Real Estate Finance II: Income Pro Forma, Equity Returns, and Multi-Period Financial Analysis

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January 30, 2013 @ 8:00 am
February 1, 2013 @ 5:00 pm
ULI Headquarters
2001 L Street
Suite 200, DC 20036 United States
David Mulvihill, Vice President, Professional Development


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As evidenced by recent experience, real estate development is a cyclical enterprise. Development projects today often require complex financing and the ability to support estimates of cash flows through both the development and holding periods. This second course in commercial real estate finance explores the techniques of financing commercial projects through the various phases of development site analysis, land acquisition, development, and construction. The central objectives of the course include providing students with hands-on experience in recognizing and mitigating risk. The key extensions from Real Estate Finance I include a focus on equity returns and the impact of time on those returns.

This second course introduces the notion of the time value of money and incorporates it into the analytical process. This includes constructing the discounted cash flows over the construction and holding period, with specific attention paid to analyzing and accounting for contingencies, tax effects, and financing alternatives. It also explores how the deal structure allocates risk and return to each of the investor groups—i.e., the investment waterfall. Other topics include interim and permanent lending procedures, use of income and expense statements, construction disbursement schedules, sales and leaseback, and leasehold financing—all examined through both case studies and workshop problems. The course focuses on the lender’s perspective, the equity investor’s perspective, and dynamic cash flow analysis or total property return metrics—i.e., internal rate of return (IRR) and net present value (NPV)—with an introduction to options analysis in real estate development decision making.

Case studies examined throughout the course will illuminate concepts, providing hands-on experience, and industry guest speakers will provide current examples of deal structures and industry data.

Participants are expected to bring a laptop computer with Microsoft Excel to the course.

Registration Fee

ULI Member: $995
Non-member: $1,250
Government and nonprofit: $950

Registration fee includes tuition, course materials, continental breakfast, luncheon, and refreshments.

Cancellations must be made in writing or by e-mail to ULI’s customer service department and are subject to a $100 administrative fee. Cancellations must be received at least seven days before the start of the program to be eligible for a refund. No refunds will be granted thereafter. You may transfer your registration to another member of your organization with no penalty.

Principal Instructor

Brent C. Smith
Associate Professor
Virginia Commonwealth University School of Business
Department of Finance Insurance and Real Estate
Richmond, Virginia

Smith is an associate professor in the Department of Finance Insurance and Real Estate in the School of Business at Virginia Commonwealth University. He holds a master of business degree from the University of Notre Dame and holds a PhD in finance and economic geography from Indiana University. Smith’s research interests include commercial property markets, mortgage performance, housing finance, and valuation.

Smith was a recipient of the Outstanding Reviewer Award in 2009 for real estate economics, and received the Emerging Scholar Award in 2010 from the American Real Estate Society. In addition, he is a postdoctoral honoree at the Weimer School of Advanced Studies in Real Estate and Land Economics, Florida. His research papers have received numerous grants and acknowledgments, including two best paper awards from the American Real Estate Society. Smith was recently inducted as one of only three academic members into the Real Estate Councilors’ Group of America.

Smith’s recent research is directed at issues of risk and valuation. Within those themes, the areas of study include commercial property markets, mortgage performance, investment finance, and public policy and tax influences. Articles produced from this activity are published or scheduled for publication in the Journal of Real Estate Finance and Economics, Real Estate Economics, Journal of Real Estate Research, Urban Affairs Review, Journal of Property Tax Assessment and Administration, Journal of Housing Economics, Journal of Housing Research, and Economic Quarterly, and Journal of Public Budgeting, Accounting, and Financial Management.

Meeting Only

ULI Headquarters
1025 Thomas Jefferson Street, N.W.,
Suite 500 W, Washington, D.C. 20007-5201
Telephone: 202.624.7000.

Accommodations Only

Hotel Monticello (currently closed for renovations)
1075 Thomas Jefferson Street, N.W.,
Washington, D.C. 20007
Reservations: 800.388.2410 or 202.337.0900

The Four Seasons Hotel
2800 Pennsylvania Avenue, N.W.,
Washington, D.C. 20007
Reservations: 877.707.0843 or 202.342.0444

The Latham Hotel (currently closed for renovations)
3000 M Street, N.W.,
Washington, D.C. 20007
Reservations: 888.587.2377 or 202.726.5000

The Melrose Hotel
2430 Pennsylvania Avenue, N.W.,
Washington, D.C. 20037
Reservations: 800.635.7673 or 202.955.6400

Georgetown Suites
1000 29th Street NW & 1111 30th Street NW
Washington, DC 20007
Reservations: 800-348-7203

Avenue Suites NW Hotel
2500 Pennsylvania Avenue
Washington, DC 20037
Reservations: 877-736-2500

Program Highlights

  • Review conceptual foundations of the property markets
  • Income-producing property markets
  • The time value of money—cost of capital, compounding, present value, future value
  • The time value of money and commercial real estate debt financing
  • Using mortgage debt in dynamic property analysis
  • Present value, future value, and mortgage constant analyses
  • Equity investor metrics—leases
  • Including capital expenditures in the cash flows
  • Case study on present value analysis
  • Considering cash flow risks arising from leases
  • Case study on risk metrics

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