Start Date
01/20/2021
End Date
01/26/2021
Description
Expect a lively and engaging interactive classroom experience! Key topics will include: establishing realistic financial objectives; identifying and calculating the primary components of return in income-producing real estate including cash flow, tax benefits, and futures; preparing operating and capital cost pro formas and sources and uses of funds statements; understanding debt-financing underwriting basics (net operating income, debt service coverage factors, annual constants, debt/equity ratios, and other lender underwriting requirements); appreciating the importance of achieving positive financial leverage; calculating and interpreting standard industry measures of return: Return on Total Asset Cost (Cap Rate), Cash-on-Cash Return, leveraged and unleveraged Net Present Value (NPV) and Internal Rate of Return (IRR); and Equity Multiples. Other topics will include preparing sensitivity analyses and understanding simple Waterfall/Promote structures (the priority and amount of cash flow distributions to the respective financial and operating partners in a real estate joint development or investment joint venture). We will teach and discuss these principles that are applicable worldwide using examples drawn from a wide variety of asset classes.
Distance Learning
Yes
Course Equivalency
No
Subjects
Business Practices / Contracts / HR
Health, Safety and Welfare
No
Hours
7.0
Learning Outcomes
• Identify the methodologies used to calculate the primary components of return in income-producing real estate;
• Establish reasonable financial return targets for each of these primary return components;
• Understand potential investment risks and risk management alternatives;
• Determine the level of debt financing that a project is likely to achieve based upon applicable underwriting criteria;
• Explore equity financing alternatives;
• Prepare simple operating pro forma, capital cost pro forma, and sources and uses of funds statements;
• Understand the most common real estate industry measures of return and the relative importance of each measure;
• Understand the significance of Purchase, Operating, and Exit Cap Rates; and
• Understand a simple Waterfall/Promote structure.
Instructors
Edward Marchant
Course Codes
Provider
Harvard University Graduate School of Design - Executive Education