Underwriting Office and Multifamily Real Estate Investments: ULI Online Live Workshop

Held over two sessions, this new online live program will introduce students to a process-oriented approach for evaluating office and multifamily investments from a physical and financial perspective. Each session will introduce theoretical investments and lead participants step by step through the areas of highest importance when evaluating these two product types for investment. Particular focus will be paid to underwriting the physical product, the surrounding market and existing tenancy, and the implications of these on the cash-flow development process. Instruction will be provided through case study materials that simulate the information and data one would receive in a typical transaction. Participants will conclude the workshop with a much more refined understanding of how to engage in a thoughtful process for evaluating an office or multifamily asset for acquisition. Each person will also receive a checklist of critical items to consider when underwriting an office or multifamily asset in the future.

Session 1: The Office Asset
August 12, 2013 1:30–3:30 p.m. ET 

The program will begin with a discussion of the office physical asset because office is the most capital-intensive of the four primary product types, and thus an area of particular risk to the investors. Additional session highlights will include:

  • Evaluation of tenancy from a credit perspective and its implications on underwriting the rent roll.
  • Discussion of market-oriented aspects of the underwriting process—including market rental rates, rent growth, and lease-up—that have significant risk implications for the cash flow.
  • Tips for auditing an Argus model for areas of risk. Knowledge of Argus is not necessary: outputs will be given to participants and discussed from a cash-flow perspective rather than from that of an Argus entry.

Session 2: The Multifamily Asset
August 14, 2013 1:30–3:30 p.m. ET

The second session will focus on the operational differences of the multifamily asset from the perspective of rent roll and operating expenses, among others. Session highlights will include:
  • Discussion of establishing market rent and the associated economic vacancy assumptions that must be made in order to arrive at a defensible effective gross income. Particular focus will be placed on the relationship between the property’s historical performance and the pro forma underwriting.
  • Evaluation of operating expenses, with particular emphasis on uncontrollable expenses such as property insurance and real estate taxes.
  • Consideration of the physical asset in terms of how to contemplate the replacement of capital items within an investment analysis.

Matthew Cypher 
Director – Real Estate Finance Initiative 
McDonough School of Business 
Georgetown University 
Washington, DC.

Matthew L. Cypher brings more than nine years of industry real estate experience to Georgetown University’s McDonough School of Business, where he teaches as a professor of the practice and directs the school’s Real Estate Finance Initiative.

He joined Invesco’s real estate acquisitions group in 2005 following several years in academia. While at Invesco, he was responsible for oversight of the Underwriting Group, which acquired $10.2 billion worth of institutional real estate during his leadership tenure. He has also personally underwritten $1.5 billion of acquisitions culminating with the purchase of 230 Park Avenue in New York, which Invesco acquired on behalf of its client capital in June 2011. Additionally, he was responsible for the Valuations group, which marks to market Invesco’s more than $13 billion North American portfolio. Cypher also was a member of Invesco’s Investment Committee and Investment Strategy Committee.

He served as an adjunct professor at Southern Methodist University teaching courses in the real estate concentration of the university’s MBA program while at Invesco. His written work has been published in several peer-reviewed journals, including the Journal of Real Estate Research, Journal of Property Research, and Urban Affairs Review. He also has written for trade-level publications including Urban Land and The Institutional Real Estate Letter. He holds a Ph.D. and M.S. from Texas A&M and a B.S from The Pennsylvania State University.
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