Real Estate Finance Fundamentals

This short program will present critical “nuts-and-bolts” real estate finance principles and practices in a simple, understandable, and interactive manner that will demystify the real estate financing process—regardless of participants’ prior real estate finance experience. 

We will focus on real estate finance fundamentals that are important to either develop and/or invest in varied types of real estate assets, or to enhance your ability to understand how real estate finance fundamentals relate to your primary role as a member of a real estate development or investment team, all with emphasis on understanding how real estate value is created, measured, and managed.

Expect a lively and engaging interactive classroom experience, where key topics will include: 

• Establishing realistic financial objectives 
• Identifying and calculating the primary components of return in income-producing real estate, including cash flow, tax benefits, and futures; preparing operating and capital cost pro formas and sources and uses of funds statements.
• Understanding debt-financing underwriting basics, including net operating income, debt service coverage factors, annual constants, debt/equity ratios, and other lender underwriting requirements.
• Appreciating the importance of achieving positive financial leverage.
• Calculating and interpreting standard industry measures of return: 
  • Return on Total Asset Cost (Cap Rate)
  • Cash-on-Cash Return 
  • Leveraged and unleveraged Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Equity Multiples

Other topics will include preparing sensitivity analyses and understanding simple Waterfall/Promote structures (the priority and amount of cash flow distributions to the respective financial and operating partners in a real estate joint development or investment joint venture). We will teach and discuss these principles that are applicable worldwide using examples drawn from a wide variety of asset classes.

Finally, the real estate financing process will be brought to life by the lively classroom discussion and case studies brought to the class by the participants. In groups, participants will be asked to interrogate how best to finance their peers’ projects, before presenting a solution to an instructor’s question. In doing so, they will gain the confidence to apply what they have learned to their work immediately after completing the program.