Private Equity Modeling for Real Estate

Introduction:

The Financial Aspects of Commercial and Residential Real Estate course is designed to provide you with detailed financial knowledge geared towards commercial and residential real estate investing as well as development. The prime objective of the course is to equip you with the skills to analyze, invest in, and sell real estate profitably. This will cover aspects such as methodologies for calculating returns, financing strategies, effective analysis of development cash flows, leases, and associated risks.

At the end of this training program, participants will have developed a comprehensive understanding of the appraisal process and the basic principles behind project finance. Moreover, students will learn about different types of financial instruments available in the real estate market and their impact on overall performance in real estate projects.

Objectives:

By the end of this Real Estate Private Equity Course, participants will be able to:

• Explain key financial concepts, ratios, and models required for investment and development appraisals in Gulf & Western real estate markets.
• Explore the applicability of modern technology and predictive tools in decision-making on property development and investment.
• Create a private investment portfolio suited to real assets in property.
• Evaluate risk-return profiles for all private investments, including pools of property assets.
• Conduct relative value analyses for various investment opportunities.
• Navigate troubled investments effectively.
• Understand how compensation structures relate to performance outcomes in real estate investments.
• Incorporate fundamental lease workings into any appraisal format used by investors.

Training Methodology:

• Interactive Financial Modeling Exercises
• Case Study Analysis
• Real-Time Scenario Simulations
• Group Modeling Projects
• Applied Software Tuition
• Peer-to-Peer Learning Sessions
• Role-Playing Investment Scenarios
• Performance Analytics Certification Workshops
• Collaborative Portfolio Construction
• Facilitated Expert Discussions

Course Outline:

Unit 1: Introduction to Real Estate Private Equity

• What is private equity?
• Risk and return.
• Metrics for valuation.
• The future of real estate in the field of private equity.

Unit 2: Understanding a Private Equity Fund Model

• Layout and key elements of a PE Model.
• Private equity market and strategies.
• Deal structure and interested parties.
• Understanding the capital structure:
  • Review of principal debt instruments
  • Review of significant equity instruments (special case – MBO).

Unit 3: Fund Valuation Methods

• The multiples approach to valuation.
• Discuss DCF, modeling, core concepts; explain how they relate to Private Equity investments.
• Key private equity performance indicators.
• Difference between pre-money and post-money valuations.
• Special cases.

Unit 4: Accounting Principles

• Balance Sheet: Real Estate Valuations and Debt.
• Profit & Loss: Capital Allowances.
• Cash Flow Statement: Escrow Accounts and Distributions.

Unit 5: Modeling Fund Dynamics, Drivers, and Forecasting

• Forecast revenue and cost drivers.
• Use working capital schedule with indirect costs calculated from historical ratios.
• Capital expenditure/amortization/depreciation schedule.
• Maintain debt service or repayments on investment loan schedules.
• Model dividend distributions.
• Closing income statement – shareholders’ equity schedule.
• Modeling & Analyzing Risk.

Unit 6: Performance Analysis

• Benchmark returns within Real Estate and across industries.
• Analyze leverage and coverage ratios.
• Calculate Equity Returns Using EBITDA or Net Income.