Financial Modelling Techniques for Real Estate Investment

2 day duration

Property portfolio management and analysis is an increasingly important task for emerging and established real estate investors. This course provides you with a best practice financial modelling skill set that will assist you in developing models to obtain a detailed analysis on your portfolio, driving confident investment decisions.

The highly interactive training is delivered using a mix of case-study based financial modelling, theoretical concepts and the demonstration of best-practice modelling approaches within a real estate project context. Concepts and techniques covered in the course will be applied to a realistic situation and can be put into action by participants immediately after course completion.

The course will utilise Corality Financial Modelling, and all techniques are compatible with the content of our other courses, delivered to over 10,000 participants all over the world.

This interactive course will enable you to:

  • Develop new financial models from scratch using Corality Financial Modelling
  • Master the analysis of a multi-asset model and understand how to easily consolidate the information to a portfolio view
  • Construct flexible funding and investment arrangements and ratio analysis to enable comprehensive analysis
  • Understand the VBA environment, including goal seeking macros in order to achieve a given return
  • Analyse financial return metrics and how acquisitions and divestments effect those returns through powerful scenario analysis

Pre-course knowledge

While no pre-course modelling knowledge is strictly required, it is expected that participants have a good handle on Excel prior to attending the course. Upon registration you are entitled to our introductory material on Excel functions which will give you the confidence and skills to fully absorb the contents of this course.

Upcoming

Course Agenda

Day One

Principals of best practice

  • Understand how to use our Corality Financial Modelling methodology
  • Good vs. bad Excel modelling: workshop and examples on poor and best practices
  • Create a corporate standard: use custom styles to standardise your layout and communication
  • Understand and utilise Excel’s in-built formula review functions to conduct model review
  • Walk-through best practice governance and incorporate self-checking formulas into your model

Build the model engine

  • Discuss the purpose of the ‘case-study’ model, key business drivers and impact on design
  • Build the timing architecture and operational modules for commercial assets on a standalone basis to initially learn best practice techniques
  • Learn a structured approach to calculating rental income, maintenance capex, depreciation, revaluation, acquisition and divestment
  • Discuss high-level accounting concepts related to each of the above in preparation for modelling three-way financial statements

Model a best practice discounted cashflow (DCF) valuation

  • Understand and discuss key considerations in valuation concepts at the single-asset level, portfolio-level and investor level
  • Calculate and analyse the NPV and IRR, utilising the capitalisation method for single-asset valuation
  • Contrast portfolio and single-asset valuation techniques

Increase your capabilities in efficient multi-asset, multi-stage or portfolio modelling techniques

  • Understand different approaches to modelling multi-asset models and extend single asset to multiple asset models
  • Learn efficient ways of consolidating multiple assets into different trusts or entities
  • Make changes across multiple sheets – know the easy mistakes and how to avoid them

Day Two

Incorporation of portfolio level items to obtain operating earnings

  • Insert capex or development facilities into the cashflow waterfall of the case study model
  • Discuss debt amortisation and typical debt covenants such as gearing and interest coverage at portfolio level
  • Include other portfolio-level items such as fund expenses and management fees to accurately model operating earnings

Understand how financial statements are constructed and how to identify common problems

  • Master the structure of completed three way financial statements
  • Learn how to continuously test and debug the integrated statements
  • Incorporate all of the debt components into integrated statements

Integrate a powerful scenario manager and increase efficiency via automation

  • Save critical time and deliver rapid analysis using our approach to scenario management
  • Transform scenarios into an efficient way to test the model and analyse
  • Create meaningful analysis to review the effect of sales and acquisitions of assets with the portfolio

Introduction to macros and the VBA environment

  • Discuss the reason for Macros in models and ways to avoid the a “black box”
  • Set up commonly used macros to break circularities that are inherent in complex models
  • Create a goal-seeking macro in order to flex inputs to achieve a desired return
  • Use VBA to control data tables so they do not adversely affect calculation speed

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