Commercial Property Valuation

Wednesday, March 6

09.00 - 09.15 Welcome and Introduction

09.15 - 12.30

Session 1: Introduction to Property Valuation

  • Run through of topics for the two days.
  • Warm up exercise - "Why do we need to value property?"
  • Property as an Asset
  • Market conditions in CEE
  • Introduction to methods of property valuation
  • Overview of main organisations that regulate Real Estate Valuation, IPMS, Ethics

  • Case study: Consideration of comparable buildings - what features drive value?

Session 2: Commercial Real Estate valuation methods and bases

  • Commercial Real Estate valuation methods
  • UK model - 5 traditional methods of valuation plus modern methods
  • US/International model - 3 approaches
  • How methods affect value
  • Growth implicit methods v Growth Explicit methods
  • Worth v Price v Value
  • Valuations for secured lending, valuations for financial reporting

  • Case study: Comparison of methods

12.30 - 13.30 Lunch

13.30 - 17.00

Session 3: Starting small - valuation of a single-let property (Investment method)

    Inputs
  • Consider and compare lease terms
  • Calculation of a suitable capitalisation rate
  • Valuation Arithmetic (PV, Year's Purchase, growth)
    Outputs
  • Initial yield
  • Reversionary yield
  • Equivalent yield
  • Equated yield

  • Case study: Valuation of a single-let investment opportunity, calculation of equivalent and equated yields

Session 4: Growth Explicit Models of Valuation

  • Cash flow for real estate investments
  • Discount rate
  • Net Operating Income
  • Discounted Cash Flow (DCF) model for RE
  • Internal Rate of Return v NPV
  • Worth or Value, Appraisal or Valuation?

  • Case study: Valuation of single-let investment using modern methods, comparison and discussion

Thursday, March 7

09.00 - 12.30

Session 5: Development Valuation

  • Warm up exercise - "Value sensitive factors - discussion"
  • Stages of development
  • Traditional Methods
  • Modern Methods
  • Comparison

  • Case study: Valuation of development site

Session 6: Multi-let properties

  • Valuing multi-let assets
  • WAULT and Running yield
  • Valuation specifics by property type - inherent differences between the main sectors

  • Case study: Shopping centre valuation - qualitative v quantitative measures and their effects on valuation

12.30 - 13.30 Lunch

13.30 - 17.00

Session 7: Risk and return in Valuation Approaches

  • Portfolio Management
  • Property Portfolio Measurement
  • Quantitative and Qualitative approaches
  • Practical risk analysis
  • Scenarios and Simulation
  • Prioritising major variables
  • Property Performance analysis

  • Case study: Examination of a property portfolio

Session 8: Properties within a portfolio

  • Property's place in a multi-asset portfolio - discussion
  • Europe's newest institutional asset class - Residential
  • True Equivalent Yield/ Quarterly (or monthly) in advance
  • Cross-border valuation - International differences

Final Activity: Closing remarks, open discussion, questions

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