Financial Modelling for Real Estate Development

2 day duration

Development of Real Estate projects require detailed financial analysis of construction, operations and financing to ensure that returns targets are met and that there is confidence in projected results. This course provides you with a financial modelling skill set to enable you to tackle more complex development that may not fit into standard templates or software.

This highly interactive course is delivered with a mix of interactive case-study based financial modelling, theoretical concepts and demonstration of best practice techniques and solutions, all with Real Estate project analysis as a contextual background.

By linking the content over two days to a fictional Real Estate case study, the concepts and techniques covered in the course will be linked to a realistic situation which ensures that the techniques demonstrated can be put into action by participants immediately after the course completion.

All financial modelling will be developed using Mazars 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, real estate focused financial modelling course will enable you to:

  • Develop new financial models from scratch Mazars Financial Modelling
  • Master the analysis of more complex real estate development project, to avoid being limited by templates or software
  • Construct flexible funding and investment arrangements and ratio analysis to enable comprehensive analysis
  • Master time saving techniques including scenario management and data tables
  • Understand how to structure debt calculations in both construction and operations
  • Analyse financial return metrics and how they are impacted by key drivers in the project

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.


Course Agenda

Day One

Master proven techniques for best practice modelling resulting in better models built faster

  • Learn to work with the powerful and easy to follow Mazars Financial Modelling methodology
  • Discuss and identify good vs. bad modelling techniques using real-life examples
  • Greatly increase consistency amongst your team in calculation technique and presentation
  • Incorporate best practice formula construction, cell styles, flags, counters and model architecture

Discuss the modelling requirements in Real Estate development – from pre-development, construction, refinance, operating and sale

  • Learn the various structural phases of the development process and how this is coded using flexible timing
  • Build your understanding of the building block components, key details and challenges of a transaction model
  • Understand the design flow of the model builder, learn how to know where to go next

Develop a model structure that is robust and scalable that can evolve with a typical project or transaction

  • Establish key constants in the model using full scope of Excel range name function
  • Build a flexible timing structure using appropriate date functions and binary flags

Construct modularised units that form the building blocks of a professional model (but not limited to)

  • Pre-development and capital expenditure breakdown with contingencies controls and consideration for local taxes and levies
  • Build out funding structures for the construction waterfall, debt and equity funding structure.
  • Building in key operating considerations – rental revenue, occupancy, voids, bad debts, operating costs
  • Operational and maintenance capex including fixed and variable items

Understand the structure of cashflow waterfalls and the importance of ‘seniority’

  • Focus on how to calculate Cash Flow Available for Debt Service for transparent analysis of borrowing capacity and credit metrics
  • Design the model in an efficient and transparent structure to increase stakeholder communication
  • Understand the different types of circular references and how to avoid them

Day Two

Integrate Operational debt

  • Walk through of term debt structuring and annuity repayment through first principles
  • Build up a credit foncier (annuity) repayment, discussing the alternatives to the functions built into Excel

Share insights into refinancing at completion

  • Discuss Gross Development value at the completion of the property
  • Learn different ways to treat the refinance fee in a financial model
  • Discuss refinancing based on the LTV and investor rental yield analysis and how this will provide developers with early returns in a project
  • Introduction to the concept of asset stabilisation

Construct and analyse debt facilities for credit or investment decisions

  • Learn the importance of credit ratios and their purposes in analysis
  • Build commonly used ratios (LTV, DSCR and ICR)
  • Extract these key metrics from ratios using a range of advanced Excel functions

Valuation and Distributions

  • Integrate levered and unlevered returns internal rate of returns and NPV, understand the role of the discount rate
  • Introduction to industry investment metrics such as Profit on Cost and Equity Multiples
  • Learn differences between NPV and XNPV functions and common errors in their application
  • Discuss sales valuation through property yields and the effect on investor returns

Take control of robust and rapid sensitivity and scenario analysis through powerful Excel techniques

  • Save time and deliver rapid analysis with our approach to scenario management
  • Use the scenario manager to test the model in all scenarios
  • Build confidence in your analysis through pre-programmed combinations of model inputs

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