Description
Wall Street Prep – Real Estate (REIT) Modeling
This REIT modeling course is ideal for investment banking, equity research, and real estate professionals with a focus on REITs. Trainees build financial and valuation models for a REIT the way it’s done on the job.
Course Objective
At completion, trainees will have developed a comprehensive REIT model from scratch
First, we will learn about the REIT industry’s unique drivers and challenges. We will then build REIT financial and valuation models from scratch, using a step-by-step approach for an actual company, BRE Properties. Along the way, we will cover real estate modeling best practices for same store properties, acquisitions, developments, and dispositions. In addition, we model and deconstruct critical REIT profit metrics like FFO, AFFO, and CAD. Part 2 dives into valuation modeling, with a focus on the Net Asset Value (NAV) approach.
What You Will Learn
- In-depth REIT industry profile, drivers, terminology, tax advantages and structure (UPREIT’s and DOWNREIT’s)
- Segment-level modeling (same store properties, acquisitions, developments, and dispositions)
- REIT sector-specific drivers and forecasting best practices
- Common REIT valuation approaches including Net Asset Value (NAV), comparable company and transaction analyses, and discounted cash flow (DCF) analysis
- Modeling REIT-specific metrics and ratios – funds from operations (FFO) and adjusted funds from operations (AFFO / CAD)
Course Samples
Modeling the Income Statement, Part 1
Modeling CIP and Accum. Depreciation
REIT Operating Modeling Template
Course TOC
Chapter 1: REIT Industry Overview
Chapter 2: Modeling A REIT’s Income Statement
Chapter 3: Understanding & Modeling REIT’s Segments
Chapter 4: Ancillary Income & Non-Operating Items
Chapter 5: Understanding the REIT Balance Sheet
Chapter 6:Modeling the REIT Balance Sheet
Chapter 7: Cash Flow Statement & Model Cleanup
Chapter 8: The Revolver, Interest Expense & Circularity
Chapter 9: Modeling Future Developments
Chapter 10: Funds from Operations (FFO) & CAD
Chapter 11: REIT Valuation & the NAV Model
REIT Modeling Review
Course Agenda
REIT overview
- Industry profile
- Industry drivers and terminology
- Tax advantages of REIT’s
- REIT basics
- The structure of REIT’s (UPREIT’s and DOWNREIT’s)
Modeling REIT financial statements
- The financials of REIT’s as compared to other companies
- Working with press releases, financial filings, and historical data
- GAAP vs. Non-GAAP presentation of REIT financial data
- Sector-specific drivers and forecasting best practices
- Forecasting Funds from operations (FFO), adjusted funds from operations (AFFO / CAD)Modeling same store properties
- Impact of Modeling acquisitions, developments and dispositions on the three financial statements
- Discontinued operations
- REIT balance sheet forecasting Completed properties, CIP and land under development
- Building a REIT cash flow statement
NAV modeling
- Step-by-step modeling: Net Asset Value (NAV)
- Common adjustments to NAV
- Arriving at implied cap rates
- Common NAV pitfalls and implicit assumptions
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