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RE 01 01 Introduction Slides

This document provides an overview of a real estate financial modeling course. It covers individual properties and REITs, focusing on preparing students for case studies and interviews. Different property types like offices, multifamily, condos and hotels are discussed, along with development, acquisition and financing strategies. The course provides guidance on focusing on either individual properties or REITs depending on a student's career goals.

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63 views

RE 01 01 Introduction Slides

This document provides an overview of a real estate financial modeling course. It covers individual properties and REITs, focusing on preparing students for case studies and interviews. Different property types like offices, multifamily, condos and hotels are discussed, along with development, acquisition and financing strategies. The course provides guidance on focusing on either individual properties or REITs depending on a student's career goals.

Uploaded by

Anonymous bf1cFDuepP
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Real Estate Financial

Modeling – Introduction
and Overview
Would You Like a Parking Lot with Your
Condo?
Lesson Outline
• Topic #1: What This Course Covers

• Topic #2: What This Course Does NOT Cover

• Topic #3: Different Property Types and Strategies

• Topic #4: How to Use This Course


What This Course Covers
• Two Main Topics: Individual properties and REITs (real estate
investment trusts)

• CRE / Private Equity / Lending: Individual properties more relevant

• Investment Banking: REIT lessons more relevant

• GOAL: Prepare you efficiently for Excel-based case studies and


interviews, and get you up to speed on the job quickly

• How We’re Different: Focus on interview-style case studies and


efficiency over bells and whistles; cover both properties and REITs
What This Course Does NOT Cover
• Excel and Accounting/Finance Knowledge: See the Excel &
Fundamentals course, which is a pre-requisite

• SIMPLE TEST: Do you know what PV, NPV, and IRR mean? Do you
understand INDEX/MATCH? If not, the E&F course is better

• Every Single Combination of Models/Property Types/REITs: Our


goal is efficient preparation, not bells/whistles and 200-hour models

• If You Want the Bells and Whistles: There are other options – some
companies and platforms teach only real estate modeling, while we
cover dozens of different industries
What This Course Does NOT Cover
• ARGUS / Other Non-Excel-Based Software: Yes, these can be very
useful, and they’re commonly used in the industry, BUT…

• Focus: They’re not our area – we teach Excel-based models, and we


will cover how to use the output from ARGUS in Excel

• Non-Property/REIT Analysis: We don’t teach private equity fund


modeling, gaming/lodging/homebuilding companies, real estate
operating companies, CMBS, etc. (Too normal or too specialized)

• Usefulness: Some material in this course may still apply to these,


but it’s not our focus (otherwise, course would be 500 hours)
Different Property Types and Strategies
• Office / Retail / Industrial – Long-term-leased to businesses for
business purposes, such as sales or manufacturing

• Multifamily (Apartments) – Medium-term-leased to individuals for


residential purposes – places to live, sleep, raise a family, etc.

• Condominiums – Sold to individual tenants for residential purposes,


and they’re often sold in advance of completion (pre-sales)

• Hotels – Very-short-term-leased to individuals for business or


residential purposes (conferences, clients, vacations, etc.)
Different Property Types and Strategies
Office / Retail Multifamily Condominiums Hotels

Customers ▪ Businesses ▪ Individuals ▪ Individuals ▪ Individuals

Lease Type ▪ Long-term (several ▪ Medium (1 year?); ▪ N / A – Ownership ▪ Short (days); very
years); details vary very similar leases similar terms

Timing of Lease or Sale ▪ After building is done ▪ After building is done ▪ Pre-sold ▪ After building is done

Purpose ▪ Business ▪ Residential ▪ Residential ▪ Business or leisure

• Other Differences: Much more granular revenue and expenses for


office / retail / industrial properties since there are fewer tenants

• Examples: Lease renewals/expirations, free months of rent,


commissions paid to brokers for individual tenants…
Different Property Types and Strategies
Closer to “normal” (non- VERY different due to timing
real-estate) companies and revenue/expense detail

Office /
Hotels Multifamily Condominiums Retail /
Industrial

• Other Property Types: Storage, student housing, nursing, lumber,


etc. – they’re all variations of the types above

• Rule of Thumb: Think about the # of tenants and granularity of


revenue and expenses – most will be closer to the Office / Retail or
Multifamily category (little fits into the “Condo” category)
Different Property Types and Strategies
• Strategies: Build a new property, or acquire an existing one

• Strategy #1: Develop and Sell Upon Completion – Offices, Retail,


Multifamily, Hotels

• Strategy #2: Develop and Pre-Sell – Mostly just Condominiums

• Strategy #3: Acquire Existing Property and Do Nothing –


Everything but Condos

• Strategy #4: Acquire Existing Property and Renovate It – Same


Different Property Types and Strategies
Office / Retail Multifamily Condominiums Hotels

Develop & Sell Upon


Completion

Develop and Pre-Sell


Before Completion

Acquire Existing & Do


Nothing

Acquire Existing &


Renovate
Different Property Types and Strategies
• Financing: Varies quite a bit between the different strategies!

• Loan Types: Construction, Bridge/Temporary, and Permanent

• Construction: Used for new developments, but refinanced into a


Permanent Loan when the property “stabilizes”

• Bridge/Temporary: Often used for “value-added” deals with


renovations and acquisition scenarios – may also be refinanced

• Permanent: Split into Senior (up to 75-80%) and Mezzanine (up to


80-90%) – But percentages, rates, etc. vary based on the region
How to Use This Course
• Quick Reference Guide: Get all the details here!

• CRE / Private Equity / Lending: Focus on individual properties

• Investment Banking: Focus on REITs

• Pressed for Time: Just focus on these shorter 30-90-minute case


studies in this intro module and skip the more complex ones

• More Time / On the Job: Worth looking at the RE PE case studies if


you’re on that side, or the REIT lessons if you’re on the IB side
Recap and Summary
• Topic #1: What This Course Covers

• Topic #2: What This Course Does NOT Cover

• Topic #3: Different Property Types and Strategies

• Topic #4: How to Use This Course

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