Redcliffe Training Associates

Real Estate Valuation

Redcliffe Training Associates
In City Of London

£ 3001-4000
Prefer to call the centre directly?
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Important information

Typology Course
Methodology Inhouse
Location City of london
Class hours 6h
Duration 2 Days
Start Different dates available
  • Course
  • Inhouse
  • City of london
  • 6h
  • Duration:
    2 Days
  • Start:
    Different dates available
Description

The purpose of this seminar is to train participants in all of the important aspects of valuing property. It begins with a thorough review of the relevant techniques in appraising commercial property. Participants will learn the RICS Guidelines and their international equivalents in order to appraise rental income, and will learn the tests for financial solvency and profitabillity, among other techniques.

The course will then cover the methodology of assessing the capital value of residential property and will learn forecasting techniques and how to create and use a detailed Discounted Cash Flow (DCF) model.

Special emphasis will be given to the underlying approaches, such as net operating income, the projection of cash flows, the assessment of the cost of capital, the cost and sales comparison approaches and the use of real options.

The theoretical techniques are fully compared to the techniques that are deployed in practice.

Participants will be required to bring a laptop with USB port to the course.

This course is offered as an inhouse course only, please contact the center for more information about the course, prices and the trainer.

Facilities (1)
Where and when
Starts Location
Different dates available
City Of London
London, England
See map
Starts Different dates available
Location
City Of London
London, England
See map

What you'll learn on the course

Real Estate
Valuation
Lifecycle Costing
IFRS Standards
Static Analysis
Dynamic Analysis
Rental Income
Assessing Capital Value
Net Operating Income
Lease Variations

Teachers and trainers (1)

Former Practitioner
Former Practitioner
Former Practitioner

Course programme

Course Content:

Commercial Property – Assessing Income

  • Appraisal of Income Property – the RICS Guidelines and their international equivalents
  • Comparison with corporate finance valuation
  • Reporting according to IFRS standards
  • Case Study: Impact of International Accounting Standard 17 (leases) on real estate valuation
  • Bricks, Mortar, and the Building Envelope
  • Lifecycle costing
  • Tests of Financial Solvency (Static Analysis)
  • Tests of Profitability (Dynamic Analysis)

Case Study: Applying the depreciated replacement cost methodology to value specialized (iconic) buildings

Residential Property – Assessing Capital Value

  • Why buy residential real estate?
  • Does rental income matter for residential property?
  • What are the main problems?
  • Evidence from pension fund holding in Europe
  • Qualitative issues, competition, style and marketing

Case Study: The addition of real estate to the GIPS (CFA Institute) valuation guidelines

Net Operating Income (NOI)

  • Gross and net income
  • Differences in calculating NOI
  • Overall capitalisation rate
  • Capital expenditure issues
  • Differences between property types
  • Approaches to the cap rate

Case Study: The band of investment approach

Projecting Cash Flows

  • The dynamic behaviour of the 4-Q model: stability versus oscillations.
  • Real Estate Pricing Behaviour: backward or forward looking?
  • Forecasting markets: Univariate analysis, Vector Auto regressions, structured models.
  • Forecasting examples.
  • The definition and evaluation of “risk”

Case Study: Forecasting Techniques

Creating and using a detailed Discounted Cash Flow (DCF) model

  • Debt service and pre-tax cash flow
  • The sinking fund
  • Lease variations
  • Differences between sectors
  • Estimating resale value
  • Terminal capitalisation rates

Exercises: Delegates will use a number of real world examples to create and use spreadsheets for DCF valuation

Cost of Capital for Real Estate Companies

  • What is the significance of the cost of capital?
  • Differentiation between debt and equity
  • Hybrid products
  • The pecking order theory of cost of capital
  • The role of debt in corporate management

Case Study: Economic Value Added (EVAtm) as applied to real estate companies

Real Options and the Real Estate process

  • Does property possess real options?
  • Examples of possible real estate real options
  • Call Option approach to land value
  • Samuelson-McKean approach
  • Difficulties of measurement
  • Potential benefits

Exercise: Participants will value a potential development on the basis of conventional DCF and real option analysis

Land Prices

  • Should land prices be calculated separately?
  • How cyclical are land prices?
  • Modelling land prices
  • Empirical evidence on land prices
  • Forecasting land prices

Case Study: Data availability on land prices

The Cost Approach

  • Type of costs
  • Methods of evaluating costs
  • Sources of cost estimation
  • Incurable and curable depreciation
  • Market extraction method

Exercises: Delegates will use spreadsheet models to calculate a range of cost estimates for individual properties

The Sales Comparison Approach

  • Value, Worth and Price
  • Sources of Comparable Data
  • Identifying points of comparison and difference
  • Sales Comparison Approach Example

Exercises: Using the sales comparison approach in practice

Highest and Best Use Approach

  • Definitions of HBU
  • Site Value
  • Improved Value
  • Calculating HBU

Case Study: Business Plan for Dubai Sports City analysed

Valuation in Practice

  • How is valuation practiced by chartered surveyors?
  • What are the key elements of the RICS and TEGOVOFA Valuation Guidelines?
  • What is the evidence on valuation practice in the UK?
  • How is valuation practiced differently elsewhere in the world?

Discounts available for multiple participants:

  • 3-4 participants: 15% discount per participant
  • 5-6 participants: 20% discount per participant
  • 7-8 participants: 25% discount per participant
  • 9 or more participants: 30% discount per participant

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