HSK 825 - Real Estate Development and Finance
*Formerly CPE 119*
Finance is possibly the most critical aspect of a development project and occurs well before the start of construction. This course examines the fundamental building blocks to present a project for financing through a combination of peer collaboration, expert industry speakers, and case studies of active development projects from across Canada. Gain a comprehensive understanding of topics related to the development of revenue and budget projections, comparative and competitive analysis for a projected pro-forma, and potential market condition changes through to the completion of a development. Apply introductory concepts of time value of money to complete net present value and internal rate of return analysis. Learn about risk identification frameworks and mitigation strategies for timely project completion and repayment of project debt. Discuss developer financing options including first and second mortgages and equity structures to capitalize projects.
Course Learning Outcomes:
- Identify the various types of real estate assets that can be developed and define the municipal approval process required to commence development.
- Identify key real estate risk factors, including project-specific and macroeconomic variables, how they impact the viability of the project, and how to mitigate these risks.
- Compare and explain the various equity capital structures used to finance real estate projects and how they influence the securing of project debt.
- Develop a project pro-forma and cost estimate used in the financing decision, including discounted cash flow analysis, IRR modelling, and the time value of money assumptions.
- List the basic features of mortgage agreements, including first and second mortgages, as well as other types of private financing transactions and the legal framework supporting these agreements.
- Identify the familiar sources and providers of commercial real estate debt across the risk spectrum.
- Assess potential real estate projects with a focus on their viability in securing project financing.