FINANCE FOR REAL ESTATE

Professionals

WEEKEND CLASS – FOUR DAYS IN AUGUST 2015

EVERY SATURDAY FROM 09.00 AM – 05.00 PM

1. Mortgage Loan Foundations :

The Time Value of Money Compound Interest

Compound or Future Value

Present Value

Compound or Future Value of an

Annuity

Present Value of an Annuity

Accumulation of a Future Sum

Determining Yields, or Internal Rate of

Return, on Investments

Investments with Single Receipts

Yields on Investment Annuities

Equivalent Nominal Annual Rate

Fixed Interest Rate Mortgage Loans

Calculating Payments and Loan Balance

The Importance of Accrued Interest and

Loan Payments

Loan Amortization Patterns

Constant Payment Mortgage Loans:

Fully Amortizing

Partially Amortizing

Zero Amortizing

Negative Amortizing

2. Fixed Interest Rate Mortgage Loans

Calculating Payments and Loan Balance

The Importance of Accrued Interest and

Loan Payments

Loan Amortization Patterns

Constant Payment Mortgage Loans:

Fully Amortizing

Partially Amortizing

Zero Amortizing

Negative Amortizing

Summary and Comparisons: Fixed Interest

Rate, Constant Payment Mortgage Loans with

Various Amortization Patterns

Determining Loan Balances

Finding Loan Balances—Other Amortization

Patterns

Loan Closing Costs and Effective Borrowing

Costs

Loan Fees and Early Repayment: Fully

Amortizing Loans

Charging Fees to Achieve Yield, or

“Pricing” Fixed Rate Mortgages

Other FRM Loan Patterns––Declining

Payments and Constant Amortization Rates

Amortization Schedules and Callable Loans

Reverse Annuity Mortgages

3. Adjustable and

Floating Rate Mortgage Loans The Price Level Adjusted Mortgage (PLAM)

PLAM: Payment Mechanics

Adjustable Rate Mortgages (ARMs) and Floating Rate Loans: An Overview

Variations: ARM and Floating Rate Loans

Risk Premiums, Interest Rate Risk, and Default Risk

Expected Yield Relationships and Interest Rate Risk

More Complex Features

ARM Payment Mechanics

Expected Yields on ARMs: A Comparison

4. Mortgages : Additional Concepts,

Analysis, and Applications Incremental Borrowing Cost

Early Repayment

Origination Fees

Incremental Borrowing Cost versus a Second Mortgage

Relationship between the Incremental Cost and the Loan-to-Value Ratio

Differences in Maturities

Loan Refinancing

Early Repayment: Loan Refinancing

Effective Cost of Refinancing

Borrowing the Refinancing Costs

Other Considerations

Early Loan Repayment: Lender

Inducements

Market Value of a Loan

Effective Cost of Two or More Loans

Effect of Below-Market Financing on

Property Prices

Cash Equivalency

Cash Equivalency: Smaller Loan Balance

Wraparound Loans

Buy-down Loans

After-Tax Effective Interest Rate

5. Investment Analysis of Income Properties Motivations for Investing

Real Estate Market Characteristics and Investment Strategies

The “Real Estate Cycle”

Investment Strategies

Market Analysis

Supply of Space

Market Rents

Forecasting Supply, Demand, Market Rents, and

Occupancy

Making Investments: Projecting Cash Flows

Office Building Example

Base Rent

Inflation Adjustment

Expense Stops

Net Operating Income

Expected Outlays for Replacements and Capital

Improvements

Estimated Sale Price

Introduction to Investment Analysis

Internal Rate of Return (IRR)

Present Value

Introduction to Debt Financing

Measures of Investment Performance Using

Ratios

Before-Tax Cash Flow from Sale

Summary of Investment Analysis Calculations

After-Tax Investment Analysis

After-Tax Cash Flow from Operations

After-Tax Cash Flow from Sale

After-Tax IRR

Effective Tax Rate

6. Financial Leverage and

Financing Alternatives Introduction to Financial Leverage

Conditions for Positive Leverage—Before

Tax

Conditions for Positive Leverage—After Tax

Break-Even Interest Rate

Risk and Leverage

Underwriting Loans on Income Properties

Market Study and Appraisal

Borrower Financials

The Loan-to-Value Ratio

The Debt Coverage Ratio

Other Loan Terms and Mortgage Covenants

Alternatives to Fixed Rate Loan Structures

Participation Loans

Lender Motivations

Investor Motivations

Participation Example

Sale-Leaseback of the Land

Effective Cost of the Sale-Leaseback

Interest Only Loans

Accrual Loans

Structuring the Payment for a Target Debt

Coverage Ratio

Convertible Mortgages

Lender’s Yield on Convertible Mortgages

Comparison of Financing Alternatives

7. Risk Analysis

Introduction

Comparing Investment Returns

Types of Risk

Due Diligence in Real Estate

Investment Risk Analysis

Sensitivity Analysis

Partitioning the IRR

Variation in Returns and Risk

Retail Case Study—Shopping Center

Lease Rollover Risk

Market Leasing Assumptions with

Renewal

Probabilities

Market Rent

Months Vacant

Leasing Commissions

Tenant Improvements

Industrial Case Study—Distribution

Center

Risk and Leverage

8. Financing Corporate Real Estate

Lease-versus-Own Analysis

Leasing versus Owning—An Example

Cash Flow from Leasing

Cash Flow from Owning

Cash Flow from Owning versus Leasing

Return from Owning versus Leasing

Importance of the Residual Value of

Real Estate

The Investor’s Perspective

A Note on Project Financing

Factors Affecting Own-versus-Lease

Decisions

The Role of Real Estate in Corporate

Restructuring

Sale-Leaseback

Refinancing

Investing in Real Estate for Diversification

Real Estate Asset Pricing and Capital

Budgeting Analysis: A Synthesis

Training Desktop

Date : August 2015 (Every Saturday From 09.00 AM – 05.00 PM)

Venue : to be advised

Notes :

Presentation slides will be distributed in softcopy

Minimum participants = 10 persons

After the training, participants are allowed to discuss about the training materials via email in the

website

Contact email : futurumcorfinan@gmail.com

Visit Website and Training Testimonials : google “futurum corfinan”