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Income Producing Properties

understanding the appraisal report,
the investor, and the deal

2.0 Connections for Members
$300 for non Members

Overview

This eight hour course is for both relatively new commercial real estate analysts and lenders who need a thorough understanding of the benefits and limitations of the appraisal report, the role and derivation of the capitalization rate, the analytical methods for estimating property market value, the application of underwriting standards, the investor’s decision criteria and components of rate of return, and the relevant documentation necessary to assure the lender’s unimpaired access to the property and the property’s stream of income.

15 CEUs

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Course Objectives

	Explore the components, derivation, and application of the cap rate;
	Understand and appreciate the benefits and limitations of the sales comparison approach to valuation;
	Understand and appreciate the benefits and limitations of the income capitalization approach to valuation;
	Examine the use of break-even analysis in understanding the sensitivity of critical net operating income drivers to market events;
	Apply underwriting standards to proposed financing for an income producing property;
	Assess the likely value of a personal guarantee;
	Fully appreciate the equity investors’ rate of return in assessing the underlying reason for the investment decision; and
	Review and examine several key documents that are critical in assessing the quality of the subject property, the lender’s access to the subject property in the event of default, and the lender’s access to the stream of income from the subject property in the event of default.

Course Materials

	Commercial Real Estate Terms and Concepts
	Credit Refresher on Cap Rates and Lending Decisions
	Credit Refresher on Net Operating Income or Market Value?
	Credit Refresher on Refinancing and the Cap Rate
	Credit Refresher on The Income Capitalization Approach
	Adobe Plaza Appraisal Report
	Assignment of Rents
	Commitment Letter from Old San Jose Bank & Trust
	Environmental Risk Questionnaire for Adobe Plaza
	Estoppel Certificate
	Excerpts from Preliminary Title Report
	Rent Roll for Adobe Plaza
	Standard Office Lease
	Subordination, Non Disturbance and Attornment Agreement
	Personal Financial Statements for Guarantor, Jeremiah Zeltig
	Written Exercise Set
	Online Review Quizzes
	Written and Audio Solution Set
	Online Credit Skills Proficiency Exam

Upon Completion

Participants who successfully complete the workshop, including completion of all review quizzes and the final proficiency exam, will be able to:

	Understand the form, structure, and objective of the appraisal report and the relevant information sources and expertise that are critical to its ultimate value for the lender in making a lending decision;
	Understand the cap rate, its derivation, and common pitfalls in establishing its value for application in the market valuation process;
	Understand the benefits and limitations of the sales comparison and income capitalization approaches to establishing market value for and income-producing property;
	Understand how to use break-even analysis in assessing the ability of an income-producing property’s net operating income to withstand adverse market pressures that impact vacancy levels, rental rates, and applicable interest rates;
	Understand and apply loan-to-value and debt service coverage underwriting standards in making a credit decision;
	Understand the importance and value of properly assessing the likely financial strength of a guarantee in assessing a secondary source of repayment;
	Estimate the equity investors’ likely rate of return from the subject property’s cash flow stream in the process of understanding the reasons behind the investment decision; and
	Fully understand and appreciate the information, evidence, and documents necessary to identify the quality of the income-producing property, the lender’s access to the income-producing property in the event of default, and the lender’s access to the stream of revenue from the income-producing property in the event of default.

How to Order

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Impact Courses
	Credit Basics
	Getting Business
	Income Producing Properties
	Key Credit Analysis Tools and Techniques

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