Commercial Real Estate Debt Finance This course is presented in London on: 26 February 2018, 29 November 2018

Transcription

1 Commercial Real Estate Debt Finance This course is presented in London on: 26 February 2018, 29 November 2018 The Banking and Corporate Finance Training Specialist

2 Course Objectives Participants will: Assess the key risk issues in Commercial Real Estate Finance Understand the main approaches to the valuation of Commercial Real Estate Illustrate, through financial sensitivity analysis, the impact of key drivers on the viability of a Commercial Real Estate Finance transaction Discuss and evaluate the principal methods for mitigating risks in Commercial Real Estate Finance transactions Understand Course the key Overview features of the principal debt financing products and their relative advantages and disadvantages Understand how value is created in Commercial Real Estate transactions and risk and return issues from a debt and equity perspective Background of the trainer The Trainer has over 40 years experience in banking, finance and financial training. He has had practical banking experience with major banks in the areas of corporate credit analysis, Corporate Banking Relationship Management and Commercial Real Estate Debt Finance. The trainer was subsequently involved in Commercial Real Estate Financial Advisory business with a then newly formed financial services subsidiary of one of the world s largest Real Estate advisory firms. The Trainer has almost 25 years financial training experience in about 60 countries focused on large scale Corporate Credit Analysis, Corporate Banking and Structured Debt Finance (Project, Infrastructure and Real Estate Finance). He holds an MSc Real Estate Investment and Finance degree from the University of Reading (2014). The trainer has worked with participants in a wide range of job functions and experience from Commercial and Investment Banks, Development Finance Institutions, Export Credit Agencies, Public Sector organisations and large corporates. Course Overview Opportunities: Commercial Real Estate is a major investment Asset Class, represents a very substantial portion of corporate assets and provides collateral and credit support for a huge volume of bank and Capital Markets financings, ranging from lending to the SME sector to Commercial Mortgage Backed Securitisations. Moreover the Real Estate markets are extending from traditional investment categories such as offices and retail to now include increased interest in areas such as distribution centres, hotels and Private Residential Rental properties and student accommodation. Risks: Commercial Real Estate values are very sensitive to the underlying economic fundamentals as well as the financial markets. With interest rates in the US, UK and the Eurozone starting to rise, there are concerns that this will adversely impact Commercial Real Estate values. Additionally Commercial Real Estate values and performance are also influenced by specific factors such as the quality of the Real Estate, lease terms, tenant risk, market sector and geographic focus making it essential to understand the specifics of each Commercial Real Estate Asset.

3 Course methodology There will 1 or 2 core case studies involving large value Commercial Real Estate transactions throughout the training, using the example of a single asset financing, supplemented by other cases / exercises to illustrate specific issues in the programme. Whilst there will brief reviews of a financial model for a core case study, for participants seeking to develop their financial modelling skills Redcliffe Training provides Real Estate modelling training programmes. Target Audience This programme is designed for personnel working on large scale Commercial Real Estate transactions, with limited or no practical experience of the practical aspects of Commercial Real Estate Finance working in organisations such as Project developers and investors Commercial and Investment banks Commercial Real Estate Debt Funds Private Equity firms investing in Real Estate Sovereign Wealth Funds Construction companies Accountancy firms Law firms Real Estate advisory firms Architectural practices and Quantity Surveying firms Government and other Public Sector Agencies Participant pre requisites It has been assumed that participants will have limited or no prior practical experience of Commercial Real Estate Finance. Participants should already be familiar with the core principles of financial analysis, the fundamental principles of investment appraisal techniques, the core functions in Excel and the main features of debt financing products. Case studies To maximise the benefit to participants case studies will Mostly focus on the main types of Commercial Real Estate office, retail and industrial Concentrate on large scale transactions Primarily relate to the financing of single asset companies, both developments and existing investments. There will be limited coverage of Commercial Real Estate companies and Investment vehicles Each participant will be required to bring a laptop to the course

4 Course Content Risk and risk mitigation techniques; overview of developments in the Commercial Real Estate markets Macroeconomic cycles what can be learned from past economic cycles? Recent developments and issues arising from the credit crisis Key risks and mitigants in Commercial Real Estate Financings Will technology fundamentally change the Commercial Real Estate markets? Exercise: Review of a commercial real estate financing to identify key credit risks and potential mitigants Principles of Commercial Real Estate Valuation Summary of Commercial Real Estate valuation methods and how the different methods can influence value Comparable buildings Capitalisation of yields Open Market Values Discounted cashflow valuation methods Occupational lease terms examples from selected markets, and how this affects value Yields in Commercial Real Estate Valuations Initial yields Reversionary yields Equivalent yields Development vs investment financings, and factors to consider in valuation assumptions Exercise: Calculating and sensitising Commercial Real Estate Finance valuations using discounted cashflow techniques Commercial Real Estate Companies and Investment vehicles Typical types of Commercial Real Estate investment companies and their approach Developers Trading companies Investment companies Real Estate Investment Trusts (REIT) vs non REIT Commercial Real Estate Funds What are the key elements of a creditworthy Commercial Real Estate company principal elements in credit rating Exercise: Review of key aspects of the financial statements of a Commercial Real Estate Company or REIT Debt financing choices for Commercial Real Estate transactions and debt structuring issues Financing choices Private debt financing choices Development vs investment financings Asset specific financing Secured vs unsecured debt Senior vs subordinated / mezzanine debt Sale and leaseback transactions Capital markets financings

5 Use of hybrid financings convertible bonds Commercial Mortgage Backed securitisations review of a Commercial Mortgage Backed Securitisation Trends in Debt Finance leverage Case Study: participants review and sensitise a financial model with a view to developing an acceptable debt structure for a Commercial Real Estate project Risk and return in Commercial Real Estate Finance the equity investors perspective Principles of evaluating investments discounted cashflow methods, NPV and IRR Value creation the development process; active Real Estate management; financial market influences, how different types of investor seek to achieve returns from Commercial Real Estate investments Risk and return Commercial Real Estate Finance vs other asset classes Use of Equity vs. Subordinated Debt Case Study: sensitising a financial model for a Commercial Real Estate project to illustrate the sensitivity of equity related returns to key assumptions Debt structuring issues and risk mitigation techniques Use of covenants and developing a covenant package Debt Service Coverage measures (interest and debt service coverage) Asset Coverage measures (Loan to Value ratio and top up requirements) Development vs. investment financings completion and cost overrun undertakings Third party credit support Case Study: participants review the key elements of a summarised Term Sheet What Redcliffe s clients are saying about the course; Explained the material very clearly Very knowledgeable presenter Broad and wide variety of topics Great Materials and very well presented by the trainer 09:30-17:00 London Standard Price: 575 +VAT Membership Price: VAT Delivering this course in-house for you to a number of participants could be very cost effective.