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REFM Training Overview

Real Estate Financial Modeling (REFM) Training enables you to master basic and advanced
concepts and techniques of Microsoft Excel, real estate finance, and real estate transaction
financial modeling by going through Excel models line-by-line and performing skills
exercises.

All training is exclusively Microsoft Excel-based and is delivered assuming that each
participant will be following along on their own computer.

Benefits of training with REFM include:

• Improved analysis capabilities

• Increased confidence in one’s Excel skills
• Improved financial modeling knowledge, understanding and customization
capabilities
• Sharpened presentation of a transaction's financials
• Heightened credibility internally and with potential partners, lenders and investors

Additional benefits specifically for University students include:

• Stronger performance in internship and job interviews

• Sharpened presentation of case study financials
• Stronger performance on academic assignments and exams.

2
  

Table of Contents
Introduction to the Real Estate Business (1 hour) 4

Identifying Risks and Opportunities in Real Estate (1 hour) 4

Basic Building Physical and Economic Characteristics 4

and Basic Zoning Terminology (1 hour)

Demystifying the Excel Pro-Forma: What It Is 5

and How You Can Begin To Master It (2 hours)

Excel For Real Estate Bootcamp (3 hours) 5-6

Real Estate Development Modeling Basics (1 hour) 6

Real Estate Finance Bootcamp (3 hours) 7

Mixed-Use Apartment/Multi-Family Building Development 8

Financial Modeling Training (4 hours)

Mixed-Use For-Sale Condominium Building Development/For-Sale 9

Housing Subdivision Development Financial Modeling Training (4 hours)

Office/Industrial Building Development Financial 10

Modeling Training (4 hours)

Apartment Acquisition and Individual Unit Renovation 11

Modeling Training (4 hours)

Customization of a Commercial/Retail Cash Flow Output 12

From Argus (1.5 hours)

Modeling Joint Venture and Partnership Profit Sharing 13

and Partitioned Returns (3 hours)

Foundations of Real Estate Finance (Semester-long) 14

About REFM and Instructor Biographies 15-19

3
  

Introduction to the Real Estate Business

In this comprehensive 1-hour orientation to the real estate business, participants learn about:

• the different types of real estate

• the different types of real estate investors and capital providers
• the various elements of real estate investment
• the types of investment capital
• real estate investment objectives and investment methods
• the main methods of valuing income-producing real estate.

These elements are introduced and discussed within a proprietary framework.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

Identifying Risks and Opportunities in Real Estate

This 1-hour session teaches participants about the real estate cycle and how it creates risks
and opportunities related to acquiring, operating and developing commercial real estate.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

Basic Building Physical and Economic Characteristics

and Basic Zoning Terminology

This 1-hour session teaches participants about the basics of the physical and economic
characteristics of buildings as they relate to real estate investment. Also covered is a primer
on basic zoning terminology and calculations as they relate to real estate analysis.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

4
  

Demystifying the Excel Pro-Forma: What It Is and How You Can Begin To Master It

This 2-hour session breaks down the real estate pro-forma into its essential components,
analyze the pieces individually in easy-to-understand language, and then re-assembles them
into the original whole. The relationships between the constituent parts are explained so that
participants will intimately understand the entire spreadsheet and its various functions.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

Excel For Real Estate Bootcamp

In this 3-hour, interactive session, participants learn the basics of operating in Excel, as well
as advanced techniques, specifically as they relate to real estate analysis. Participants follow
along in Excel in real time and perform exercises to ensure they are grasping the lesson and
are mastering the technical skills being taught. Participants are encouraged to ask their
questions in real time to have them answered by the Instructor on a rolling basis.

Topics covered include *:

• Arithmetic and Rounding • Transpose

• Statistics • Avoiding Error Messages
• Relative vs. Absolute Cell • Dates and Timelines
References • Conditional Statements
• Inserting and Deleting Rows and • Financial Functions for
Columns Compounding and Discounting
• Function Wizard • Internal Rate of Return (IRR)
• Creating Summary Tables • Mortgage Payment Calculation
• Formatting Numbers • Formula Auditing
• Conditional Cell Formatting • Data Tables for Sensitivity Analysis
• Data Table Lookup Functions • Circular References
• Custom Formatting • Keyboard Shortcuts
• Format Painting • Best Practices
• Paste Special

* All Topics Include Exercises

5
  

Excel techniques and formulas taught include:

• SUM • SUMIF, SUMIFS

• ROUND, ROUNDUP, • COUNTIF, COUNTIFS
ROUNDDOWN • VLOOKUP, HLOOKUP
• MAX, MIN, AVERAGE, • IFERROR
MEDIAN • RATE
• Cell Anchoring using Dollar Signs • PV, FV
• EOMONTH, EDATE, • NPV and XNPV
DATEVALUE • IRR and XIRR
• IF, AND, OR, and combinations • PMT, PPMT, IPMT
thereof

Real Estate Development Modeling Basics

This 1-hour session teaches participants the fundamentals of financial modeling specifically
for real estate development transactions.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

6
  

Real Estate Finance Bootcamp

In this 3-hour, interactive session, participants learn the foundations of real estate finance as
well as advanced techniques and topics. Participants follow along in Excel in real time and
perform exercises to ensure they are grasping the lesson and are mastering the technical skills
being taught. Participants are encouraged to ask their questions in real time to have them
answered by the Instructor on a rolling basis.

Topics covered include:

• The Time Value of Money Model

• The Discounted Cash Flow Model (includes Exercise #1)
• Internal Rate of Return (IRR)
• Mortgage Payment Calculation
• Refinancing Scenario Payment Calculation (includes Exercise #2)
• Interest Only Schedule Integration
• Refinancing Case Study
• Residual Land Valuation
• Future Net Operating Income Calculation (includes Exercise #3)
• Transaction Capital Structures
• Financing Development Transactions
• Multiple Equity Investors Discussion (includes Exercise #4)
• Profit Sharing Discussion
• Internal Rate of Return Waterfall basics

Excel techniques and formulas taught include:

• Compounding and Discounting

• Net Present Value (NPV) and XNPV
• Internal Rate of Return (IRR) and XIRR
• Conditional Statements
• Mortgage Payment (PMT)
• Principal Payment (PPMT)
• Interest Payment (IPMT)
• IFERROR
• Minimum (MIN) and Maximum (MAX)
7
  

Mixed-Use Apartment/Multi-Family Building Development

Financial Modeling Training

In this 4-hour, interactive class, you will gain a mastery of technical pro-forma (financial
projection) modeling skills for the ground-up development of a mixed-use rental apartment
building, including distressed and foreclosed development sites.

Topics covered include:

• Site and Building Information and Construction Type

• Apartment Unit and Mix Details
• Project Timing Elements
• Capital Structure
• Uses of Funds
• Sources of Funds
• Cash Flows and Returns
• Capitalized Valuation.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

CFA Institute has approved this program, offered by Real Estate Financial Modeling, LLC, for 3.5 CE
credit hours. If you are a CFA Institute member, CE credit for your participation in this program will be
automatically recorded in your CE Diary.

8
  

Mixed-Use For-Sale Condominium Building Development/For-Sale Housing

Subdivision Development Financial Modeling Training

In this 4-hour, interactive class, you will gain a mastery of the skills needed to successfully
model for-sale mixed-use condominium building and for-sale housing subdivision
development transactions, including distressed and foreclosed development sites.

Topics covered include:

• Site and Building Information and Construction Type

• Mix Details
• Project Timing Elements
• Capital Structure
• Uses of Funds
• Sources of Funds
• Pre-Sales, Market Sales, Closings, Cash Flows and Returns

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

9
  

Office/Industrial Building Development Financial Modeling Training

In this 4-hour, interactive class, you will learn how to model the speculative development and
sale of a commercial (office or industrial) building (with a ground-floor retail component for
office building) and income-producing parking component.

Topics covered include:

• Site and Building Information and Construction Type

• Project Timing Elements
• Capital Structure
• Uses of Funds
• Sources of Funds
• Cash Flows and Returns
• Capitalized Valuation

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

CFA Institute has approved this program, offered by Real Estate Financial Modeling, LLC, for 3.5 CE
credit hours. If you are a CFA Institute member, CE credit for your participation in this program will be
automatically recorded in your CE Diary.

10
  

Apartment Acquisition and Individual Unit Renovation Modeling Training

In this 4-hour, interactive, class, you will gain a mastery of Excel-based technical pro-forma
(financial projection) modeling skills for the acquisition and individual unit renovations (with
continued operation) of a rental apartment building with ground-floor retail. The principles
and skills taught apply equally to duplexes and 1,000-unit complexes:

Topics covered include:

• Integration of historical property data and existing rent roll into your pro-forma
• Modeling of future lease expirations and renewals
• Modeling of the unit renovation program
• Modeling of operating expense savings gained from the renovation/greening of
apartment units
• Modeling of acquisition loan financing, residual equity requirement, and permanent
take-out loan/refinancing
o Constructing amortization tables and using the VLOOKUP function
efficiently
• Property Disposition

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

11
  

Excel-based Customization of a Commercial/Retail Cash Flow Output from Argus

While Argus is able to generate future cash flow projections based on market factors and
tenant rollover assumptions, a DCF valuation and sensitivity analyses are more easily
controlled by using Excel. Additionally, a customized presentation of the property
valuation and investment returns is more appropriate to individual deals and partnerships.

In this 90-minute, interactive session, participants will learn the following:

• How to quickly build a live Excel-based pro-forma valuation model that links directly
to a 11-year cash flow Excel-based output from Argus
• How to construct data table-based Sensitivity Analysis using discount rate and
terminal capitalization rate as variables
• How to construct a leveraged cash flow analysis including both a Senior Loan and a
Mezzanine loan
• How to construct and run data table-based Sensitivity Analyses on Internal Rate of
Return by varying:
o Purchase Price vs. Terminal Capitalization Rate
o Purchase Price vs. Loan-to-Cost
o Loan-to-Cost vs. Interest Rate.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

12
  

Modeling Joint Venture and Partnership Profit Sharing and Partitioned Returns

Joint venture partnerships are becoming increasingly complex and their proper structuring
and modeling increasingly critical as equity capital requirements have grown given today’s
more conservative lending environment.

Topics covered in this 3-hour session include:

• Reasons to seek a Joint Venture partner

• Typical legal structuring
• Roles played by partners
• Types of risk being assumed
• Philosophy behind the disproportionate partitioning of cash flows
• “Optimal” structuring through Sponsor alignment
• Preferred return and Promote structures
• Mechanics of partitioning cash flows
• Transaction Waterfall characteristics
• Look-back IRR mechanism
• Claw-back IRR mechanism
• How to structure partnerships based on current trends
• How to build the line items for a 5-Tier Internal Rate of Return Waterfall.

Participants are encouraged to ask their questions in real time to have them answered by the
Instructor on a rolling basis.

13
  

Foundations of Real Estate Finance

This semester-long (15-week, or 7-week condensed) course provides you with a critical
foundation in real estate finance and investing. Among other things, you will learn about
discounting cash flows, commercial real estate leases, pro-forma modeling, and how to think
critically about real estate and real estate transactions. The required text is Real Estate Finance
& Investments: Risks and Opportunities, Second Edition by Peter Linneman.

Students will perform individual and group case study assignments that cover most of the
major real estate property types.

14
  

About REFM

REFM is the premier commercial real estate training organization.

REFM provides its clients with the advanced financial modeling knowledge, tools and skills
they need to successfully model their transactions and present them with confidence internally
and to potential partners, lenders and investors.

Based in Arlington, VA, REFM was founded by Bruce Kirsch in 2009. Mr. Kirsch is a
recognized expert in and top instructor of Microsoft Excel-based financial modeling for real
estate transactions. Through REFM, Kirsch has trained both new and experienced real estate
professionals in financial modeling from a wide variety of real estate businesses, organizations
and institutions, including private equity, development, construction, brokerage, trade groups
and government.

In addition, REFM has given on-campus real estate financial modeling training sessions to
Undergraduate, Masters and MBA students from top schools including The Wharton School,
The University of Pennsylvania School of Design, Harvard Business School, Harvard
Graduate School of Design, Massachusetts Institute of Technology, MIT Sloan, Georgetown
University, University of Chicago, Cornell University and George Washington University.

REFM is a member of the District of Columbia Building Industry Association.

15
  

Instructor Biographies

Bruce Kirsch, Principal and Founder, REFM

Mr. Kirsch began his real estate career at CB Richard Ellis, where he marketed high-rise New
York City office buildings for re-development in the top-producing Midtown Manhattan
Investment Properties Institutional Group. After CBRE, Kirsch was recruited to be the
Director of Acquisitions at Washington, DC-based Metropolis Development Company, a
cutting edge local developer of urban infill design-forward residential lofts. While at
Metropolis, Kirsch sourced, analyzed and negotiated the acquisition of three privately-owned
District of Columbia sites to support the development of 500,000 SF of mixed-use
condominium, multi-family and retail product.

After leaving Metropolis, Kirsch engaged in his own urban and suburban condominium and
single family detached housing ventures. Kirsch was then selected as one of the two
executives to run New York City-based developer and consultant The Clarett Group's
Washington, DC business.

While at The Clarett Group, named one of New York City’s most important real estate
development companies by Crain's New York Business, Kirsch was responsible for
analyzing and making urban and suburban site acquisition recommendations for
development of trophy-level office, condominium, multi-family and age-restricted multi-
family properties in the greater Washington metropolitan area. In addition, Kirsch had
significant day to day project management responsibilities for the entitlement, financing and
marketing of the company’s existing Washington, DC metropolitan area development
portfolio. Kirsch was additionally involved in the marketing and implementation of The
Clarett Group’s consulting business.

16
  

Mr. Kirsch holds an MBA in Real Estate from The Wharton School of the University of
Pennsylvania, where he was awarded the Benjamin Franklin Kahn/Washington Real Estate
Investment Trust Award for academic excellence. Kirsch started teaching on real estate
topics while at Wharton as the Wharton MBA Real Estate Club’s Co-Vice President of
Education. Kirsch was also a member of the Wharton team that won 1st Place at the
National Real Estate Finance Challenge case competition.

Prior to Wharton, Bruce performed quantitative equity research on the technology sector at
The Capital Group Companies, the manager of the American Funds, the largest family of
mutual funds in the United States.

Mr. Kirsch is a Faculty member in real estate at the Georgetown University School of
Continuing Studies. Mr. Kirsch graduated with a BA in Communication from Stanford
University, and he is a member of the Urban Land Institute.

Bulkeley Banks, Instructor

Bulkeley Banks holds a Masters in Professional Studies in Real Estate from Georgetown
University, where he served as the Finance Co-Chair on the Student Advisory Board in Real
Estate. Prior to joining the company, Mr. Banks worked at the University of Chicago’s
Evolution and Ecology Lab analyzing genetic variation in botany. He also holds a B.A. in
Philosophy from the University of Chicago, where he was awarded the Herman S. Dunlap
Scholarship.

17
  

Ehud Mouchly, Instructor

Ehud Mouchly is an adjunct professor at the University of Southern California’s (USC)

School of Policy, Planning, and Development (SPPD) where he teaches Advanced Real
Estate and Financial Modeling in the Master of Real Estate Development (MRED) program.

Mr. Mouchly is also the owner of READI, LLC (Real Estate Asset Development &
Investments). He has more than 30 years of experience in development, redevelopment and
financing of sustainable infill projects, mixed-use development (MXD) projects, master
planned communities (MPC), workforce housing communities and employer-assisted
housing projects. He was previously Vice President and General Manager of UniDev, LLC’s
West Coast Office, focusing on the design, development, financing, and management of
workforce housing communities. Earlier, Mouchly worked with SunCal Companies as a
member of the master planned communities’ acquisition, entitlements and start-up team;
General Manager of Anaverde (formerly City Ranch), KB-Home’s 2,000-acre, 5,000-unit in
Palmdale, CA; Principal and Co-Developer of a 160-acre commercial MXD in San Joaquin
County, CA; managing director in the Real Estate Group of Price Waterhouse; founder and
president of a national real estate consulting company; developer/builder of residential and
retirement communities.

Mouchly has served as chairman and vice chairman of several flights of the Community
Development Council (CDC) of the ULI, vice chairman of the ULI Program Committee, a
ULI council counselor, and member of the ULI-LA District Council Executive Committee.
He is a member of the California Redevelopment Association (CRA), the National
Association of Home Builders (NAHB), the Counselors of Real Estate (CRE), former fellow
of the Royal Institution of Chartered Surveyors (RICS), and member of Lambda Alpha
International. He has served as an expert witness in U.S. district and state superior courts.
He is an occasional author and frequent speaker on real estate matters in the U.S. and
18
  

overseas. Mouchly holds master’s degree and certification as Ph.D. candidate (“all but
dissertation”) in economics and Middle East studies from Columbia University.

19
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