Certificate in Real Estate Financial Modelling

This is an exclusive programme offered by Cambridge Finance and in line with the Royal Institution of Chartered Surveyors (RICS) financial modelling competency.

Cambridge Finance is the only real estate financial modelling training company regulated by RICS. We are their exclusive partners in their real estate finance and investment content development.

Learning Outcomes:

• Construct fully automated multi-tenant property cash flows from scratch.
• Audit third-party cash flows.
• Understand how cash flow inputs and outputs are interlinked.
• Develop and produce sensitivity and scenario analysis.
• Give investment recommendation based on quantitative methods.

Course Content:

• Best practice in financial models
• Simple tips to help you become an efficient financial modeller.
• How to avoid errors and present your models in a persuasive way
• Implicit investment valuation methods
• Term & Reversion
• Layer / Hardcore
• Property yields
• Defining term and reversionary yields
• Calculating the equivalent yield
• Build your cash flow from scratch
• Inputs: passing rent, estimated rental value, initial and exit yields, market growth, review cycles and most
• importantly, target returns
• Outputs: internal rate of return, net present value and worth
• Annual and quarterly discounted cash flows: modelling purchase price, passing rent, rent reviews, exit rent and exit price
• Analyse the results
• IRR, NPV and Worth
• Data tables & sensitivity analysis
• Risk visualisation (charts)
• Case study
• Single-tenant office building in the UK
• Day 2:
• Course Content
• Multi tenant properties
• Modelling tenancy schedules and rents forecast
• Rent reviews, upward-only, break options, lease expiry
• Modelling hypothetical second leases
• Void period, rent free and estimated rental values
• Time-varying rental growth
• Net Operating Income Forecast
• Modelling capital expenditure for refurbishment and operating costs (letting fees, void costs, empty rates)
• Investment decision
• When to accept the project and make investment recommendation
• Case Study
• Multi-tenant office building in the UK
• Day 3:
• Course Content
• Capital Structure, sources of debt funds & lending criteria
• Capital structures: debt & equity
• Explanation of different debt & equity structures
• Sources of debt fund & lending criteria
• Debt Covenants & calculations
• Operational Covenants: asset maintenance, disclosure requirements, insurance and credit line
• Financial Covenants: interest cover ratio, debt service coverage, loan to value, debt yield
• Senior debt repayment modelling
• Interest Only
• Constant Amortisation
• Fully-Amortising Constant Payment
• Partially-Amortising Constant Payment
• Rolled-Up (Capitalised) Interest
• Day 4:
• Course Content
• Pro-forma cash flow development modelling
• Site Purchase
• Gross Development Value (GDV) versus Net Development Value (NDV)
• Development Timeline Modelling:  Phases and Duration
• Development Costs Modelling: Hard Costs and Soft Costs
• S-Curve
• Straight-Line
• Known Costs
• Mezzanine finance
• Modelling mezzanine structures
• Mezzanine interest and fees
• Debt Prioritisation
• Modelling cash flow waterfall
• Coupon and capital repayment schedule
• Analysis
• Maximum loan amount based on financial covenants
• Credit Analysis
• Stress test
• Capital adequacy calculations
• Case study:
• Office development lending 
• Day 5:
• Course Content
• Real Estate Risk
• Sensitivity Analysis 
• Data Tables
• Scenario Analysis
• Automatic scenario modelling
• Simulation Analysis
• Monte Carlo analysis 
• Case Study:
• Learn how to add a real life tenancy schedule and debt facilities into the models. Analyse any investment-grade commercial property transactions in the European markets.