Financial Analysis of Development Projects

Financial Analysis of the Development Process

Financial Analysis of Development Projects

Financial Analysis of Development Projects (FADP) provides students with the analytical theory and practical tools needed to appropriately evaluate the financial feasibility of complex value-added and opportunistic real estate investments, including ground-up development projects for all major property types, as well as commercial and residential rehabilitation.

Accounting, risk management, taxation, capital markets, and organizational issues influencing the financial viability of these real estate projects are also considered and discussed.

Among NAIOP finance-oriented courses, Basic Real Estate Finance and Advanced Real Estate Finance are good preparation for Financial Analysis of Development Projects, as is Real Estate Investment and Capital Markets.

Financial Analysis of Development Projects also correlates with the purely development-oriented courses NAIOP offers, including Advanced Development Practices (ADP), Site Feasibility and Market Analysis (SFMA), and Construction Management for Developers and Owners (CMD).

Lesson Plans

Module 1

Financial Strategies

Time: 11:45 a.m. - 2 p.m. (Eastern Standard Time)

Date: January 3, 2018

In this Module, we'll describe the interaction between space and capital markets. We will explain how the major real estate investment indexes can be used to research market conditions. The seven stages of the real estate development cycle and methods for calculating returns will be reviewed.

Learning Objectives

  • Describe the intersection of space and capital markets
  • Explain how the major real estate investment indexes can be used to research market conditions
  • Illustrate risks and rewards of different real estate investment strategies
  • Define methods used to calculate returns
  • Demonstrate how leverage is used to increase real estate rate of return
  • Review the seven stages of real estate development
Facilitator for this Lesson:
Jerry Franke

Jerry Franke

President

WISPARK LLC

Milwaukee, Wis.

Subject Area: Advanced Real Estate Finance, Financial Analysis of Development Projects

Jerold Franke was named president of WISPARK LLC., the real estate development subsidiary of Wisconsin Energy Corp., in August 2000. In this role, Franke has executive responsibility over the full-service, real estate development company that plans and constructs master-planned business parks in southeast Wisconsin and northeast Illinois.

Franke began his career with WISPARK in 1988 as director - Business Development. He quickly advanced to vice president in 1989 and was subsequently named senior vice president in 1998. Prior to joining WISPARK LLC., Franke was vice president for economic development of Forward Wisconsin, Inc., the state's economic development marketing organization from 1987 to 1988. Previously he was acting city manager and director of community development for the city of Janesville, Wisc., from 1980 to 1987.

Module 2

Land Investment

Time: noon - 2 p.m. (Eastern Standard Time)

Date: January 10, 2018

Most real estate professionals are focused on buildings, but most of the risk and reward in real estate is actually to be found in the land development phase, so learning the skills of this face is central to succeeding as a developer. In this Module, students will explore land investment strategies. We’ll summarize the calculations used to evaluate land and consider the risk and return requirements for land investments. The Module concludes with a review of the financial analysis of a land investment transaction.

Learning Objectives

  • Situate land investment in the seven stages of real estate development
  • Explore land investment strategies
  • Analyze risk and return requirements for land investments
Facilitator for this Lesson:
Jerry Franke

Jerry Franke

President

WISPARK LLC

Milwaukee, Wis.

Subject Area: Advanced Real Estate Finance, Financial Analysis of Development Projects

Jerold Franke was named president of WISPARK LLC., the real estate development subsidiary of Wisconsin Energy Corp., in August 2000. In this role, Franke has executive responsibility over the full-service, real estate development company that plans and constructs master-planned business parks in southeast Wisconsin and northeast Illinois.

Franke began his career with WISPARK in 1988 as director - Business Development. He quickly advanced to vice president in 1989 and was subsequently named senior vice president in 1998. Prior to joining WISPARK LLC., Franke was vice president for economic development of Forward Wisconsin, Inc., the state's economic development marketing organization from 1987 to 1988. Previously he was acting city manager and director of community development for the city of Janesville, Wisc., from 1980 to 1987.

Module 3

Building Investment

Time: noon - 2 p.m. (Eastern Standard Time)

Date: January 17, 2018

This module will provide a thorough overview of financing and investing in development. We will discuss the complexities of valuing and assessing development projects and identify the differences between valuing a for-sale versus a for-rent development project. Students will learn how to deal with changes in project risk over time and how to determine the appropriate equity return for a development project.

Learning Objectives

  • Determine how real estate developers assess the feasibility of real estate projects, including market, financial, physical, legal, political, and practical factors
  • Understand different ways to perform financial feasibility analysis
  • Identify risk factors in financing real estate development projects
Facilitator for this Lesson:
Jason S. Ting

Jason Ting

Principal

Ting Realty

Tulsa, Oklahoma

Subject Area:

Jason Ting is co-founder of Ting Financial Group, a niche private equity real estate investment firm, and principal of Ting Realty, a full-service real estate development, management and brokerage company. His direct responsibilities include acquisitions and dispositions, property management and leasing, domestic and foreign client relations, and new business formation. 

Module 4

Mixed Use Investment

Time: noon - 2 p.m. (Eastern Standard Time)

Date: January 24, 2018

We will focus on financing and investing in a mixed-use development during this session. We'll discuss the complexities and nuances involved in mixed-use development projects and identify the factors that drive the phasing and inventory decision for a mixed-use investment.

Learning Objectives

  • Identify the general forms of mixed-use development
  • Evaluate the complexities and nuances of mixed-use projects
  • Analyze the financial fundamentals of mixed-use projects
  • Assess the pros and cons of working on mixed-use projects with the public sector
Facilitator for this Lesson:
Jerry Franke

Jerry Franke

President

WISPARK LLC

Milwaukee, Wis.

Subject Area: Advanced Real Estate Finance, Financial Analysis of Development Projects

Jerold Franke was named president of WISPARK LLC., the real estate development subsidiary of Wisconsin Energy Corp., in August 2000. In this role, Franke has executive responsibility over the full-service, real estate development company that plans and constructs master-planned business parks in southeast Wisconsin and northeast Illinois.

Franke began his career with WISPARK in 1988 as director - Business Development. He quickly advanced to vice president in 1989 and was subsequently named senior vice president in 1998. Prior to joining WISPARK LLC., Franke was vice president for economic development of Forward Wisconsin, Inc., the state's economic development marketing organization from 1987 to 1988. Previously he was acting city manager and director of community development for the city of Janesville, Wisc., from 1980 to 1987.

Module 5

Value Add Investment

Time: noon - 2 p.m. (Eastern Standard Time)

Date: January 31, 2018

Students will develop skills to identify and analyze value-added investment opportunities. In doing so, we will review key metrics, data points and structural issues used when evaluating value-added investments from both a debt and equity viewpoint.

Learning Objectives

  • Evaluate the investment patterns in value-added properties
  • Select financing for different types of value-added properties
  • Determine using value-added metrics whether the value-added investment did in fact add value
  • Complete a comprehensive case study examining value-added investment, including equity and debt underwriting
Facilitator for this Lesson:
Jim T. Neyer

Jim Neyer

EVP, Real Estate Development

Al. Neyer

Cincinnati, Ohio

Subject Area: Essentials of the Development Process, Advanced Development Practices, Basic Real Estate Finance, Leasing, Marketing and Negotiations, Site Feasibility and Financial Analysis of Development Projects

Jim Neyer leads Al. Neyer's real estate development activities with a balanced focus on market driven investment. He has more than 25 years experience in commercial real estate, development, financing and construction. He is a principal and a member of the Al. Neyer Executive Team and has the hands-on expertise and strategic perspective to drive results for Al. Neyer and its investor partners. Neyer serves as a faculty member for NAIOP's Center for Education.

In addition to his work with NAIOP Corporate and NAIOP Cincinnati/Northern Kentucky, he is involved with Downtown Cincinnati, Inc. and several other professional and community organizations. Neyer received his Bachelor of Science degree in civil engineering from Marquette University.

Module 6

Deal Structuring

Time: noon - 2 p.m. (Eastern Standard Time)

Date: February 7, 2018

In this session, we will examine the sources of equity financing and discuss the organizational forms and joint ventures for value added and opportunistic real estate investments. We will define terms associated with private equity arrangements and discuss the investment strategies pursued by private equity. Students will learn to analyze the fees structures of private equity investment vehicles and comprehend the workings of joint ventures, in addition to understanding common deal structures for private equity joint venture and partnerships with profit sharing and partitioned returns. We'll explore the commercial mortgage capital markets in terms of lenders, mortgage types and terms. We'll review the contents of a loan submission package and development and value-added loan underwriting guidelines and discuss how lenders make decisions on financing these properties. Finally, students will work through a case study/exercise detailing a private equity joint venture deal structure with profit sharing and partitioned returns.

Learning Objectives

  • Define Private Equity Real Estate
  • Understand investment strategies pursued by Private Equity Real Estate
  • Explore the workings of joint ventures and commingled funds
  • Analyze fee structures of private equity investment vehicles
  • Summarize the content of loan submission packages
  • Identify key underwriting standards for development
  • Complete a waterfall distribution
Facilitator for this Lesson:
Jerry Franke

Jerry Franke

President

WISPARK LLC

Milwaukee, Wis.

Subject Area: Advanced Real Estate Finance, Financial Analysis of Development Projects

Jerold Franke was named president of WISPARK LLC., the real estate development subsidiary of Wisconsin Energy Corp., in August 2000. In this role, Franke has executive responsibility over the full-service, real estate development company that plans and constructs master-planned business parks in southeast Wisconsin and northeast Illinois.

Franke began his career with WISPARK in 1988 as director - Business Development. He quickly advanced to vice president in 1989 and was subsequently named senior vice president in 1998. Prior to joining WISPARK LLC., Franke was vice president for economic development of Forward Wisconsin, Inc., the state's economic development marketing organization from 1987 to 1988. Previously he was acting city manager and director of community development for the city of Janesville, Wisc., from 1980 to 1987.

Module 7

Accounting and Tax

Time: noon - 2 p.m. (Eastern Standard Time)

Date: February 14, 2018

This session will cover the various tax classifications and exemptions imposed on real estate in addition to addressing accounting and tax issues for development projects. We will explore affordable housing programs and discuss the Low Income Housing Tax Credit (LIHTC). Other tax incentives and programs that affect development will also be examined.

Learning Objectives

  • Explain real estate relevant tax classifications and exemptions
  • Address accounting and tax issues for development projects
  • Interpret the Low Income Housing Tax Credit (LIHTC)
  • Discover other tax incentives that affect development
Facilitator for this Lesson:
Allen Gregory

Allen Gregory

Shareholder

AG Tax and Consulting Services Inc.

Subject Area:

Allen Gregory is a shareholder at AG Tax and Consulting Services Inc.

With 25+ years of public accounting experience, he provides tax planning from formation to liquidation with flow-through entity taxation, and specializes in evaluating fixed asset capitalization procedures through cost segregation studies for newly constructed, renovated and acquired real estate.

Mr. Gregory received a bachelor’s degree in Business Administration from Kent State University and a Masters of Taxation from the University of Denver.


Module 8

Risk Management

Time: noon - 2 p.m. (Eastern Standard Time)

Date: February 21, 2018

The final course session will focus on risk management. We will identify and pinpoint risk exposures during the development process as a problem to be solved with a risk management solution. Students will gain a better understanding of the principal risk exposures in real estate development and how to assess the risk exposure and identify the assumptions which must be made in the process of recommending a risk management solution. We will discuss the differences between insurable versus uninsurable risks and address how insurable risk exposures and theoretical concepts of risk affect insurance policy design, coverage and contractual provisions.

Learning Objectives

  • Explain a project risk management process
  • Describe the role of insurance in real estate contracts
  • Summarize important insurance terminology and concepts
  • Discuss the use of surety bonds

Facilitators for this Lesson

Joe Nawa Joseph Nawa, RPLU, CPCU, CRIS
Senior Consultant, Construction Practice
New Day
Hamilton, New Jersey

   
Mae Torres Maydelis Torres
Assistant Vice President, Real Estate Practice
New Day
Hamilton, New Jersey

Education Credits

Education Credits

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Financial Analysis of Development Projects is approved for the following Education Credit:
16 hours credit toward either the Certificate of Advanced Study in Commercial Real Estate Development or the Certificate of Advanced Study in Real Estate Finance.

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16 AIA/CES Learning Units
16 Professional Development Hours (PDH)
1.6 Continuing Education Units (CEUs)

Learning Objectives

Learning Objectives

After completing the course, students should be able to do the following:

  • Identify the major real estate indexes used to research market conditions
  • Describe how real estate developers assess the feasibility of real estate projects, including market, financial, physical, legal, political, and practical factors
  • Explain financial analysis that needs to occur during each stage of the real estate development life cycle
  • Complete a financial analysis of a value add project
  • Create a waterfall distribution
  • Explain real estate relevant tax classifications and exemptions
  • Describe a process for analyzing risk in real estate projects

Tuition & Register

Tuition & Register

Registration is not currently open for this course.

Course Tuition

  • Member: $795
  • Nonmember: $995
  • Developing Leader: $595
  • Student Member: $95
  • Student Nonmember: $145

FAQs

FAQs

What does tuition cover?

Payment for a NAIOP online course entitles access for one person only to the course and all materials.

Is there an online instructor?

Yes, there is a live instructor presenting each class. Students are able and encouraged to engage and interact with the instructor and each other.

How much out-of-class work is required for each course?

Courses offered online require no more than one hour per week of additional work outside of the scheduled class times.

What if I miss a scheduled class?

If a student misses a class, all materials and a recording of each class is posted in the material library for the student to review before the next class. A student must attend a minimum of 75 percent of the classes to receive credit.

Do I have to take an exam?

Course exams are not required unless you are enrolled as a candidate for the Certificate of Advanced Study in Commercial Real Estate or the Certificate of Advanced Study in Real Estate Finance.

What records are kept of my coursework?

The Center maintains records of all the coursework you complete, as well as optional exam scores, in a confidential transcript. Transcripts are available to candidates upon request. Please contact education@naiop.org.

What are the computer requirements?

The interactive sessions will be accessed via GoToWebinar.com.

Please use the list below to determine if your computer meets the minimum requirements recommended to participate in the online courses:

To attend on a PC, the following is required:

  • Internet Explorer® 6.0 or newer, Mozilla® Firefox® 2.0 or newer (JavaScript™ and Java™ enabled)
  • Windows® 2000, XP, 2003 Server or Vista
  • Cable modem, DSL or better Internet connection
  • Minimum of Pentium® class 1GHz CPU with 512 MB of RAM (Recommended) (2 GB of RAM for Windows® Vista)

To attend on a Mac®, the following is required:

  • Mac OS X 10.4 (Tiger®) or newer
  • Safari 3.0 or newer, Firefox 2.0 or newer (JavaScript™ and Java™ enabled)
  • Cable modem, DSL or better Internet connection
  • Power PC G4/G5 or Intel processor (521 MB of RAM or better recommended)

Participants wishing to connect to audio using VoIP will need a fast Internet connection, a microphone and speakers (a USB headset is recommended).

Contact Barb Parnarouskis at barbp@naiop.org for more information.