Recording - Commercial Real Estate Lending: Developing a Global Analysis of Property Holdings - Sp20

Course Length
90 mins

Instructor
Richard Hamm

Price
$275.00

Description

Presenter: Richard Hamm

This 90-minute program will be presented live on: March 24, 8:30-10:00 a.m. Central Time 
Recording available through: June 24, 2020
Price: $275

 

In many instances of commercial real estate (CRE) lending, the risks to a borrower/owner/guarantor from contingent liabilities outweigh the strength of the property your bank is proposing to finance. How can you effectively evaluate the risks of these guarantees? This program provides a framework not only for arraying the various properties, but a strategy for determining the risk of individual properties. Yes, developing property cash flows for tax returns and other data is the first step, but bankers need to go deeper into estimating collateral value and any potential shortfall within the property that becomes a direct liability to your borrower/owner/guarantor. Due to the high incidence of banks requiring owners to guarantee a percentage higher than the person’s ownership percentage, minority interests in CRE create a more complicated analysis, even best case/worst case/most likely scenarios. Finally, issues such as property type, location, length of leases in place and strength of tenants quickly take the analysis beyond tax return or operating statement data.

 

Specific subjects that will be covered during the seminar:

  • Net operating income (NOI) components and concepts
  • Understanding key variables within NOI: vacancy, management fees, replacement reserves and capital expenditures
  • Understanding cap rates and how they are used to link cash flow to property value
  • Using tax returns and customer rent rolls, plus issues with commercial leases
  • Unique characteristics of the major types of real estate
  • Transaction-level stress-testing of debt service coverage (DSC) and loan-to-value (LTV)
  • How to use a sample worksheet to explore the major issues, including stress-testing
  • Issues faced in the global analysis of the various holdings of the borrower/guarantor
  • Taking the global analysis beyond the face values of guarantees (contingent liabilities analysis)
  • Using the cash flow analysis as part of ongoing loan monitoring, including estimated property values, not in lieu of appraisals, but as a key part of the overall CRE process
  • Brief look at residential rentals and related cash flow and property value issues

 

Target Audience: Commercial lenders, credit analysts and small business lenders; consumer lenders, mortgage bankers and private bankers; loan review specialists, special assets officers, lending managers and credit officers

 

Related GSB Online programs/topics:

  • Developing a Commercial Real Estate Cash Flow and Key Ratios
  • Commercial Real Estate Cap Rates and Factors Beyond Debt Coverage and Loan-to-Value
  • CRE Lending: Issues with Property Types & Lease Structures

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