Description
This Course Is For You If You Want To
This is a good fit if you want to:
- Get a basic conceptual foundation of commercial real estate finance and investments, on which you can build further later if you wish
- Understand how mortgage lenders view capital exposure to operating property collateral
- Grasp the life cycle of an equity investment and how equity players measure yield and returns
Details
In this course, you will learn about debt financing, walk through an income-producing property cash flow set up, learn about investment yield and returns metrics and how to calculate them, and take a deeper look at the discounted cash flow model.
- How and why to use debt in a CRE transaction
- What determines how much debt you are offered, and how much you should use
- How senior and mezzanine lenders think, and how they make money
- The benefits of refinancing, and risk of a cash-out refinancing portfolio building plan
- How property owners think about pricing their properties for sale
- How property buyers rationalize their offer prices
- How equity players measure yield and return on their investments
This is a slide presentation course with an associated multiple choice quiz. You will watch the video and, if you choose, complete the quiz and review the answers given when the quiz is automatically graded.
The video running time is 80 minutes. Watching all the video (replaying parts where desired) and completing the quiz and reviewing the answers will take approximately 85 to 95 minutes, depending on the individual.
Through the direct experience of REFM’s principals in commercial real estate transactions, and REFM’s ongoing consulting to industry practitioners across the U.S. for the last decade, we have developed and have continually refined “The REFM Way” of teaching general commercial real estate principles and the specific practice of financial modeling.
To enhance your learning and help you to efficiently build a practical knowledge base, we:
- Always set the stage by providing the big picture first
- Speak in plain language and define industry terms on an ongoing basis
- Draw with “ink” on the slides to help you follow the lesson and grasp important points
- Give you highly granular video chapter hyperlinks so you can find what you want quickly and easily.
Upon successful completion of this course, you will:
- Have gained a holistic conceptual understanding of the use of debt in CRE transactions
- Have learned about how lenders and equity players think about the use of debt
- Have an appreciation for both the opportunities and risks that come with the use of debt.
What You Get
Lifetime online access to:
- An easily-navigated 80-minute video tutorial with playback controls up to 2x speed. Videos have captions available and are playable on any device including PC, Mac, phones and tablets.
- PDF file of the 59 slides presented in the video
- 10-question quiz (multiple-choice, automatically graded) and answer key.
Meet Your Instructor
Since 2009, top companies and educational institutions have trusted REFM to train thousands of their employees and students.
New to REFM training?
Clients Include
Clients Include
Amherst
ASB Capital Management
Barings
BentallGreenOak
BrightSpire
Brixmor
Brookfield
CapitalOne
CBRE Global Investors
CCRE
Centennial Bank
Citibank
ColonyNorthstar
Conrex
CPPIB
CRC Companies
CreditSuisse
Crescent Communities
Crow Holdings
DDG
DLA Piper
Greystar
GTIS Partners
Hodes Weill & Associates
Houlihan Lokey
Howard Hughes
Jamestown
JBG Smith
JPMorganChase
Kennedy Wilson
Link Logistics
LivCor
Lubert-Adler
Macys
Oxford Properties
Park Hill
Peterson Companies
PGIM
PN Hoffman
Prometheus
QuadReal
Related
Revantage
SEO
Skanska USA
Square Mile Capital
USAA Real Estate
Asset Living
CBRE Global Investors
Clark Enterprises
Comstock Homes
Conor Commercial
Crescent Communities
Federal City Property
Flournoy
Four Seasons
Grosvenor
GTIS Partners
Hines
Hoffman
Howard Hughes
HPET
Hunt Companies
Insight Property Group
Kettler
LaSalle Investment
MadisonMarquette
Markwood
Mesa Capital
Midway
Miller Valentine
Panoramic Interests
PEG Development
Renaissance Downtowns
Rockefeller Group
Skanska USA
Snavely Group
Trammell Crow Residential
Trion Properties
Vornado
Sample Video
- Overview and Agenda
- Case study introduction
- Capital structure
- U.S. debt capital sources
- Comparison of long-term CRE lenders
- Senior loan sizing
- How much should we borrow?
- Alternative capital structures
- Amortizing loan payments
- P&L setup: capital items
- Portfolio building with cash-out refinancing
- Investment sales
- Buyer's DCF model
- Joint venture incentive structuring
Video Chapter Markers
- Agenda
- Case study
- Sources of funds
- Why use debt in a real estate transaction?
- Sources of U.S. CRE debt
- Comparison of long-term CRE lenders
- Debt sizing
- Debt service coverage ratio and Debt yield
- Lenders are risk averse
- How much should we borrow?
- Alternative capital structures
- No debt financing – 0% LTV
- Debt financing amplifies returns to equity
- Debt financing also introduces risk to equity
- Loan term and payment types
- 10-year interest-only mortgage
- 30-year amortizing mortgage
- How lenders make money – loan points
- How lenders make money – interest spread
- Interest rates
- Base variable interest rates
- U.S. Dollar LIBOR and SOFR
- Base variable interest rates continued
- Interest rate swaps
- Loan covenants (terms/clauses)
- Other loan terms
- What if we can only get 60% LTV senior debt?
- We can close the gap with mezzanine financing
- The two loans coexist under certain terms
- Mezzanine financing
- Now we hold the property for 3 years…
- Income-producing property cash flow P&L set up
- Measurement of yield during operation
- Measurement of operating returns to equity
- Refinancing
- Refinancing excess proceeds to equity
- Refinancing is not without costs
- Defeasance as a prepayment penalty
- Yield maintenance as a prepayment penalty
- Now we entertain selling the property
- How does the next buyer solve for their offer price?
- Discounted cash flow model
- Buyer’s DCF model
- Multiple on equity and IRR
- Measurement of investment returns
- Profit-sharing considerations
- Disproportionate targeted reward to the sponsor.
