Real Estate & REIT Modeling: Course Outline

Transcription

1 Real Estate & REIT Modeling: Course Outline The topics in Real Estate & REIT Modeling teach you everything you need to know about developing, acquiring, and renovating properties and projecting and valuing real estate investment trusts (REITs). If you re in a time crunch and needed answers yesterday, you can skip to whatever you need help with but if you want to go through everything from top to bottom, you can do that too. In total, there are 63 lessons with accompanying Excel files as well as 7 quick reference guide PDFs on key topics. That amounts to over 24 hours of video altogether, which may seem like a lot. But don t worry: everything is broken into bite-sized chunks so you can digest it easily. All the content is downloadable to your preferred device (works with QuickTime and most other media players and on all common devices including desktops, laptops, ipad, iphone, and ipod). NEW: You also get full transcripts of all the videos. There are over 290,000 words in all, and all the transcripts are also downloadable. Use the transcripts to suit your preferred learning style or to quickly revise key concepts without having to find the exact location in the videos. Easily keep track of your progress: As you move through the lessons, you can check off what you ve completed and what s still on your to-do list. Fast answers to all your questions: Our expert support team is standing by to answer any questions you have about any of the content, 365 days a year. NEW: Quizzes and Certifications. After you have completed the course, you will be eligible to take our challenging Certification Quiz. Once you pass the Quiz, you ll be issued a Certificate that you can add to your resume / CV and refer to in interviews. Included Lifetime Access: You also get lifetime access, so you can come back to the course whenever you need it whether that s in 1 month, 1 year, or 10 years. What Others Are Saying About Our Modeling Courses...

2 "Thanks for offering such great courses and keep up the great effort!" "All Models Are Comprehensive And Simple To Understand."

3 "Structured so that you can refer back to it quickly to recap anything you forget." "I took your real estate valuation course and it really set me apart from all the other candidates.

4 Real Estate & REIT Modeling Course Highlights In this course, you ll complete case studies of an office development and sale, a hotel acquisition and renovation, and a full operating model and valuation for AvalonBay Communities, a leading multifamily real estate investment trust (REIT). You ll start by learning the key terminology for real estate and REITs, how to model a property development, and how a REIT s financial statements differ from those of normal companies. Then, we ll move into two real estate development case studies one based on an office development and sale with a waterfall and returns allocation schedule, and one based on the acquisition and renovation of a hotel property. After that, we ll create a detailed operating model for AvalonBay that incorporates a segment-bysegment buildup (same-store properties, acquisitions, development/redevelopment, and dispositions) and a complex debt schedule. We ll conclude by completing a valuation of AvalonBay, based on traditional methodologies such as comparable public companies, precedent transactions, and the DCF, and real estate-specific ones such as the Net Asset Value (NAV) Model. After you finish this case study you ll be well-equipped to land investment banking and private equity offers in real estate groups and to leap ahead of the competition once you start working. Resources: Completed Office Development & Sale Model Completed Hotel Acquisition & Renovation Model Completed AvalonBay Operating Model & Valuation Real Estate Development Key Terms Quick Reference Real Estate Development Quick Reference Properties to REITs Quick Reference REIT Overview Quick Reference REIT Financial Statements Quick Reference REIT Key Metrics Quick Reference Real Estate Valuation Quick Reference Module 1: Overview, Accounting & Key Metrics In this course, you ll learn why and how real estate development works, and the key terms and metrics you need to know when modeling properties. We ll look at an example of an apartment construction and sale, and you ll learn how to think about the development costs, revenue and expenses, and project returns.

5 Then, we ll jump into an overview of REITs and the key REIT terminology you need to know, and you ll learn what a REIT s financial statements look like. You ll also learn how to link individual properties and REITs, and how to project revenue and expenses for a REIT based on its operating segments. We conclude the course by analyzing key operating metrics and valuation multiples for REITs. Resources: Real Estate Development Key Terms Quick Reference Real Estate Development Quick Reference Properties to REITs Quick Reference REIT Overview Quick Reference REIT Financial Statements Quick Reference REIT Key Metrics Quick Reference Real Estate Valuation Quick Reference 1.1 Overview (Video Length: 17:48) In this lesson, you ll learn about real estate development and real estate investment trusts (REITs), what makes them different from normal companies, the main sectors within the industry, and how we re going to approach the case studies in this course. 1.2 Real Estate Development Key Terms (Video Length: 45:06) This lesson will introduce you to the key terms and metrics used in real estate development, such as hard costs and soft costs, the Loan-to-Cost ratio, the construction timeline, vacancy allowances, and net operating income; you will also learn how to value properties using cap rates and key industry-specific real estate terms. 1.3 Apartment Complex Construction (Video Length: 25:28) In this video, you ll learn how to estimate the size and cost of constructing an apartment complex and what its stabilized net operating income might be; you will also create a monthly income statement for the complex and estimate monthly construction costs. 1.4 Apartment Complex Returns (Video Length: 26:30) This lesson will conclude our apartment development model and will teach you how to project debt and equity draws, calculate capitalized interest, and calculate the return by estimating cap rates, sale proceeds, and the timing of the transaction. 1.5 REIT Overview (Video Length: 42:47)

6 You will get a crash-course on REITs in this lesson, including what they are, why they were created, their key requirements, how they differ from normal companies, how they re structured legally, and the key operating metrics and valuation multiples to know. 1.6 REIT Financial Statements (Video Length: 31:02) In this lesson, we ll analyze the financial statements of a sample REIT and you ll learn how the income statement, balance sheet, and cash flow statement differ from what you see for a normal company; you ll also learn the different categories of real estate assets that might be on a REIT s balance sheet and which ones we care about most. 1.7 How to Link Individual Properties and REITs, Part 1 Same-Store, Acquisitions, Dispositions, and Development (Video Length: 28:44) In this video, you ll learn how to link individual properties like the apartment complex we modeled before and real estate investment trusts. You will learn how to estimate a REIT s revenue and expenses by projecting the rental income, margins, and cap rates associated with same-store properties, acquisitions, development/redevelopment, and dispositions. 1.8 How to Link Individual Properties and REITs, Part 2 Linking the Statements (Video Length: 28:26) We will finish connecting individual properties and our sample REIT in this lesson by projecting the next year of the income statement, balance sheet, and cash flow statement and linking in all the numbers from our revenue and expense projections. 1.9 REIT Key Metrics and Valuation Multiples (Video Length: 40:50) In this lesson, you ll learn the key operating metrics for a REIT such as FFO, AFFO, AFFRO, dividend yield, payout ratios, and NAV per share and the key valuation multiples, such as P/FFO, P/AFFO, Premium or Discount to NAV per share, and FFO and AFFO yields. We will use these metrics and multiples to determine whether our sample REIT is overvalued, undervalued, or valued correctly by the market. Module 2: Office Development & Sale In this course, you ll construct a detailed real estate development model for an office complex, starting with its lot size, FAR, and gross and rentable area. Then, we ll estimate the hard costs, soft costs, and other expenses before completing a Sources & Uses schedule and the construction timeline for the project. Next, you will learn to create a monthly income statement and cash flow statement for the property that incorporate rental and parking income, property-level expenses, and development costs. After that, you ll learn how to complete the debt and equity schedules and how to link the statements properly.

7 We ll conclude with the most technically difficult lesson on this entire site where you ll create a developer promote waterfall schedule that allocates returns differently depending on the IRR and then create a transaction summary page to display the results. Resources: Completed Office Development & Sale Model Real Estate Development Key Terms Quick Reference Real Estate Development Quick Reference 2.1 Office Development Overview & Assumptions (Video Length: 25:34) In this lesson, you ll get an overview of our office development model and you ll learn the key steps required to calculate cash flow and investor returns. You will also learn how to estimate the size, revenue, and expenses associated with an office complex and above grade parking structure, based on the FAR, maximum allowable lot coverage, and maximum building height. 2.2 Hard Costs, Soft Costs, Land Acquisition, FF&E, and Tenant Improvements (Video Length: 19:46) This video will teach you how to estimate the fixed and variable costs associated with the 5 major categories of expenses for real estate development: land acquisition costs, hard costs, soft costs, furniture, fixtures & equipment (FF&E), and tenant improvements (TIs). You will also learn which expenses should be based on gross building area vs. lot area vs. rentable area. 2.3 Sources & Uses of Funds (Video Length: 15:21) In this lesson, we ll create a sources & uses of funds schedule for this office development project where we estimate how much in developer and investor equity, mezzanine, and senior secured notes we use to finance the project. You will also learn which expenses such as capitalized interest and the operating deficit depend on future projections in the model and which we can estimate upfront. 2.4 Construction Timeline (Video Length: 21:35) We ll create a construction timeline here detailing how many months are spent in the planning, construction, and post-construction phases, and when various events such as the acquisition of FF&E and the payment of TIs occur. You will also learn how to track when different tenants move into the complex based on our timeline. 2.5 Property Income Statement (Video Length: 18:52) In this video, you will create the property-level income statement for our office development and learn how to estimate potential rental income, the vacancy allowance, and monthly operating expenses and property taxes. You will also learn which expenses should NOT be included on this type of income statement. 2.6 Parking Revenue & Expenses (Video Length: 13:32)

8 We will get into granular detail on the above grade parking garage we re constructing here, and you ll learn how to estimate monthly contract revenue and daily rate parking revenue from the complex and how to link these back to the income statement we just constructed so that the parking garage contributes to net operating income. 2.7 Property Cash Flow Statement (Video Length: 18:49) In this lesson we ll create a property-level cash flow statement for our office complex and you ll learn how to estimate and distribute monthly land acquisition costs, hard costs, soft costs, FF&E, and TIs based on the development phases in the project. 2.8 Debt Schedules, Part 1 Setup (Video Length: 10:01) This video will teach you how to set up the debt and equity schedules for a real estate development project and how to estimate the total interest expense across all tranches of debt based on interest rates and average debt balances. 2.9 Debt Schedules, Part 2 Funds Required (Video Length: 19:53) You will learn how to project the debt and equity draw required each month in this lesson, as well as how capitalized interest, origination fees and taxes, and the operating deficit accumulate over time Debt Schedules, Part 3 Equity and Debt Draws and Optional Repayment (Video Length: 20:27) In this lesson, you ll learn how to allocate the funds required between different levels of equity and different debt tranches, and how you can ensure that the proper amounts are drawn each month. You will also learn how to project optional debt repayments for the senior notes and mezzanine debt Linking the Statements (Video Length: 10:59) We ll finish linking together the income statement, cash flow statement, and debt & equity schedules in this video, and you ll understand how the cash interest, capitalized interest, and operating deficit tie together with everything else Property Sale Proceeds (Video Length: 22:59) In this lesson, you ll learn how to estimate the proceeds from the sale of our office complex by applying an appropriate cap rate to the future stabilized NOI of the property after maintenance CapEx and inflation adjustments Allocating Returns and Developer Promotes (Video Length: 50:03) In this video one of the most technically complex on the entire site you will learn how to allocate returns to equity investors based on a waterfall schedule that accrues a different percentage to each investor up to 4 tiers of IRR hurdles. You will also learn what it means when we have no ending balance vs. a positive ending balance for the return accrual within a given tier and how to estimate IRR based on that.

9 2.14 Calculating IRR (Video Length: 17:33) This lesson will teach you how to calculate the IRR for the entire project and the IRR to 3rd party investors and developers as well as how to calculate return multiples for each different type of equity investor Transaction Summary and Sensitivities (Video Length: 19:58) In this final lesson, we will create a transaction summary page that lists the key inputs and output from the model, and then look at several sensitivity tables to analyze the impact of changes in annual rent, cap rates, and property size. Module 3: Hotel Acquisition & Renovation In this course, you ll build a model for the acquisition, renovation, and sale of a hotel property in a major city. You ll start by learning how to think about the key operational, renovation, and acquisition assumptions in the model, and then complete a Sources & Uses schedule based on the numbers there. Then, you ll learn how a hotel s income statement and cash flow statement differ from those of an office property, and you ll use key metrics such as RevPAR to complete the statements, taking into account the impact of the renovation period. You will also learn an alternate method for projecting interest and principal repayment using the built-in IPMT and PPMT functions in Excel, and you will use those to complete the debt and equity schedules here. We ll conclude by calculating the IRR and creating a transaction summary page. Resources: Completed Hotel Acquisition & Renovation Model Real Estate Development Key Terms Quick Reference Real Estate Development Quick Reference 3.1 Hotel Operating and Renovating Assumptions (Video Length: 22:49) In this lesson, you ll learn how to set up the operating and renovation assumptions for a hotel and how we think about the size, revenue, and expenses differently from a residential or office complex; you will also learn how to use the per-room renovation cost and renovation time period to drive the rest of the model. 3.2 Hotel Acquisition Transaction Assumptions (Video Length: 15:03) This video will teach you how to estimate the purchase price, fees, and debt and equity used to finance the acquisition of this hotel based on net operating income and cap rates.

10 3.3 Sources & Uses of Funds (Video Length: 12:16) We ll create a Sources & Uses of Funds schedule here that allows us to more accurately estimate the true funds required to acquire this hotel. You will also learn how we can modify the model to avoid circular references and why certain expenses such as the cost to renovate the hotel are not included in Sources & Uses. 3.4 Hotel Income Statement Revenue (Video Length: 20:09) In this lesson, you will learn how to estimate the annual revenue for our hotel based on the total number of rooms, the average daily rate (ADR), occupancy rates, and Revenue Per Available Room (RevPAR). You will also learn how to modify these formulas to take into account the renovation period in the model, and how to estimate supplemental income streams such as food & beverages, telecommunications, and parking. 3.5 Hotel Income Statement Expenses (Video Length: 26:55) In this video, we ll project the expense side of this hotel s income statement and you ll learn how to factor in the renovation period, margin improvements, and new additions such as the management incentive and depreciation. 3.6 Acquisition Debt Interest and Principal Repayment Schedule (Video Length: 22:29) You will learn how to use the IPMT and PPMT functions in Excel to project the yearly interest expense and principal repayment for 30-year loans with optional interest-only periods in this lesson. 3.7 Cash Flow Statement and Debt & Equity Schedules Part 1 (Video Length: 11:35) In part 1 of this lesson, you will create a cash flow statement for this hotel, learn how to project the renovation expense and understand what the key items in cash flow from operations, investing, and financing are. 3.8 Cash Flow Statement and Debt & Equity Schedules Part 2 (Video Length: 10:04) Part 2 of this lesson will teach you how to use additional equity draws to cover the renovation expense and cash flow shortfall during the under renovation years and how to pull in the mandatory debt repayments from our amortization schedule. 3.9 IRR Calculation and Sensitivities (Video Length: 20:15) In this lesson, we ll complete our model by calculating the 10-year IRR to equity investors, the returns multiple, and creating sensitivity tables based on the purchase and exit cap rates and loan-to-cost (LTC) ratio. You will also learn which variables are relevant to analyze in sensitivity tables and which are not, and why additional leverage can sometimes reduce the IRR.

11 3.10 Hotel Acquisition & Renovation Summary (Video Length: 11:06) This final lesson will teach you how to create a transaction summary page for the deal that highlights the key metrics and you ll learn what is attractive and not so attractive about this deal to investors and lenders. Module 4: REIT Operating Model In this course, you ll build a detailed operating model for AvalonBay based on its real estate segments and how much it spends on acquisitions, development, and redevelopment. We ll begin by going over their historical financial statements, and then jump into the projections for their same-store properties, development/redevelopment, acquisitions, and dispositions. Here, you ll learn how to track assets by segment and how to shift around assets as they are developed and disposed of. Then, we ll project AvalonBay s financial statements and create a debt schedule that supports the issuing and repayment of debt across different tranches. We ll conclude by linking together the company s statements and supporting schedules, calculating FFO, AFFO, and dividends, and creating a summary page so that anyone can understand the model at a glance. Completed AvalonBay Operating Model Properties to REITs Quick Reference REIT Overview Quick Reference REIT Financial Statements Quick Reference REIT Key Metrics Quick Reference 4.1 REIT Operating Model Overview & Setup (Video Length: 16:29) In this lesson, you ll learn how we re going to approach this case study of AvalonBay and how we ll divide the lessons. You will also learn how to calculate equity value for a REIT and understand the variables and constants that will be used throughout the case study. 4.2 REIT Historical Income Statement (Video Length: 23:06) This video will teach you how the historical income statement for AvalonBay is different from the REIT income statement we looked at in the overview videos. You will also learn how to move from net income to net operating income, and how to separate property-level expenses from corporate overhead. 4.3 REIT Historical Balance Sheet (Video Length: 22:35) In this lesson, we ll cover AvalonBay s balance sheet and you ll learn about more advanced line items that were not discussed in the overview lessons; you ll also learn how we might modify the balance sheet to more easily make financial projections.

12 4.4 REIT Historical Cash Flow Statement (Video Length: 22:53) You ll learn the structure of AvalonBay s cash flow statement in this lesson, as well as how to separate acquisition spending from development/redevelopment spending in cash flow from investing. You will also learn about the other modifications we ve made to the CFS to support 3-statement projections. 4.5 REIT Established and Stabilized Community Projections (Video Length: 22:46) In this lesson, you ll learn how to estimate AvalonBay s same-store community rental growth and net operating income margins, as well as how to use cap rates and NOI margins to project their Other Stabilized community segment. You ll also see how maintenance CapEx is related to these numbers. 4.6 REIT Development/Redevelopment and Acquisition Projections (Video Length: 22:35) You will learn how to estimate development/redevelopment spending and acquisitions in this lesson, as well as how to derive rental income and NOI estimates based on cap rate guidance given in investor presentations and historical data. 4.7 REIT Dispositions and Discontinued Operations (Video Length: 21:24) In this video, you will learn how to project income from discontinued operations for AvalonBay, including the gain or loss on the sale of real estate assets and net income from those assets. You will also learn how these assumptions affect the rest of the model, including the impact of dispositions on AvalonBay s real estate assets in other segments. 4.8 REIT Revenue and NOI Rollup and Change in Gross Real Estate Assets (Video Length: 20:53) In this lesson, you ll learn how to link together the revenue and NOI from each of AvalonBay s different operating segments to calculate the portfolio-wide net operating income and metrics such as revenue growth, NOI margin, and portfolio-wide cap rate. We will also compare our numbers to those in equity research and the company s internal guidance, and you ll learn what might cause discrepancies in the historical numbers and forward estimates. 4.9 REIT Income Statement Projections (Video Length: 21:21) This video will teach you how to complete AvalonBay s income statement projections based on our segment-level buildup as well as independent projections for non-property level expenses. We ll also compare our numbers to those in equity research and the company s own guidance, and you ll learn why our EPS does not match theirs but also why it doesn t matter much for real estate investment trusts REIT Balance Sheet Projections (Video Length: 17:05) In this lesson, you ll learn how to project AvalonBay s balance sheet based on its income statement and segment-level projections; you will also see why many of the balance sheet items for an equity REIT require a cash flow statement and supporting schedules to be projected properly.

13 4.11 REIT Cash Flow Statement Projections (Video Length: 28:03) This lesson will teach you how to project AvalonBay s cash flow statement over the next 5 years by using its income statement, balance sheet, and supporting schedules to link in, average, or straight-line various items REIT Debt Schedules, Part 1 Setup (Video Length: 28:00) In this video, you ll learn how to set up the debt schedules for AvalonBay, and how to estimate interest rates and mandatory debt repayments based on the footnotes to their financial statements. You will also learn how to track the debt balance in each tranche and take into account issuances, additional borrowings, and mandatory and optional repayments REIT Debt Schedules, Part 2 Mandatory and Optional Repayments (Video Length: 28:51) In this lesson, you ll learn how to determine mandatory and optional debt repayments for AvalonBay based on the cash flow available to repay debt, new debt issuances, and its minimum cash balance. You will also learn how to set up an optional debt repayment formula that handles all possible scenarios and previous repayments in our schedule REIT Debt Schedules, Part 3 Linking to the Financial Statements (Video Length: 12:11) We ll finish linking together the debt schedules to the other financial statements in this lesson, and you ll see how the debt repayment and issuance line items on the cash flow statement affect the available cash flow and the ending cash balances, as well as how the net interest expense impacts net income and cash flow from operations REIT FFO, AFFO, and Dividend Projections (Video Length: 38:42) In this video, you ll learn how to calculate Funds from Operations, Adjusted Funds from Operations, and dividends for AvalonBay; you will also learn 3 different methods to estimate dividends for an equity REIT and you ll see how dividends impact the other financial statements and the amount of debt they need to borrow Linking a REIT s Statements (Video Length: 25:55) This lesson will teach you how to link together the 3 financial statements of a REIT and its supporting schedules, and what to do when you run into problems with your balance sheet not balancing. Linking together a REIT s financial statements can be more complicated than doing the same for companies in other industries, so you must understand where to make approximations and what to do when you re not sure where to put certain items REIT Operating Model Summary (Video Length: 18:30) In this final lesson of our operating model, you ll create a summary page for AvalonBay that presents their key operating metrics and valuation multiples and you ll learn which numbers are important to include on a 1-page summary and which we should leave out.

14 Module 5: REIT Valuation In this course, you ll learn how to value real estate investment trusts (and several methods that could apply to individual properties as well). You ll start by learning how comparable public companies and precedent transactions differ for REITs, and you ll see a firsthand example of how to pull in all the relevant data from a peer company s SEC filings. Next, we ll move into the Net Asset Value (NAV) model and you ll learn the concept and mechanics, subtle variations you may see in equity research, and how to apply it to AvalonBay. Then, we ll create a Discounted Cash Flow analysis using Free Cash Flow to Equity, and a Dividend Discount Model before moving into the Replacement Cost method. There, you ll learn how you might use Cap Rates and Replacement Costs to value individual properties and how to apply the Replacement Cost method to REITs. The final lesson of the course will present a valuation summary that incorporates these methodologies, and you ll learn what the different methods imply about AvalonBay. Completed AvalonBay Operating Model & Valuation Real Estate Valuation Quick Reference 5.1 REIT Valuation Overview & Public Company Comparables (Video Length: 20:45) In this lesson, you ll get an overview of how to value REITs using different methodologies, and then you ll learn how to select public company comparables and narrow the set based on industry, geographic, and financial criteria. 5.2 Equity Residential [EQR] Public Company Comparable Analysis (Video Length: 37:52) This video will walk you through how to find the required data for a public company comparable analysis of Equity Residential [EQR], one of AvalonBay s peer companies. You ll learn how to properly adjust for OP and DownREIT units in the diluted share calculation, where to find FFO, NOI, and other real estate metrics, and how to calculate AFFO and the implied cap rate based on information in their filings. 5.3 Summary of REIT Public Company Comparables (Video Length: 24:45) In this lesson, you ll learn how to analyze a set of REIT public company comparables and what the key links are between operating metrics such as cap rates, gross real estate operating assets, FFO, and AFFO, and valuation multiples such as Equity Value / FFO and Equity Value / AFFO. In addition, you will also learn the finer points of the public company comparables analysis in case you want to practice with the rest of the set and compare your numbers to the output here. 5.4 REIT Precedent Transactions (Video Length: 28:37)

15 In this lesson, you will learn how to analyze real estate precedent transactions for entire REITs as well as individual assets and property sales. You will also learn the differences between healthcare, industrial, and residential REITs, and understand what to do when we have limited information on M&A deals. 5.5 Net Asset Value Model Overview (Video Length: 26:45) In this video, you ll get an overview of the Net Asset Value (NAV) approach to valuing real estate investment trusts, and you ll learn the mechanics as well as the advantages and disadvantages compared to other intrinsic valuation methodologies such as the DCF. We will consult with equity research and 3rd party sources and look at several different approaches to the NAV model as well. 5.6 Net Asset Value Model, Part 1: Calculations (Video Length: 26:45) We ll calculate AvalonBay s Net Asset Value Per Share in this lesson, and you ll learn how to take into account property NOI, 3rd party management fees, real estate and non-real estate assets, and the benefit of tax-exempt bonds when adjusting the balance sheet values of assets. 5.7 Net Asset Value Model, Part 2: Premiums & Sensitivities (Video Length: 19:14) In this video we ll calculate the premium or discount to NAV and the implied cap rate for AvalonBay; you will also learn how to create a single-axis sensitivity table that lets us analyze the impact of assumed property cap rates on NAV Per Share. 5.8 REIT Discounted Cash Flow Assumptions & Setup (Video Length: 20:53) This lesson will show you how to calculate Free Cash Flow to Equity, also known as Levered Free Cash Flow, for a REIT and the logic behind our definition compared to slightly different variations on FCFE. You will also learn how to calculate the discount rate for a REIT, and why a Levered DCF is often nearly the same as a dividend discount model for equity REITs. 5.9 REIT Discounted Cash Flow Terminal Value & Sensitivities (Video Length: 16:54) In this video, we ll finish off the DCF analysis for AvalonBay and you ll learn how to calculate terminal value, the implied value per share, and how to set up a sensitivity table to analyze the output under different assumptions. You will also learn what the DCF output means compared to the NAV model, public comps, and precedent transactions REIT Dividend Discount Model (Video Length: 20:10) In this lesson, you ll learn how to create a Dividend Discount Model for AvalonBay based on FFO and their assumed payout ratio. You ll also see why the DDM doesn t necessarily tell us much more than a Levered DCF for an equity REIT, and what the output indicates about AvalonBay s valuation Replacement Value Methodology (Video Length: 30:05) We ll cover the replacement value (also known as the replacement cost) methodology in this lesson for both individual properties and entire REITs. You ll learn the mechanics of how to estimate the

16 replacement cost, as well as how to use it when analyzing precedent real estate transactions and an equity REIT s balance sheet REIT Valuation Summary (Video Length: 18:03) In this final lesson, we ll create a valuation summary and football field graph that allow us to compare different methodologies and see which ones imply higher or lower values for AvalonBay; you ll also learn which methodologies are more reliable and why we get counter-intuitive results when comparing the public comps, precedent transactions, DCF, and NAV output. Instructor Interaction and Your Questions Answered You don t just get tons of videos, Excel files, and quick reference guides with this course. You also get to ask questions on anything you don t understand whether it s an entire course, just one lesson, or just one sentence of one question. We have a team (you can read more about everyone here) who is on call to answer questions 365 days per year and you can access all previous questions and answers from the thousands who have already signed up for the course. You re looking at accessing not only years of wisdom and questions and answers all in one spot, but also the ability to get new answers on anything you need even if it s Christmas or New Year s Day. Some of our lessons have dozens (or more) of questions and answers, and more are being added every day: I no longer even offer 1-on-1 consulting, and the last time I did offer it, the price was over $300 per hour. And even when you had hired me for a session, you couldn t ask questions 24/7 and receive responses on any topic you could think of our time was limited to the session itself. This support function and the superb community of Breaking Into Wall Street mean that you get an even better deal it s like getting a detailed guide, hiring a seasoned coach to answer your questions, and getting to access the experience of thousands of previous and current students.

17 What Are Your Alternatives? And What s Your Investment In This Course? There are limited options when it comes to learning real estate modeling: Real Estate Financial Modeling: $600 $1,000 per Excel file; videos are separate and cost more. Wall Street Training Real Estate Development Modeling: $300. Wall Street Training REIT Financial Modeling: $750 for just a single Excel file no lessons or videos. So if you want to learn everything taught in this course elsewhere, you d be spending a minimum of $1,000 and you wouldn t even get videos walking you through it all. Yes, you read that correctly: $1,000 for a single Excel file. With the Breaking Into Wall Street version, you get more material including multiple different real estate development models, a REIT operating model, a REIT valuation, and quick reference guides for all the key concepts for just $247, as opposed to $1,000. That s a 75% discount for MORE content, material, and lessons that you can watch and follow along with yourself. Oh, and none of these courses have a built-in quiz and certification like we do if they offer it at all, it is separate and costs significantly more than the course itself. This is extremely specialized material good luck finding this level of detail online or in finance textbooks so I actually thought about pricing this higher to begin with. And in the future, the price will be going up, since $247 is still much lower than all the available alternatives. This is information that makes you far more valuable to firms, than if you simply know basic accounting and valuation for general situations. And there s more material coming potential future lessons will include coverage of REIT merger models and LBO models, and more real estate development topics. If you sign up today, you get all of this for only $247 a 75% discount plus free access to all future additions to this course as soon as they re released. But More Importantly What s the Return On Investment in This Course? As Warren Buffett says, Price is what you pay. Value is what you get. The price is $247, but what s the value of your investment? Let s run the numbers

18 The pay for entry-level investment banking jobs varies from year to year, but it's safe to say that even entry-level Analysts would make at least $100,000+ USD right out of university. At the MBA level, that climbs to $200,000 USD. And as you progress, your salary only gets higher and higher. By investing $247 in this highly-specialized course, you re doing several things, all at the same time: Gaining extremely specialized knowledge in a field for which there is always high demand for people who know what they re doing. Differentiating yourself from other candidates - even the very best ones with the best academic pedigrees and the highest GPAs. Proving beyond doubt to potential employers that you re someone who is prepared to go above and beyond to be the best and get results which is exactly the type of person that banks love to hire. You re setting yourself up for a job that pays a minimum of $100,000 that's a 400x return on investment. (Good luck getting that in the stock market!) Even if we re super-conservative and assume that you only have a 10% chance of landing the job after going through this Course, that s still a 40x ROI for you. And if you re working at a REIT, or in commercial real estate, or in real estate private equity, you ll be making at least $60,000, and more likely $100,000+ and either one represents a great return. Plenty of other training firms would charge you thousands of dollars for this same content, but why bother when you get a much higher ROI from your investment with us? Plus, You Get A No-Hassle Money-Back Guarantee Just like every one of the BIWS products and courses, this comes with our unconditional 12-month money back guarantee. That s right take a full 12 months to evaluate everything inside the Course, and if you re not 100% satisfied, simply contact us via the Contact link displayed on every page of the site and ask for your money back. You ll receive a prompt and courteous refund. There are no strings attached, no special terms or conditions, and no fine print. Here s What Happens Within Minutes Of You Signing Up

19 Once you sign up, you ll immediately have access to the 63 instructional videos, all the Excel files and quick reference guides, and the complete curriculum. And you ll have access to our expert support team to ask whatever questions you have. With that comes lifetime access, free upgrades, new content as we add it, and expert support. Click Here to Sign Up Now for The BIWS Real Estate & REIT Modeling Course Best Regards, Brian DeChesare Mergers & Inquisitions Breaking Into Wall Street Pssst! Here s An Even Better Offer What s even better value than this industry-specific financial modeling Course? The Industry-Specific Financial Modeling Course Bundle. With the bundle, you get the following three components, at a deep discount to the regular price: Oil and Gas Modeling Course Bank and Financial Institution Modeling Course Real Estate and REIT Modeling Course (Including all bonuses, expert support, immediate access and a 12-month Money-Back Guarantee on everything ) all for just $497 (savings of $244). Knowledge and skill in these three specialized disciplines will truly set you apart from the pack, and I promise you - they will never be offered at a lower price than this. Click Here to Sign Up Now for The Industry-Specific Financial Modeling Course Bundle