Financial Modelling for Real Estate Investment

Principals of best practice

• Understand how to use our financial modelling methodology
• Good vs. bad Excel modelling: workshop and examples on poor and best practices
• Create a corporate standard: use custom styles to standardise your layout and communication
• Understand and utilise Excel’s in-built formula review functions to conduct model review
• Walk-through best practice governance and incorporate self-checking formulas into your model

Build the model engine

• Discuss the purpose of the ‘case-study’ model, key business drivers and impact on design
• Build the timing architecture and operational modules for commercial assets on a standalone basis to initially learn best practice techniques
• Learn a structured approach to calculating rental income, maintenance capex, depreciation, revaluation, acquisition and divestment

Model a best practice discounted cashflow (DCF) valuation

• Understand and discuss key considerations in valuation concepts at the single-asset level, portfolio-level and investor level
• Calculate and analyse the NPV and IRR, utilising the capitalisation method for single-asset valuation
• Contrast portfolio and single-asset valuation techniques

Increase your capabilities in efficient multi-asset, multi-stage or portfolio modelling techniques

• Understand different approaches to modelling multi-asset models and extend single asset to multiple asset models
• Learn efficient ways of consolidating multiple assets into different trusts or entities
• Make changes across multiple sheets – know the easy mistakes and how to avoid them

Incorporation of portfolio level items to obtain operating earnings

• Insert capex or development facilities into the cashflow waterfall of the case study model
• Discuss debt amortisation and typical debt covenants such as gearing and interest coverage at portfolio level
• Include other portfolio-level items such as fund expenses and management fees to accurately model operating earnings

Integrate a powerful scenario manager and increase efficiency via automation

• Save critical time and deliver rapid analysis using our approach to scenario management
• Transform scenarios into an efficient way to test the model and analyse
• Create meaningful analysis to review the effect of sales and acquisitions of assets with the portfolio

Introduction to macros and the VBA environment

• Discuss the reason for Macros in models and ways to avoid the a “black box”
• Set up commonly used macros to break circularities that are inherent in complex models
• Create a goal-seeking macro in order to flex inputs to achieve a desired return
• Use VBA to control data tables so they do not adversely affect calculation speed