Start Dates: TBC
Duration: 2 Days
Full Fee: €1200
Network Members Fee: €700
Participants will be made familiar with different asset classes within real estate including residential, retail, commercial, hotels and related financing. The participants will first model and value an income-producing office building. There will be specific focus on optimising the financing structure of the investment and on detailed returns analyses. Participants will then turn their attention to the modelling of development projects and related project financing.
The objective of the “Private Equity Real Estate” training is to develop the participants’ understanding of analysis and valuation of real estate assets, both development and income-producing.
Who is the course for?
This audience for this training are Irish Finance professionals who are involved in the real estate and infrastructure industries and related financing.
Session 1 – Real Estate Modelling
The aim of this session is to provide an overview of real estate modelling. Participants will model the operation assumptions of an office building (including rent review, vacancies, refurbishment, etc). The notion of capitalisation rates, project Internal Rate of Return (IRR) and equity IRR will be discussed and analysed in detail.
- Introduction to different asset classes within real estate
- Acquisition cash flow
- Financing structure and fees
- Sources and uses table
- Fixed versus variable costs
- Modelling revenues based on occupancy
- Modelling a real estate development
- Detailed revenue modelling e.g. rent roll
- Tenant incentives and lease costs
- Maintenance versus renovation capex
- Levered versus unlevered cash flows
- Exit assumptions
- Return calculations
Case study: Modelling of a multi-tenanted office building
Session 2 – Project Financial Modelling
In this session, project finance and project finance modelling are discussed in depth using a full project finance model which analyses a project in depth. The construction phase, operating phase and financing are discussed in detail and include complex issues such as dealing with real and nominal forecasting, maintenance capital expenditure and deferred tax. This prepares participants to be able to effectively and efficiently build any complex project finance model. Debt considerations, credit metrics, project valuation and investor returns are also modelled, discussed and examined.
- Project finance transaction considerations and structure
- Core mechanics of project finance models
- Construction phase
- Operating phase
- Financing with multiple debt tranches
- Interest during construction
- Financial statement analysis
- Three statement model
- Cash sweep and cash flow available for debt service
- Real and nominal cash flows
- Full capital expenditure analysis
- Deferred tax considerations
- Credit analysis
- An overview of project finance terms
- Covenants in project finance
- Market risk and contract risk in project finance
- Investor considerations
- Returns analysis
- Project finance valuation
- Use of project finance model
- Risk and analytical failures
- Sensitivity analysis
- Model error checking and best practice
Case study: Modelling of a large industrial complex and related financing
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