P4: Real Estate Financial Modelling (4 days)

Learn the fundamentals of Real Estate financial modelling then apply this knowledge to the real world financial modelling challenges in the property development sector.

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Pre-requisites

Although not mandatory, attendees will get a lot more out this course if they complete some online training in Excel functions before attending.

We have partnered with Excel University to provide high-quality, low-cost online training and recommend their Volume 2 Course as good preparation for this course.  If attendees are a little less familiar with Excel, Volume 1 would also very useful.

What you get from this course

Real estate professionals often need to go beyond what pre-built financial models like Estate Master provide.  Examples include analysing unique situations, complex deals, or just to ensure they understand the fundamentals of their project’s forecast.

This course provides an excellent grounding in building financial models for real estate property developments of all kinds. The examples used are primarily from projects where property is acquired, developed, then split-up and sold (although the same principles can be applied to all kinds of real estate financial modelling).

If you already have some experience in property investment or development, and would like to take your modelling skills to the next level, making your models more flexible, robust and user-friendly, then this is an excellent course for you.

Extensive worked examples and models are used throughout the course so that participants gain valuable experience in designing solutions to real-world financial modelling challenges in the property sector.

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Agenda Highlights

This course provides a sound understanding of both the principles of real estate financial modelling and the practical application of these to real-world situations through the use of spreadsheets.

The course then builds upon the real estate financial modelling principles and practices learned to apply these to property developments and the financing of these. In this way, participants improve their mastery of real estate investment evaluation principles and concepts, then see how to apply these in practical applications.

Finally, the course describes how to both detect and prevent errors from occurring.

Day 1: Advanced Excel Workshop

This one-day intensive workshop helps participants to get the most out of the remainder of the course. It covers key, advanced areas of Excel that are relevant to real estate financial modelling and project evaluation.

Here are just some of the areas we cover in our in-depth, hands-on workshop:

  • Working with large data sets
  • Summarising and aggregating data
  • Extracting data that matches criteria using flexible formulas
  • Error handling
  • Ways of improving structure
  • Techniques for keeping formulas consistent yet flexible
  • Combining and splitting cells according to the content they contain
  • Advanced techniques for creating automatically expanding charts and ranges
  • Introduction to macros & when to use these

We then apply and practise these functions during the remainder of the course.

Day 2: Introduction

Brief Introduction to Real Estate Financial Modelling

  • What is a financial model?
  • What is included in the scope of a financial model?
  • What makes a good spreadsheet model?

Principles of Best Practice Real Estate Financial Modelling

  • The 7 steps of financial model building
  • How to compare and contrast different scenarios
  • Best practice guidelines and financial modelling standards
    • Compare and contrast functions, formatting and functionality
  • Designing for flexibility and scalability
  • Designing for consistency
  • Designing for usability and functionality
  • Designing checks and balances
    • Best practices for creating and displaying checks and balances
  • Using financial modelling standards
    • Compare different financial modelling standards
    • Examples of standards and how to apply these
  • Setting up Excel for efficient financial modelling
    • Learn the tips and techniques that will dramatically speed up the creation of your financial models
  • Using VBA in financial models
    • When is it appropriate & when is it not appropriate?
    • What things is it best suited for in financial modelling?

Case Study: Modelling with Standards

Identify the key components of a standards-based, real estate financial modelling template

Day 3: Finance and Valuation Concepts

Topics covered include:

  • Principles of discounted cash flow (DCF) modelling
  • Investment indicators: WACC, NPV, IRR, Payback
  • Valuation techniques & considerations
  • Escalation factors for revenue, costs and CAPEX
  • S-Curve real estate financial modelling for construction costs
  • Modelling uncertainty using sensitivity & scenario analysis
  • Model optimisation to consider constraints: tools and techniques available
  • Presentation and interpretation of results: charts & presentations
  • Methods for comparing and selecting projects: key charts & techniques

Case Study Part 1: Model Scoping, Timeline & Structure

Design and scope the model: what should be included/excluded? What are the key outputs & sensitivities? How will the model need to be designed to provide these?

Case Study Part 2: Inputs & Assumptions

How to design and build a model that is flexible, robust, and user-friendly. Learn how to allow for future expansion, change of strategy, different scenarios and sensitivities in a way that allows the user to easily switch between these.

Case Study Part 3: Cash Flow Model

Create a cash flow model for a property development project, building up the model line-by-line.

Day 4: Debt and Finance Modelling

How to model debt finance in property models.

Topics covered include:

  • Typical banking covenants and financing arrangements
  • Simple debt schedules
  • More complex debt waterfalls
  • Dealing with fees, interest expense, drawdowns, and interest capitalisation
  • Cash sweep

Case Study Part 4: Financing

Extend your model to include debt financing and loan covenants

Case Study Part 5: Investment indicators

Calculate and sense-check the key outputs: charts, investment indicators.

Case Study Part 6: Scenarios & Sensitivities

Identify key risk areas and then incorporate sensitivity factors for these. Build a sophisticated scenario manager to run multiple scenarios and highlight the results.

Control of Financial Models

How to detect and prevent errors from occurring.

Topics covered include:

– Why audit financial models?

– Excel’s auditing tools

– Automated testing tools: role, purpose, limitations, demonstration

– Model documentation 

Case Study Part 7: Controls & Checks

Build controls and checks then summarise these so the model’s integrity can be checked and reviewed easily.

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Who should attend?

  • Property Analysts
  • Finance Analysts
  • Lenders/bankers involved with property
  • Property Consultants
  • CFOs & Accountants
  • Property Investors
  • Property Developers
  • Property Syndicate Professionals
  • Property Managers
  • Providers of Public Housing Projects

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Facilitator: Jeff Robson Jeff Robson

Masters (Applied Finance), BCom (Accounting & Information Systems), FAIM, F Fin, MAICD, CISA, MS Excel Expert

Jeff Robson is the Principal and Founding Director of Access Analytic, a specialist consultancy that focuses on financial modelling, forecasting, valuation, model auditing, and management reporting for clients throughout the world. He is skilled in the development and maintenance of analytical tools and financial models for corporates, at all levels of complexity, in both domestic and international settings.

He has worked extensively with clients in the property sector over many years.  He has trained and consulted to property specialists from a wide variety of companies including property developers, property managers, property valuers, government housing departments, plus listed and unlisted property syndicators.

He provides training in financial modelling for companies throughout the world. Jeff is the author of a number of white papers on financial modelling on subjects such as Financial Modelling Best Practices and Financial Model Auditing.

Highlights from his property experience include:

  • Development of an extensive series of models for reporting and management of hundreds of property syndications for a listed property syndicator.
  • Development of financial models for evaluating potential property investment opportunities and obtaining finance for a listed property development company.
  • Development of a 20-year financial model for a property valuation & investment company

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Benefits & Inclusions

Practical: Highly experienced facilitators who actively and regularly consult to clients also.
Applicable: apply what you learn to your job to further your career.
Hands-on: the course is designed to provide maximum hands-on experience.
Passionate: Our facilitators love this subject!
Clear: we specialise in translating complex subjects into concepts that are easy to understand.
On-going help: you can always e-mail the facilitator.
CD: includes worked examples, suggested solutions, reference materials, and a large variety of templates that can be immediately applied to kick-start your projects.
Comprehensive course notes.
Networking: meet industry peers and hear how they approach this subject.
Certificate of completion.
… and much more!

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Clients who have 3-4 or more people interested in this course normally prefer to run this course on an in-house basis in their offices.

We can bring all the equipment for up to 8 people so all you need is a room!

Benefits

  • Flexibility: we can combine content from multiple courses to create a custom course just for you, add-on a workshop or some mentoring sessions then run everything at the times that suit you.
  • Timing options: if you’re in Perth, we can split courses into half or single days and schedule these at times to suit you
  • No hidden extras: our fixed fee includes all materials and equipment costs for up to 10 participants
  • Cost effective: in-house courses are often 50-80% cheaper than sending the same number of people to public training

In-House Details & Pricing

  • Structure: half-day or full-day sessions
  • Location: all courses are available in-house, many are also available in open sessions
  • Provided: projector, laptops, manual, CD

In-house Course Fees

Call us on +61 8 6210 8500 to discuss your requirements.

Notes:
– We are happy to customise our courses to suit your requirements
A 10% discount applies when booking 10+ full days of training in any 30 day period
– Many courses can also be split into half-days (please enquire)
– Fees for locations outside of Perth do not include equipment