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How can you master corporate real estate financial analysis?

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Corporate real estate (CRE) is the property owned or leased by a business for its operations, such as offices, warehouses, retail stores, or manufacturing plants. CRE financial analysis is the process of evaluating the performance, value, and risks of CRE assets and portfolios, using various methods and tools. Mastering CRE financial analysis can help you make better decisions, optimize returns, and reduce risks in your CRE career. Here are some tips to help you master CRE financial analysis.

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1 Understand the basics

Before diving into the details of CRE financial analysis, you need to understand the basics of CRE finance, such as the types of CRE properties, the sources and costs of capital, the income and expense components, and the key metrics and ratios. You also need to familiarize yourself with the CRE market dynamics, such as the supply and demand factors, the location and submarket characteristics, and the trends and cycles. Having a solid foundation of CRE finance and market knowledge will help you interpret and apply the results of your analysis more effectively.

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Gopinathan Venkatesan, MRICS

Leader in Large Scale Project Delivery
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One thing I found helpful is in understanding the tenure of lease (most of the time you make a judgement call with historical data). This will help to structure to lease contract with mutually extendable/exit. Make sure to specify the clause on reinstatement and optimal is to leave as is and fit out may still have usable life for landlord. This will help the lease cost during Reinstatement as well as reinstatement cost as well. Another important aspect is selection of material for fit out. This shall be based on lease and also organisation office revamp cycle. E.g don’t buy a furniture with 10 year service warranty when max lease is 5 year. At the end of the day excel or any tool provides output based on data feed. Provide real data.

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Dr.Manoj Kurup. DBM,CPD,NEBOSH,CBIFM,PMP?.FMP?. CFM?.SFP?

General Manager-TBOAM FM | Corporate FM Trainer/Coach /Accelerator | Business Trainer | Influential FM Leader-Middle East | Author (Facilities Management: Red vs Blue Ocean Strategy (Amazon)
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To master corporate real estate financial analysis, start by building a strong foundation in finance and real estate fundamentals. Understand financial statements, cash flow analysis, and valuation methods. Familiarize yourself with real estate market dynamics, including location factors and property types. Excel in financial modeling and use software tools effectively. Stay current with industry trends, regulations, and emerging technologies like data analytics. Gain practical experience through internships or working with industry experts to refine your skills. Continuous learning and real-world application are key to mastering corporate real estate financial analysis.

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Mark Adair-Rios

Growth partners for entrepreneurs and investors.
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One thing I've found helpful is to also think of the end-product in commercial real estate, which is the lease. Having a healthy understanding of how each type of lease works for each type of property type will go a long way in helping you understand the cash flows of a given property. A 12 month apartment lease is completely different than a 15 year retail lease in terms of tenant needs, improvement costs & allowance, reimbursements etc..Understand how the leases work as a first order of business.

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Doug Jacques

Commercial Property Management and Leasing
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The real skill in analyzing commercial property is assessing the quality of the Tenants financial covenant, (it's/their ability to pay rent over the term) and second, the ability of the property to continue to lease space when the Tenants turn over.

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Larry Indermuehle, CCIM

CEO
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To become proficient in understanding commercial real estate financial matters, start with taking CCIM courses and obtaining the CCIM designation. With this designation and practical experience, you are equipped to solve client financial issues.

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2 Learn the methods

When conducting CRE financial analysis, there are various methods and models available depending on the purpose and scope of the analysis. Discounted cash flow (DCF) analysis is a popular approach, which calculates the present value of future cash flows generated by a CRE property or portfolio, using a discount rate that reflects the required return and risk. Net operating income (NOI) analysis is another method used to measure the profitability, efficiency, and performance of a CRE asset or portfolio. Capitalization rate (cap rate) analysis is also used to compare the relative value and risk of different CRE assets or markets, as well as estimate the value or purchase price of a CRE property or portfolio based on the NOI and the market cap rate. Lastly, internal rate of return (IRR) analysis can help evaluate the attractiveness and feasibility of a CRE investment, as well as compare different investment alternatives.

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3 Use the tools

To perform CRE financial analysis, you need to use various tools and software to collect, organize, and analyze the relevant data and information. Excel is a powerful and versatile tool for creating models, formulas, charts, and reports. Argus is a specialized software that can be used to generate cash flow models, assumptions, and reports. CoStar is a comprehensive source of market data and information that can be used for research and comparison of different CRE properties. All of these tools can help you gain valuable insights for your CRE financial analysis.

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Lucy Gordon

Real Estate Analyst ?? | Business Mentor
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I've been modelling Real Estate forecasts in Excel for over 10 years. Unlike other modelling programmes like Argus, you can dive right into the detail of your cash flow and make tweaks and changes to more accurately forecast your investment. However, this can lead to mistakes, so proceed with caution! To avoid costly errors, always make sure you get someone to audit any financial forecast before you fully commit to a transaction.

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4 Practice the skills

Mastering CRE financial analysis requires practice and application of knowledge to real-world cases and scenarios. To practice your skills, consider taking courses and certifications from reputable institutes such as the CCIM Institute, the Appraisal Institute, and the Urban Land Institute. Additionally, reading books and articles like The Real Estate Game by William Poorvu, The Art of Commercial Real Estate Leasing by R. Craig Coppola, and The Real Estate Analyst's Handbook by David Lynn can help deepen understanding and broaden perspective. Joining forums and groups like CRE Online, CREW Network, and BiggerPockets is also a great way to connect with other CRE professionals and enthusiasts to share insights and experiences.

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5 Seek feedback and guidance

Finally, to master CRE financial analysis, you need to seek feedback and guidance from others who can help you improve and grow your skills and knowledge. Don't be afraid to ask questions and seek advice from your peers, mentors, managers, or experts in your field or industry. Reviewing and analyzing examples of CRE financial analysis can also help you learn from others' methods, techniques, assumptions, and results. Additionally, getting feedback and reviews on your own CRE financial analysis is beneficial for evaluating your performance, quality, and accuracy; you can ask for feedback from your clients, investors, or stakeholders. All of these resources can help point out areas of improvement.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you master corporate real estate financial analysis?

1

2

3

4

5

6

1 Understand the basics

2 Learn the methods

3 Use the tools

4 Practice the skills

5 Seek feedback and guidance

6 Here’s what else to consider

Corporate Real Estate

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How can you master corporate real estate financial analysis?

1

2

3

4

5

6

1 Understand the basics

2 Learn the methods

3 Use the tools

4 Practice the skills

5 Seek feedback and guidance

6 Here’s what else to consider

Corporate Real Estate

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感谢您的反馈

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