Workshop on Real Estate Development and Financing

Program overview:

Real estate development is a complex and interactive process that relies on multiple skills, efforts, and knowledge, of different professional disciplines to be successful.

Value adding and opportunistic property investments are complex both in their initial scope and their cash flow projections. Development of real estate projects require greater skill and flexibility from Analysts and an ability to work simultaneously with project partners.

In this course you will learn the basic elements of the real estate development process. You will become familiar with the steps and analyses that developers and other professionals engage in during the real estate development process. You will develop an understanding of the development process from building a project budget to valuing raw land before purchase, to finance concepts used by lenders.

For Whom:

This program is designed for Real Estate Developers, Surveyors, Real Estate professionals at any level with exposure to real estate financial models on a frequent basis, Fund managers, Asset managers, Land managers, Planning managers and Lenders

Learning Objectives:

At the end of the program, participants will be able to;

• learn how to structure a full development cash flow, cost functions and financing sources;
• create development project budgets;
• learn and understand market studies and their purpose;
• explain project valuation methods and residual land value;
• manage project site selection and carry out the due diligence process;
• list and explain entitlements and permitting issues; and
• manage a basic bidding and reviewing process for construction bids.

Course Outline:

Day 1: Real Estate Development and Financing: Overview

      Risk Management

• Demand
• Finance
• Types of developers and projects

Budgeting

• Feasibility
• Bar napkin from finance

The Market Study

• Purpose of document
• Ways to quantify demand
• Project location and proximity to similar projects
• Absorption
• Key risks

Day 2: Project Valuation Methods

Understanding ROI

• Appraisal
• Time value of money
• Defining and using cap rates

Residual land value

• Building on project valuation (to determine land value)
• Utility of land use
• Impacts of rising construction costs on land value

Site Selection

• Best practices
• Why this site and not that one
• Site limitations (zoning, geometry, environmental, etc.)

Due Diligence

• Confirm assumptions in site selection
• Sample DD budget
• Project economics
• Entitlement risks/PERT

Day 3: Real Estate Deal Structures

• How projects get financed
• Lender requirements of developers
• Lenders triangle
• Partnership structures (and why)
• Profit split example with investor
• Entitlements
• Timelines and budget/project risks
• Review local, regional, state, and federal permits
• Rezoning/land use changes
• Reactionary zoning

Day 4: Real Estate Finance Tools

• Review terminology
• Review concepts of TVM (time value of money)
• Calculate loan amount
• Calculate loan payoff amount
• Calculate project ROI and annual ROI

(return on investment)

• Introduction to net present value (NPV)
• Introduction to discounted cash flow (DCF)

Day 5: Real Estate Construction

• How to bid a project?
• How to review bids
• Working with your contractor
• Risks and how to mitigate them
• Course Wrap-up

Training Methodology

Methodology: Lectures, discussions, exercises, case studies, audio-visual aids will be used to reinforce these teachings/learning methods.