Certificate In Real Estate Valuation

Packed with case studies to reinforce learning

Certificate In Real Estate Valuation 27 – 30 November 2011

Hyatt Regency Hotel Dubai, UAE

www.iirme.com/revaluation

Make more prudent real estate investment decisions by having a clear comprehension of what determines value of real estate income 4 Key Business Benefits 1. Understand the most widely-practiced property income valuation techniques

and be able to critically analyse a real estate investment proposal

2. Identify the cost of capital for real estate 3. Confidentially implement discounted cash flow valuation frameworks 4. Be equipped to successfully negotiate terms of a real estate transaction

Who Will Benefit?

Delegates are expected to possess basic understanding of principles of real estate finance and investment. This course would be of interest to professionals who develop, finance, manage, buy or sell real estate, and especially: • Real estate investors and analysts • Real estate developers • Real estate managers • Planning and development professionals in real estate businesses • Bankers and lenders • Mortgage brokers • Property owners • Finance managers and analysts

Organised by

Official Regional Recruitment Partner

Meet Your Expert Course Director Julian Spencer Roche Finance Training Consultant, Australia and UK From an old real estate family in the UK, Julian Roche worked as an economist for DRI McGraw-Hill and as a partner in a real estate development company with US investments before launching his own real estate consultancy specialising in global data provision. Later he spent five years as a senior consultant to a venture capital company in the UK, where he advised on corporate structure, flotations, trade sales and business valuations.

He has also published a number of books on real estate derivatives and business valuations and has presented real estate courses internationally for a number of years.

The George Washington University School of Business, IIR Middle East’s Academic Partner, is dedicated to excellence: in its teaching and research about management, in the public and private sectors, within the United States and internationally.

The school has a 75 year history of preparing men and women for leadership in both the public and private sectors. Known internationally for its dedication to academic excellence, the school draws students from all parts of the United States and around the world.

Beyond first class teaching and scholarship, the school’s

Course Overview

faculty offers practical experience in the issues and

This course covers the methods and concepts of real estate valuation. At this course, you will learn to value most typical forms of real estate using a variety of techniques and methods, in the same way as a chartered surveyor. The focus is on properties and market conditions in the Gulf, but with plenty of international examples, including land, properties with development potential, and different classes of property such as offices, retail, hotels, and warehouses as well as residential property valuation.

research centres link faculty and students with US and

Course Assessment

Delegates must meet two criteria to be eligible for an

Assessment will be based on an interview with each delegate and a multiple-choice questionnaire, each equally weighted.

1. Satisfactory attendance – delegates must attend all

challenges confronting business and government. Its international business and government organisations.

Recent distance learning initiatives have expanded the school’s global reach.

Course Requirements and Certificates IIRME/GW Certificate of Completion for a course:

sessions of the course. Delegates who miss more than 2 hours of the course sessions will not be eligible to sit the course assessment.

2. Successful completion of the course assessment.

Delegates who do not meet these criteria will receive an IIRME Certificate of Attendance. If delegates have not attended all sessions, the Certificate will clearly state the number of hours attended.

W: www.iirme.com/revaluation

T: 971-4-3352437 F: 971-4-3352438

Certificate In Real Estate Valuation

27 – 30 November 2011 Hyatt Regency Hotel, Dubai, UAE

Course Timings: Registration will be at 8.00 on Day One. All four days will run from 8.30 to 14.30 with two breaks for coffee and refreshments at appropriate intervals; lunch will be served at the end of each course day.

Day One Real Estate As An Investment Class Property Performance Analysis • How is property measured?

• Identifying what makes a good property • Problems and issues with performance evaluation • Sources of data • Evolution of data measurement • International comparisons of performance • Current issues in performance management

Day Two Discounted Cash Flow For Real Estate Investments 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: Best international practice in property performance measurement

Case Study: The band of investment approach

Property In The Investment Portfolio • Concept of Modern Portfolio Theory (MPT) • Measuring variance (Beta and equivalents) • Constructing a portfolio • Property correlation with other assets • Best international practice on property in a portfolio • International trends in property correlation

Projecting Cash flows • The dynamic behavior of the 4-Q model: stability versus oscillations • Real estate pricing behavior: backward or forward looking?

• Forecasting markets: univariate analysis, vector auto regressions, structured models.

• Forecasting examples • The definition and evaluation of “risk”

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

Case Study: Forecasting techniques

Commercial Property - Assessing Income • Appraisal of income property – red book/blue book 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 specialised (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

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 Land Prices • Should land prices be calculated separately?

• How cyclical are land prices?

• Modelling land prices • Empirical evidence on land prices • Forecasting land prices • Land price issues in the Gulf

Case Study: Data availability on land prices

Case Study: The buy-to-let market in Dubai

T: 971-4-3352437 F: 971-4-3352438 E: register@iirme.com

W: www.iirme.com/revaluation

Day Three Alternative Valuation Techniques and Highest And Best Use Analysis (HBU) 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 a major Gulf project analysed

Day Four The Cost Of Capital, Real Options Introduction To Cost Of Capital Theory • 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 • Dividend pricing model • The Capital Asset Pricing Model (CAPM) • CAPM and corporate leverage (equity/asset betas)

Case Study: Arbitrage pricing theory in project finance structures • • • • •

Bank debt as a corporate funding tool The concept and application of the mortgage Prevailing mortgage rates, terms and conditions Funding a property company through debt Islamic funding instruments and characteristics

Case Study: Mortgage lending criteria for typical banks • • • •

Calculating and using WACC Target vs. actual capital structure Adjusting capital structure WACC information for property companies

Case Study: Analysing a proposed development financing methodology Introduction To Real Options • How to calculate real option value • Comparing the Black-Scholes and Binominal Expansion model • Real world examples • Problems with real option calculation • Application to distressed firms' equity and other financial applications

Exercise: Delegates will study a range of real option calculations using customised spreadsheet models • • • • • •

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: Delegates will value a potential development on the basis of conventional DCF and real option analysis Valuation In Practice • How is valuation practiced by chartered surveyors?

• What are the key elements of the RICS valuation guidelines?

• What is the evidence on valuation practice in the Gulf • Is valuation in the Gulf adhering to best international practice?

• What are the differences between countries?

Exercise: Leveraging and de-leveraging equity cost • • • •

Criticisms of CAPM Sources of beta and market risk premia Uses of CAPM in practice CAPM and project (individual property) financing

T: 971-4-3352437 F: 971-4-3352438 E: register@iirme.com

W: www.iirme.com/revaluation

Certificate In Real Estate Valuation

27 – 30 November 2011 Hyatt Regency Hotel, Dubai, UAE

FIVE WAYS TO REGISTER 971-4-3352437

IIR Holdings Ltd. P.O Box 21743 Dubai, UAE

971-4-3352438

GCS/IIR Holdings Ltd. P.O Box 13977 Muharraq Kingdom of Bahrain

register@iirme.com

www.iirme.com/revaluation

DISCOUNTS AVAILABLE FOR 2 OR MORE PEOPLE CALL – 971 -4-3352483 E-MAIL – a.watts@iirme.com Event Certificate in Real Estate Valuation

Date

Course Fee Before 18 September 2011

Course Fee Before 16 October 2011

Final Fee

US$ 3,950

US$ 4,450

US$ 4,750

27 – 30 November 2011

BC4170

Interested in running this course in-house?

Course fees include documentation, luncheon and refreshments. Delegates who attend all sessions will receive an IIRME/GW Certificate of Completion.

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A confirmation letter and invoice will be sent upon receipt of your registration. Please note that full payment must be received prior to the event. Only those delegates whose fees have been paid in full will be admitted to the event. You can pay by company cheques or bankers draft in Dirhams or US$. Please note that all US$ cheques and drafts should be drawn on a New York bank and an extra amount of US$ 6 per payment should be added to cover bank clearing charges. In any event payment must be received not later than 48 hours before the Event. Entry to the Event may be refused if payment in full is not received.

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Event Venue: Hyatt Regency Hotel, Dubai, UAE Tel: 971-4-2091234

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