risk and return to providers of debt and equity finance in commercial real estate transactions and identification of potential warning signs.
The course will focus heavily on case studies in the areas of office, retail and industrial and on large scale transactions.

Who will benefit?

Participants should already be familiar with the core principles of corporate credit risk analysis, the fundamental principles of investment appraisal techniques, and the core functions in Excel. Some previous familiarity with the financing of Commercial Real Estate has been assumed.

Course Content

Risk and risk mitigation techniques in the Commercial Real Estate markets

• Macroeconomic cycles
• Recent developments
• Key risks and mitigants in Commercial Real Estate Financings
• Risks inherent in specific types of Commercial Real Estate transactions

Principles of Commercial Real Estate Valuation

• Summary of Commercial Real Estate valuation methods including: Comparable buildings, Capitalisation of yields, Open Market Values, Discounted cash flow valuation methods
• Occupational lease terms
• Yields in Commercial Real Estate Valuations

Financial analysis of Commercial Real Estate Companies and Investment vehicles

• Commercial Real Estate investment companies
• Real Estate Investment Trusts (REIT)  vs non REIT
• Operating vs. financing risks
• Key accounting issues

Sensitising the key drivers in a financial model for a Commercial Real Estate Finance transaction

• Reviewing the underlying assumptions
• Key drivers of Commercial Real Estate values
• Sensitivity analysis and reviewing the financial model – useful Excel Functions
• Case study

Use of Commercial Real Estate by companies

• Why should companies invest in Real Estate?
• Do companies have Real Estate strategies?
• Case study

Debt financing choices for Commercial Real Estate transactions

• Financing choices – private debt
• Commercial Mortgage Backed securitisations
• Debt structuring issues

Risk and return

• Equity investor risk. The bank vs equity risk / return trade off
• Discounted cash flow methods, NPV and IRR
• Value creation Risk and return – Commercial Real Estate Finance vs other asset classes
• Use of Equity vs. Subordinated Debt
• Case study

Debt structuring issues and risk mitigation techniques

• Use of covenants and developing a covenant package
• Trade-offs in negotiating covenants – risk vs pricing
• Third party credit support
• Case study