Seminar 1: Building the Foundation: Structuring and Formatting Financial Models

Date : Tuesday 6^th of May: 6.00pm – 7.30 pm UK time

Description:

This seminar provides an introduction to the case study we will be developing throughout the three seminars. Participants will learn how to properly format and structure their financial models, ensuring a solid framework for analysis. By the end of the session, attendees will have a well-organised model ready for further development in the following section.

Seminar 2: Unlevered Cash Flow Analysis: Key Metrics and Hands-On Modelling

Date: Tuesday 13^th of May at 6.00 – 8:00 pm UK Time

Description: In this session, participants will dive into hands-on modelling, creating unlevered cash flow statements and calculating essential unlevered metrics.

Seminar 3: Hands-on modelling: Developing the levered cash flow, calculating levered metrics, and building sensitivity tables

Date: Tuesday the 20^th of May at 6.00-8.00 pm UK time

Description: The final seminar focuses on developing levered cash flow, calculating key levered financial metrics, and constructing sensitivity tables. Participants will learn how leverage impacts financial performance and how to incorporate scenario analysis to assess risks and opportunities in their models.

By the end of the three seminars, you will have successfully built a comprehensive financial model from scratch.

Overview:

• Introduction to Present Value (PV) and its role in real estate valuation.
• Explore the fundamentals of compounding, discounting, and annuity/perpetuity calculations.
• Explain the Internal Rate of Return (IRR) and its relationship with the discount rate and target return.

Topics:

• • PV Basics:

• Time Value of Money (TVM): Compounding and discounting principles.
• PV calculation for fixed cash flows, annuities, and perpetuities.

• • Growth Adjustments:

• Gordon Growth Model: Adjusting PV for growth and depreciation.
• Impact of growth rates on cap rates and PV.

• • Timing Adjustments:

• Adjusting PV for timing of payments (arrears vs. advance, quarterly vs. annual).
• Formula for cap rate adjustments based on payment frequency.

• • Internal Rate of Return (IRR):

• Definition of IRR and its role in investment evaluation.
• Relationship between the discount rate and IRR:
  • The discount rate equals the target rate of return when IRR is used to calculate PV.
  • Ensuring consistency between the discount rate and investment objectives.

Data Exercises:

• Calculate PV for fixed cash flows, annuities, and perpetuities.
• Adjust PV for rent received quarterly in advance vs. annually in arrears.
• Compute IRR for a sample investment and discuss how the discount rate aligns with the target return.

Overview:

• • Explore the distinctions between price, value, and worth in real estate.
  • Introduction to key metrics for comparing investment performance, including equity multiple and cash-on-cash returns.

Topics/Theory

• • Price, Value, and Worth:
    • Definitions and differences.
    • How external factors, market conditions, and investor preferences influence each.
  • Equity Multiple:
    • Explanation and significance in measuring investment performance.
    • Applications in real estate decision-making.
  • Cash-on-Cash Returns:
    • Definition and practical use in evaluating income-producing properties.
    • Limitations and scenarios where it is most useful.
• Data Exercises/ Hands-on
  • Calculate equity multiple and cash-on-cash returns for a sample property.

Compare price, value, and worth for the same property under different market assumptions