Comparative Real Estate Deal Analysis

Most small development companies are very constrained in their resources and cannot afford time or capital to pursue multiple deals. This new ULI online program will identify the practical considerations, financial hurdles, and other relevant analytics that a residential developer may use to evaluate multiple opportunities when confronted with scarce resources. Using the tools developed by in this program a real estate company may determine the most appropriate opportunity to pursue given their company’s resources such as capital availability, timing, risk appetite, debt, etc). Later in the program, new considerations will be introduced that will be used to compare either engaging in another project, or two more projects which would require taking on a financial partner. Resource allocation becomes a science and analyzed in a new way to maximize returns while managing risk.

 

Session 1 Highlights: Understanding the considerations 

  • General review of project considerations

               - Risk
               - Profitability
               - Capital Need
               - Debt Need
               - Development/ Management Fees
               - Timing of project
               - Sensitivities
               - "Free looks"

 

 

  • Development risks (Entitlement, Finance, Construction, and Sales)
  • Introduction and review of financial hurdles (Internal Rate of Return, Profit Margin, Return on Investment, and unlevered return)
  • Review pros and cons of each hurdle individual  [i.e. a 80% IRR may not mean you have a great project]
  • Review of  sample projects which excel in some hurdles but not others 

 

 

Session 2 Highlights: Choosing the first project

  • Introduction of the Weighted Average Hurdle Score (WAHS) – assigns a value or a score to each hurdle which is then assigned a weight – the result is a weighted average score that allows two projects to be compared, quickly and simply.  
  • Maximizing the capital stack - identifying low cost of capital sources (i.e.  buyer deposits, structured acquisitions, seller mortgages, etc)
  • Apply WAHS to  sample projects

 

 

Session 3 Highlights: Analysis of a second project

  • New considerations to apply when choosing a second project 

               - Avoiding interference with pre-allocated capital
               - Debt ceiling
               - Timing
               - Exposure if market softens
               - Other

  • Reviewing a company cash flow model, incorporating two project cash flows into one (includes income tax review)

 

Session 4 Highlights: Is a part of many better than all of one?

  • Review of partnership structures 

              - Who puts up capital?
              - Who guarantees debt?
              - Fees earned and timeliness of payment
              - Other investor structure terms

  • Comparison of multiple partnership projects vs single project as reviewed in Session 3

 

Instructor

Daniel Whitehurst 

Managing Partner

Ten Oaks Realty

Falston, MD

Program Information
Program Date:
April 05, 2016
Comparative Real Estate Deal Analysis Session 1
Speaker Information
Daniel Whitehurst   [ view bio ]
Comparative Real Estate Deal Analysis Session 2
Speaker Information
Daniel Whitehurst   [ view bio ]
Comparative Real Estate Deal Analysis Session 3
Speaker Information
Daniel Whitehurst   [ view bio ]
Comparative Real Estate Deal Analysis Session 4
Speaker Information
Daniel Whitehurst   [ view bio ]
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