The Ultimate Real Estate Financial Modeling Course

In this module, you will get an introduction to Real Estate Financial Modeling, and you’ll practice key skills with short case studies/modeling tests across the main property and deal types.

Then, you’ll move into the real estate investment trust (REIT) lessons and learn how accounting, the financial statements, and valuation all differ.

These case studies are all short (30, 60, or 90 minutes) so you can get results and practice your financial modeling skills without needlessly complicated models or documents.

If you have limited time to prepare, you can complete this module in a weekend and feel confident and prepared for your interview by Monday morning.

• 6 Case Studies on Individual Properties: These include 2 office/retail acquisitions, an industrial development, a hotel acquisition/renovation, a pre-sold condominium development, and a multifamily acquisition. They range from 30 minutes to 90 minutes of completion time, and each one has a full video tutorial walk-through and written answers.
• 2 Case Studies on Real Estate Investment Trusts (REITs): These 90-minute case studies cover a U.S.-based REIT (Park Hotels) and a European REIT (Inmobiliaria Colonial SOCIMI), and they teach you how to project the three statements and value REITs with a DCF, DDM, NAV, and comparables. Each case study has accompanying video tutorials and written answers.
• 4 Overview Lessons: These video lessons and slides explain the main property and deal types and walk you through accounting, financial statement analysis, and valuation for REITs, including differences under U.S. GAAP and IFRS.

In this module, you will complete a 4-hour real estate development modeling test for an office property in the City of London (100 Bishopsgate). You will expand on the simplified 90-minute version in the introductory module and build in support for a monthly schedule with flexible refinancing and exit dates and multiple scenarios.

You will also add support for tenants with different lease types, calculate returns to both equity and mezzanine investors, build a mixed IRR/multiple-based waterfall schedule, and add support for the Lookback Provision using VBA code.

Finally, you’ll answer the case study questions, make an investment recommendation for each investor group, quantify the risk factors, and explain how to mitigate the main risks.

• 10 Step-by-Step Lessons: These video tutorials walk you through how to complete the model efficiently and answer the case study questions, including how to make investment recommendations.
• Waterfall Returns Schedule with Mixed IRR and Multiple-Based Tiers: You’ll learn how to create a variation of the standard waterfall returns schedule and how to split up the cash flows based on the property’s performance.
• Brief VBA Tutorial: You’ll learn how to use VBA to add support for a “Lookback” function that evaluates the deal’s performance and then re-distributes the proceeds once the overall IRR is known at the end of the deal.

In this case study, you’ll complete a 2-hour hotel acquisition and renovation modeling test based on a 5-star resort in Dubai, the Jumeirah Beach Hotel.

You’ll start by setting up assumptions for different market and operational scenarios, including Base, Upside, and Downside cases and Independent vs. Franchise cases, and you’ll use them to build a Pro-Forma for the property.

Then, you’ll set up the acquisition, exit, and financing assumptions, project the Debt service, calculate returns to equity investors, and set up sensitivity tables to analyze the deal outcome under varied assumptions.

Finally, you’ll make an investment recommendation, identify the key risk factors and explain how to mitigate them, and comment on the Independent vs. Franchise choice and the terms of the Permanent Loans.

• 6 Step-by-Step Lessons: In these video tutorials, you’ll learn how to set up and complete the model and how it expands on the simplified version in Module 1.
• Support for 6 Different Scenarios: You’ll learn how to add support for multiple market and operational scenarios, including Base, Upside, and Downside and Independent vs. Franchise cases – and how key assumptions like the ADR and Occupancy Rate change in these cases.

In this case study, you will build a multifamily acquisition and credit analysis model and make an investment recommendation on the Senior Loan, Mezzanine, or Preferred Equity used to fund the property.

You’ll start by building a standard Pro-Forma for The Lyric, a 234-unit multifamily property in Seattle, and you’ll add support for the acquisition, exit, and debt service, as well as the equity returns calculations.

Then, you’ll calculate the returns and recovery percentages for the lender groups in different scenarios and exit dates, and you’ll create sensitivities to further “stress test” the deal.

Finally, you will build a DCF to value the property, evaluate comparable properties and a Replacement Cost analysis, and answer case study questions about the debt and equity, the operating assumptions, the risk factors, and the valuation.

• 9 Step-by-Step Lessons: In these video tutorials, you’ll extend the multifamily acquisition model from Module 1 and add credit analysis and valuation sections, as well as multiple scenarios and more complex financing assumptions.
• Credit Analysis: You’ll learn how to tweak a standard real estate model and add credit features, such as recovery and IRR analysis, as well as support for prepayment penalties, equity grants, interest-only periods, and interest rate floors and spreads.
• Valuation/DCF Analysis: You’ll use data from comparable properties and recent property sales and build a DCF analysis to draw conclusions about the purchase price.

In this case study, you will build an acquisition and renovation model for a mixed-use office/retail property and make investment recommendations for the Limited Partners, General Partners, Senior Lenders, and Mezzanine Investors.

You’ll start by setting up the transaction assumptions for 45 Milk Street, a 61,000-square-foot property in Boston, and then you’ll build a monthly and annual Pro-Forma that supports different lease types, start dates, and expiration dates, including Percentage Rent leases.

Then, you’ll project the Debt Service, including a TI/LC/CapEx Holdback released on a monthly basis, and you’ll calculate the returns to each investor and lender group.

In the Waterfall Returns Schedule, you will build in support for Preferred and Catch-Up Returns, and you’ll create sensitivity tables to analyze different outcomes.

Finally, you’ll use the model to make an investment recommendation for each group and explain how to mitigate the risk factors – or, for negative recommendations, what must change for the deal to work.

• 10 Step-by-Step Lessons: You’ll learn to combine elements of the office development model and the hotel acquisition/renovation model in this set of video tutorials.
• Replicate ARGUS in Excel: You’ll create a monthly tenant-by-tenant schedule that replicates much of the functionality of ARGUS in Excel (with certain constraints) – including support for Loss to Lease, Concessions & Free Rent, Absorption& Turnover Vacancy, Tenant Improvements, Leasing Commissions, Expense Reimbursements, General Vacancy, Percentage Rent, and more.
• Alternate Waterfall Schedule: You’ll create a waterfall schedule with a Preferred and Catch-Up Return for different investor groups, and you’ll understand how this factors into the investment recommendation.

In this case study, you will build a condo development model for the Heritage Cyrela, a super-high-end luxury complex in São Paulo. You will then use the model to make investment recommendations for the Limited Partners and Developers and identify the key risk factors in the deal.

You’ll start by setting up the transaction assumptions and the construction timeline, including the monthly pre-sales of condo units in each phase and the start and end of the construction period.

Then, you’ll project Gross Sales based on initial, construction-end, and final deposits, and you’ll forecast the Hard Costs, Soft Costs, FF&E and Move-In Costs, and Land Acquisition Costs.

You’ll use this monthly cash flow model to project Equity and Debt draws, interest, and principal repayment, and then you’ll build a Waterfall Returns Schedule with a Preferred Return, Catch-Up Return, and tiers based on a mix of IRRs and equity multiples.

Finally, you’ll create an annual summary, Sources & Uses schedule, and sensitivity tables to summarize everything and answer the case study questions.

• 7 Step-by-Step Lessons: You will expand on the simplified condo development model from Module 1 and add additional phases and sales triggers, as well as a more complex Debt/Equity treatment. These video-based lessons walk you through the whole process.
• More Complex Waterfall: You will learn how to build a waterfall returns schedule with support for a Preferred Return to the 3rd Party Investors, followed by a Catch-Up Return to the Developers, followed by cash flow splits that are based on a mix of IRRs and equity multiples – and you will do all this on a monthly basis.

In this case study, you will build a 3-statement model and valuation for AvalonBay, a leading U.S.-based multifamily REIT. You will then use the model to create a hedge fund/asset management stock pitch, an equity research report, and an investment banking pitch book for the company.

You’ll start by projecting the company’s developments, redevelopments, acquisitions, dispositions, and unconsolidated real estate (equity investments), and you will use these segment-level projections to build a 3-statement projection model.

Then, you will value the company using a Net Asset Value (NAV) Model, Comparable Public Companies and Precedent Transactions, and a Discounted Cash Flow (DCF) Analysis based on a 10-year projection period. You’ll also get practice finding the data and adjusting the numbers based on disclosures in SEC filings.

You’ll then summarize the results of this valuation and use it to outline a stock pitch for the company, including the investment thesis, catalysts, risk factors, and ways to hedge against the main risks. Finally, you’ll tweak this pitch to create an equity research report and an investment banking pitch book with a debt vs. equity recommendation for the company’s financing requirements.

If you complete only the model here, it’s a 4-hour case study. If you also draft the stock pitch and the other documents for a more in-depth exercise, it’s closer to a 1-week case study.

• 20 Step-by-Step Lessons: Learn how to expand on the REIT models from Module 1 and add additional operating assumptions, gather and adjust data for the comparables, and support multiple scenarios; you’ll also learn how to handle JVs and Equity Investments and how a more complex NAV Model works. These videos explain the entire process.
• Hedge Fund Stock Pitch: You’ll learn how to outline and draft a short stock pitch in both written (Word) and slide (PowerPoint) format, and you’ll understand how to craft an investment thesis and research catalysts, risk factors, and ways to mitigate the risk for REITs.
• Equity Research Report: You’ll learn how to tweak the stock pitch to create an equity research report that presents similar ideas, but changes the tone, focus, and presentation for use in a different context.
• Investment Banking Pitch Book: You’ll learn how to make a Debt vs. Equity recommendation for AvalonBay, and you’ll get an example of a short pitch book presentation you can use to present your findings and argue for a different financing mix.

In this case study, you’ll project the performance of individual properties for SPH REIT, a Singaporean retail REIT, on a half-year basis, and you’ll create a 3-statement model that supports the S$ 500 million acquisition of Seletar Mall, a new property, using Equity and Debt.

You will create Base, Downside, and Extreme Downside Cases based on market data, and you’ll use the different Rental Reversions, NPI Margins, and Cap Rates in those cases to assess the company’s credit stats and ratios (Gearing, Debt / EBITDA, EBITDA / Interest, and others).

Then, you’ll try different combinations of Debt and Equity until you find one that allows the company to achieve its targeted metrics and ratios (Distribution Yield > 5%, DPU Accretion >= 0%, Gearing <= 35%, and Interest Coverage >= 5.0x) across all the cases.

Finally, you’ll answer case study questions at the end, present your recommendation, explain the key risk factors and how to mitigate them, and examine other ways the company could change its capital structure to meet its targets.

• 6 Step-by-Step Lessons: You’ll learn how to create a half-year operating model for a REIT based on its individual properties, and how to incorporate scenarios and credit stats and ratios. These video-based lessons walk you through the whole process.
• Data Gathering Exercises: Unlike in some of the other case studies, which give you explicit numbers, here you’ll have to review documents and market data and use your judgment to come up with appropriate growth rates, margins, and other assumptions; our tutorials explain this process.

In this case study, you’ll complete a quarterly merger model and supplemental analysis for Digital Realty’s $5.8 billion acquisition of DuPont Fabros, and you’ll learn how purchase price allocation and the combination of the financial statements differ for REITs.

You’ll start by reviewing each company’s standalone quarterly projections and NAV models, and then you’ll set up the transaction assumptions, including the Sources & Uses and Purchase Price Allocation schedules, including new items such as Above- and Below-Market Lease Intangibles.

Then, you’ll combine and project the financial statements, calculate key metrics such as accretion/dilution for FFO and AFFO per unit & share, and analyze the credit profile of the combined entity.

Since most REIT M&A deals are 100% stock, the Contribution Analysis and Value Creation Analysis are especially important; you’ll complete both here and use them to draw conclusions about the deal terms, the seller’s valuation, and the potential risk factors in the deal.

Finally, you’ll answer the case study questions at the end, make a recommendation for or against the deal, and see how you might present your findings in a short presentation as well.

• 12 Step-by-Step Lessons: You’ll learn how to build a full 3-statement merger model for REITs, including key differences vs. M&A deals for normal companies, and you’ll add REIT-specific analysis and use the model to answer the case study questions.
• Contribution and Value Creation Analyses: You’ll learn how to create REIT-specific analyses for M&A deals that are more meaningful than traditional accretion/dilution metrics, and you’ll assess the deal based on these methodologies.
• Investment Banking Deal Recommendation Presentation: In the final lesson, you’ll get an example of a short presentation you can use to recommend for or against the deal, and you’ll learn how to use visual elements to strengthen your arguments.

In this case study, you’ll analyze Blackstone’s $2.5 billion CAD leveraged buyout of Pure Industrial Real Estate Trust (PIRET) in Canada and make an investment recommendation for or against the deal.

You’ll start by learning about the key differences in REIT leveraged buyouts, and then you’ll set up the transaction assumptions, scenarios and drivers for the REIT’s same-store, acquisition, development, and disposition activity, and the full financial statement projections.

Then, you’ll add the Debt Schedule, examine the credit stats and ratios, and calculate the returns to all investor groups, including a management rollover, options pool, and multiple-based incentive fee for Ivanhoé Cambridge (the other equity investor in the deal).

Finally, you’ll set up sensitivity tables and use them to answer the case study questions and make an investment recommendation. The final, optional lesson will show you how to draft a 10-slide presentation with your findings.

• 11 Step-by-Step Lessons: These video tutorials will walk you through the process of building an LBO model for a REIT, including how to include operational scenarios and modify the normal Dividend and Debt/Equity assumptions.
• Alternate Returns Calculations: You’ll learn how to link the exit multiples to prevailing Cap Rates, and how to factor in continual Dividends, a Management Options Pool, a Management Rollover, and an Incentive Fee for Ivanhoé Cambridge.
• Investment Recommendation Presentation: The final lesson here gives you an example of an investment recommendation presentation you can use and re-use in other LBO case studies and private equity interviews.

In this final module, you can test your knowledge of the course material with a 60-question certification quiz testing all the topics and case studies above.

These questions are challenging, so you will almost certainly need to attempt this quiz multiple times to pass it. You can review your incorrect answers and go back to review the appropriate material, as needed.

Once you pass the quiz with a score of at least 90%, you will receive a Certificate that you can add to your resume/CV and LinkedIn profile..