Commercial Real Estate Analysis Foundations Solutions
corporate/Investment banking48 hours$520
Commercial Real Estate Analysis Foundations Solutions
Course Modules
Coverage Analysis and Financial Ratios
- Financial ratios
- Interaction between pro forma cash flow and financial ratios
- Income quality, sensitivity analysis, and stressing the loan
- Determining the loan amount
Financing and Loan Structure
- Affirmative, negative, and financial covenants
- Sample cash management and lockbox structures
- Typical lender escrow/reserves, including property taxes, insurance, tenant rollover, and deferred maintenance
- Deal documentation
- Capital structure overview
- Construction loans and permanent loans
- Basic loan underwriting framework
Third-party Property Valuation Issues
- Valuation risk and appraisal analysis
- Formal property valuations: process, structure, and content
- Appraisal valuation approaches: cost, sales comparison, and income
- Final property valuation estimate versus liquidation value
Property Types and Uses
- Primary characteristics of CRE property types
- Current trends
- General CRE property types: residential construction, multifamily, industrial, office, retail, mixed-use, special-purpose, and land
- Similarities and differences between CRE property types
- Special-purpose properties
- Owner-occupied properties versus investment properties
External Risks
- Property location and its effect on demand and credit
- CRE in the context of market and economic trends
- Real estate capital markets and industry statistics
- Legal and governmental regulatory risks
- Space markets, asset markets, capital markets, and development industry
- External environmental issues
Property specific Risks
- Deferred maintenance and replacement reserves
- Sponsor/borrower analysis
- Property management and building maintenance
- Property condition assessments (environmental, engineering, seismic, and property inspections)
- Tenants: source of cash flow
- Lease types and terms
- Property inspections, including inspections for construction loans
Cash Flow Analysis
- Legal elements of leases
- Sample rent roll and pro forma cash flow
- Ground leases and mortgage financing
- Cash flow and property valuation
- Cash flow projections and drivers
- Capitalization rates
- Individual pro forma cash flow items
- Liquidity and pro forma cash flow overview
Credit Analysis Framework and Credit Risk
- Five Cs of credit
- Liquidity and solvency tests and analytical decision-making
- Crucial areas of risk assessment
- Financial risk analysis and risk mitigants
- General categories and types of CRE credit risk