Over the last few years, we’ve worked to build the world’s largest library of readily accessible Excel models (real estate pro formas) for commercial and residential real estate professionals. This is a project-based course, meaning you’ll start with a blank Excel workbook and walk away with a fully-functional, dynamic, eight-tab pro forma model that … Deal Type #2: Real Estate Renovation Modeling. The Real Estate Pro-Forma is a simplified and combined Income Statement and Cash Flow Statement for properties, with a few modifications – such as no Income Taxes and no Depreciation in most cases. The state and city charge property taxes for a total of 3% of the property’s value, so the taxes here are $600K. in merger situations, spin-offs, etc.) All Industries All Industries Consulting Financial Model Financial Services Marketplaces Online Businesses & IT Professional Services & Advisory Real Estate Retail SaaS Service Businesses eCommerce & Webshops Everything must be connected in these scenarios – if there’s a recession, rents will fall, the vacancy rate will rise, and TIs and LCs will also rise because it will be more difficult to find tenants. The certificate in Real Estate Pro Forma Fundamentals provides the professional at the entry to intermediate level with a fundamental understanding of pro forma analysis through spreadsheet modeling. Real Estate Finance and Investments: Risks and Opportunities, Peter Linneman, PhD and Bruce Kirsch, REFAI / Chapter 10 | Development Pro Forma Analysis Simple Calculation: A tenant signs a 5-year lease for 10,000 square feet that initially starts at $50 per rentable square foot and then increases to $52, $54, $56, and $58 over the term. This pro forma uses its calculation method to draw investor’s interest when the company releases earnings announcements. EBITDA, by contrast, never reflects capital costs because it excludes CapEx and D&A. All models are built in Microsoft Excel 2013 or newer. This course will take you by the hand and walk you step-by-step through the entire process. This model is scalable and modular and can be used as a base for much larger models of varying asset types. Simple Calculation: If the TIs per Rentable Square Foot for a tenant are $50 and the tenant is renting 10,000 square feet, the TIs will be $500,000 upon initial move-in. This course will take you by the hand and walk you step-by-step through the entire process. Nearly all property acquisitions and developments are funded partially by Debt, so you will almost always see the Interest Expense on that Debt on the pro-forma. Free download The Real Estate Pro Forma Modeling Master Class. We are making it available in an online format here on PlannersWeb.com. Click here for detailed instructions on how to disable it Watch a YouTube video showing how to disable it: Chrome Firefox Internet Explorer As with TIs, LCs are incurred only when a new tenant moves in, or an existing one renews. The Advanced Real Estate Pro Forma Modeling Master Class. 2,499 4 add_shopping_cart. The template was developed in collaboration with a couple friends that are real estate professionals. Editor’s Note: Pro-Forma 101 was written in 2007 by the late Wayne Lemmon, who was (among other things) a skilled real estate market economist. As stated, these models are driven by inputs known as assumptions or variables. The Complete Step-By-Step Guide To Building Dynamic, Institutional-Quality Real Estate Pro Forma Models in Excel. Real Estate Financial Modeling Content and Learning Objectives: Real estate industry Overview Just as you need to understand the financial statements to grasp financial modeling and valuation for normal companies, you must understand the Pro-Forma if you want to understand real estate. As stated, these models are driven by inputs known as assumptions or variables. But it’s not quite the same as Unlevered FCF because Adjusted NOI excludes income taxes, the Change in Working Capital, and several other items that go into Unlevered FCF. Potential Gross Income (PGI) All investing is probabilistic, so you need to consider what happens if the deal goes very well, average, or very poorly. Using an IRR Matrix to Determine Hold Period. This website and our partners set cookies on your computer to improve our site and the ads you see. Includes ALL the courses on the site, plus updates and any new courses in the future. Pro-Forma Financial models sometime use pro forma financial statement (e.g. The book introduces students and professionals to the basics of real estate finance theory before providing a step-by … You can see how some of the assumptions differ in these scenarios below: Taken together, all these differences create substantially different outcomes for Effective Gross Income (EGI) and Net Operating Income (NOI) in the final year of the model: The scenarios also tell us that the proposed financing for this deal, with 85% leverage, won’t work because some of the lenders lose money in the Extreme Downside Case, and the equity investors also get wiped out. Foundations of Real Estate Financial Modelling, Second Edition is specifically designed to provide the scalable basis of pro forma modelling for real estate projects. An introduction to risk quantification using scenario analysis is featured to allow for back-of-the-envelope risk quantification. ), Cap Rate – net operating income divided by the value of the property, expressed as a percentage (e.g., 4.5%). Some are projected based on a % of Effective Gross Income, some are based on $ per square foot or $ per square meter figures, and some are percentages of the property’s value. This course will teach you how to build a real estate pro forma investment model the way the largest and most sophisticated private equity real estate firms look at deals. Then, you list the “capital costs” (similar to CapEx and the Change in Working Capital for normal companies) that correspond to long-term items that will last for more than 1 year. The Real Estate Pro Forma Modeling Master Class Want to learn how to build professional, dynamic, institutional-quality real estate pro forma models in Microsoft Excel? The most common way to project future cash flows for your pro forma model is to use a common rate of inflation. The book introduces students and professionals to the basics of real estate finance theory before providing a step-by … When building a real estate financial pro forma, it's important to model for and include a summary of various return and risk metrics. Get details and read reviews about The Advanced Real Estate Pro Forma Modeling Master Class, an online course from Udemy taught by Justin Kivel We are making it available in an online format here on PlannersWeb.com. The Real Estate Pro Forma Modeling Master Class Video: .mp4 (1280x720, 30 fps(r)) | Audio: aac, 48000 Hz, 2ch | Size: 4.27 GB Genre: eLearning Video | Duratio Udemy Course - The Real Estate Pro Forma Modeling Master Class. In this lesson, you’ll learn what the real estate pro-forma is, why it’s important, what the key line items and calculations are, and how to make it more complex with scenarios, based on examples for office and multifamily properties. January 15, 2011 realestateproforma Model Tips Leave a comment. The book introduces students and professionals to the basics of real estate finance theory prior to providing a step-by-step guide for financial real estate model construction using Excel. There may also be a new line item for Parking Income, which is what it sounds like. Here’s an example multifamily pro-forma, with the key differences highlighted: In addition to these new features and line items, this model can also become more complex with the addition of scenarios. Are you looking to follow industry-leading best practices and stand out from the crowd? These articles will teach you business valuation best practices and how to value a company using comparable company analysis, discounted cash flow (DCF) modeling, and precedent transactions, as used in investment banking, equity research, Join 350,600+ students who work for companies like Amazon, J.P. Morgan, and Ferrari, 3 techniques for Private Company Valuation - learn how to value a business even if it's private and with limited information. The key difference is that something significant about the property changes during the holding period, and the owners spend something to enact this change. Net operating income, which is equal to gross rental revenue less operating expenses (property taxes, insurance, repairs & maintenance, capital expenditures) is the key profitability or cash flowValuationFree valuation guides to learn the most important concepts at your own pace. Simple Calculation: If CapEx per Gross Square Foot is $5 and there are 50,000 Gross Square Feet in the property, CapEx is $250K. Among the different return metrics, the internal rate of return (IRR) - both on an unlevered and levered…. CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™FMVA® CertificationJoin 350,600+ students who work for companies like Amazon, J.P. Morgan, and Ferrari certification program, designed to help anyone become a world-class financial analyst.CFI’s mission is to help you advance your career. Editor’s Note: Pro-Forma 101 was written in 2007 by the late Wayne Lemmon, who was (among other things) a skilled real estate market economist. Cap rate, which is equal to net operating income divided by the value of the property, is expressed as a percentage and used to value real estate. It comes with both a blank template and a completed version, so you can easily build a model on your own, or just go straight to the completed version. Net Operating Income (NOI) is Effective Gross Income – Operating Expenses & Property Taxes. Smart REIA - The Real Estate pro Forma, goes a Step Further. Over 30,000 current and aspiring real estate investment professionals have used these courses to help them ace real estate financial modeling interview exams to land their dream jobs, secure consulting gigs with top private equity firms, build (and rebuild) entire financial models from scratch, and confidently analyze their own potential real estate investments. The first thing you have to do when it comes to a real estate investment decision is to build a real estate pro forma, which really just means a cash flow projection. This tutorial/course is created by Justin Kivel. This real estate development financial modeling in Excel course is designed for anyone who is seeking to develop intermediate to advanced financial modeling skills and become an expert financial modeling for real estate development. LTV – “loan to value” – the amount of debt financing a lender will provide as a percent of the market value (i.e. That explains why you’ll see “Bad Debt” as a deduction in the Revenue section. Here’s an example: NOTE: There is significant disagreement over where these Reserves should show up. The most common capital costs for properties are Capital Expenditures (CapEx), Tenant Improvements (TIs), and Leasing Commissions (LCs). This guide will outline the foundations of real estate financial modeling and the key concepts you need to get started building your own models for development projects. Udemy Course - The Real Estate Pro Forma Modeling Master Class. Effective Gross Income sums up all these adjustments and is similar to Net Revenue or Net Sales for normal companies, but on a Cash basis rather than an accrual basis. For example, if a property’s projected NOI is $5 million and Cap Rates for similar properties in the area are 5%, this property might be worth $5 million / 5% = $100 million. This pro forma uses its calculation method to draw investor’s interest when the company releases earnings announcements. At the end of this course, you will be able to: Build an institutional-quality, dynamic real estate pro forma investment model … 80%)LTC – “loan to cost” – the amount of debt financing a lender will provide as a percent of the cost of a development (i.e. Sales & Marketing and G&A may be much bigger, there will be management compensation and bonuses, and NOI margins tend to be lower than they are for other property types such as multifamily. Download file - The Real Estate Pro Forma Modeling Master Class.part1.rar Please disable your ad block extension to browse this site. Chaptered video totaling 49 minutes 2. Absorption & Turnover Vacancy is for the months of downtime when a tenant leaves, and it takes time to find a new tenant. Crystal Ball Sheet - This stand-alone sheet which can be “Bolted-On” to existing spreadsheet models to enable stochastic modelling of inputs. Master real estate, accounting, valuation, and financial modeling with detailed, step-by-step video training. These articles will teach you business valuation best practices and how to value a company using comparable company analysis, discounted cash flow (DCF) modeling, and precedent transactions, as used in investment banking, equity research, measure used to evaluate real estate development transactions. Learn more in our financial math course. This introductory session takes participants from a blank spreadsheet to a completed real estate pro forma model. In our multifamily example here, the Base Case represents steady, uninterrupted growth in Market Rents (3-5%), the same 3% Vacancy Rate, the same 3% Bad Debt, 2-4% Expense Growth, and TIs grow at 2-4% with LCs remaining at 3% of Effective Rent. real estate financial model pro forma real estate finance property development. The total length of time it will take you to pay off your mortgage (e.g., 30 years). Most developments are structured as a joint venture between General Partners (GPs) and Limited Partners (LPs). “Capital costs” refer to spending on items that will provide benefits for many years to come. All Industries All Industries Consulting Financial Model Financial Services Marketplaces Online Businesses & IT Professional Services & Advisory Real Estate Retail SaaS Service Businesses eCommerce & Webshops Wayne also served for many years as a member of the Planning Commissioners Journal’s editorial advisory board. Foundations of Real Estate Financial Modelling, Second Edition is specifically designed to provide the scalable basis of pro forma modelling for real estate projects. Properties do have financial statements, but for modeling and valuation purposes, we can simplify and just project the Pro-Forma – as we often do when valuing companies with a DCF and projecting only their cash flows. Simple Calculation: If this same 10,000-rentable-square-foot building has 1,000 square feet that is always empty, the General Vacancy line item would be 10,000 * 10% * $50 = $50,000. In order to get started, we will begin by defining some of the key terms you’ll need to know before building your model. For example, if you allocate $200K per year to the Reserves over 5 years when there are no capital costs in Years 1-2, $600K of capital costs in Year 3, 0 in Year 4, and $400K in Year 5, you can use the Reserves to cover the Year 3 and Year 5 costs without dipping into the property’s cash flows. The book introduces students and professionals to the basics of real estate finance theory prior to providing a step-by-step guide for financial real estate model construction using Excel. Property Management Fees exist because owners rarely manage their properties directly; instead, they hire 3rd party management companies to deal with tenants, collect rent, resolve problems, and set up repairs and maintenance. This same pro-forma also applies to industrial properties because lease terms, revenue, and expenses are similar. This introductory session takes participants from a blank spreadsheet to a completed real estate pro forma model. This is a project-based course, meaning you’ll start with a blank Excel workbook and walk away with a fully-functional, dynamic, eight-tab pro forma model that … However, there would be some minor differences for a multifamily property (i.e., an apartment building where tenants rent units) because: Tenants are often responsible for Utilities, but not much else, so Expense Reimbursements might be labeled just “Utility Reimbursements.”. Simple Calculation: If the Operating Expenses are $10.00 per Rentable Square Foot per Year and there are 50,000 rentable square feet, then the annual Operating Expenses are $500,000. The Downside Case represents a mild recession over ~2 years, so Market Rents fall, Vacancy and Bad Debt rise to ~6%, Expenses fall, TIs grow at 10%, and LCs jump to 8% of Effective Rent. Our process, called The Analyst Trifecta® consists of analytics, presentation & soft skills, Certified Banking & Credit Analyst (CBCA)®, Capital Markets & Securities Analyst (CMSA)®, Financial Modeling & Valuation Analyst (FMVA)™, How to be a world-class financial analyst, Financial Modeling and Valuation Analyst (FMVA)®, Financial Modeling & Valuation Analyst (FMVA)®, Fiduciary duty to act for the benefit of the limited partners, May have guarantees as security on borrowing, Have priority on liquidation, ahead of the GPs, Provide capital to fund the development project, Have no control over the management of the fund/project, Sales assumptions ($ total / per unit / per SF). This course will take you by the hand and walk you step-by-step through the entire process. We tend to follow the latter approach, so we do that in all the models here; this approach is also more conservative and favored by lenders. $95.00 ... Real Estate Financial Model to evaluate a development project, with Equity Waterfall and Advanced Scenarios Modeling. Next, you list the operating expenses required to run the property’s day-to-day operations. As you can see, it clearly displays all the information listed above and makes it easy for someone to evaluate the deal. CapEx represents items that are not specific to one tenant, such as a new roof, elevator, air conditioning, heating system, etc. You might calculate these with the IPMT or PPMT functions in Excel, or you could do it manually, depending on the terms. In real estate financial modeling (REFM), you analyze a property from the perspective of an Equity Investor (owner) or Debt Investor (lender) in the property and determine whether or not the Equity or Debt Investor should invest, based on the risks and potential returns. The Real Estate Pro Forma Modeling Master Class by GC Admin December 04, 2018.