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Commercial Real Estate Debt Finance

Illustrates key issues in large scale commercial real estate transactions

Commercial Real Estate Debt Finance Course

A one-day course

  • Focused content in a short time period providing an intensive overview of key risk and structuring issues in Commercial Real Estate Debt Finance
  • Practical content using a core case study to illustrate the topics covered in the programme
  • References to further reading that will illustrate the topics covered in the training
  • Provides a structured methodology in a short time period that can be used as an “aide memoire” when assessing Commercial Real Estate Debt Finance transactions
  • Topical coverage of trends in the Commercial Real Estate markets to put course content in context

  • Assess the key risk issues in Commercial Real Estate Finance
  • Understand the main approaches to the valuation of Commercial Real Estate
  • Illustrate, through financial sensitivity analysis, the impact of key drivers on the viability of a Commercial Real Estate Finance transaction
  • Discuss and evaluate the principal methods for mitigating risks in Commercial Real Estate Finance transactions
  • Understand the key features of the principal debt financing products and their relative advantages and disadvantages
  • Understand how value is created in Commercial Real Estate transactions and risk and return issues from a debt and equity perspective

Risk and risk mitigation techniques; overview of developments in the Commercial Real Estate markets

  • Macroeconomic cycles…what can be learned from past economic cycles?
  • Recent developments and issues arising from the “credit crisis”
  • Key risks and mitigants in Commercial Real Estate Financings
  • Will technology fundamentally change the Commercial Real Estate markets?

Exercise: Review of a commercial real estate financing to identify key credit risks and potential mitigants 

Principles of Commercial Real Estate Valuation

  • Summary of Commercial Real Estate valuation methods and how the different methods can influence value
    • Comparable buildings
    • Capitalisation of yields
    • Open Market Values
    • Discounted cash flow valuation methods
  • Occupational lease terms – examples from selected markets, and how this affects value
  • Yields in Commercial Real Estate Valuations
    • Initial yields
    • Reversionary yields
    • Equivalent yields
  • Development vs investment financings, and factors to consider in valuation assumptions

Exercise: Calculating and sensitising Commercial Real Estate Finance valuations using discounted cash flow techniques 

Commercial Real Estate Companies and Investment vehicles

  • Typical types of Commercial Real Estate investment companies and their approach
    • Developers
    • Trading companies
    • Investment companies
  • Real Estate Investment Trusts (REIT) vs non-REIT
  • Commercial Real Estate Funds
  • What are the key elements of a creditworthy Commercial Real Estate company – principal elements in credit rating

Exercise: Review of key aspects of the financial statements of a Commercial Real Estate Company or REIT 

Debt financing choices for Commercial Real Estate transactions and debt structuring issues

Financing choices

  • Private debt financing choices
    • Development vs investment financings
    • Asset specific financing
    • Secured vs unsecured debt
    • Senior vs subordinated / mezzanine debt
    • Sale and leaseback transactions
    • Capital markets financings
    • Use of hybrid financings – convertible bonds
  • Commercial Mortgage-Backed securitisations – review of a Commercial Mortgage-Backed Securitisation
  • Trends in Debt Finance leverage

Case Study:  participants review and sensitise a financial model with a view to developing an acceptable debt structure for a Commercial Real Estate project 

Risk and return in Commercial Real Estate Finance – the equity investors’ perspective

  • Principles of evaluating investments – discounted cash flow methods, NPV and IRR
  • Value creation – the development process; active Real Estate management; financial market influences, how different types of investor seek to achieve returns from Commercial Real Estate investments
  • Risk and return – Commercial Real Estate Finance vs other asset classes
  • Use of Equity vs. Subordinated Debt

Case Study: sensitising a financial model for a Commercial Real Estate project to illustrate the sensitivity of equity-related returns to key assumptions 

Debt structuring issues and risk mitigation techniques

  • Use of covenants and developing a covenant package
    • Debt Service Coverage measures (interest and debt service coverage)
    • Asset Coverage measures (Loan to Value ratio and “top-up” requirements)
    • Development vs. investment financings – completion and cost overrun undertakings
  • Third-party credit support

Case Study:  participants review the key elements of a summarised Term Sheet

The trainer has had a career in the financial services industry and financial training for over 40 years.

He started his career with National Westminster Bank (now part of RBS) before moving to Mellon Bank NA, a major regional US bank (now part of Bank of New York Mellon). At Mellon Bank, he held several credit analysis and account management positions in London, focusing on large UK corporates and UK subsidiaries of US corporations.  He also had two extended work assignments in the USA, on the second occasion as an account officer responsible for a group of US subsidiaries of non-US multinationals.

After 11 years at Mellon Bank, he joined Swiss Bank Corporation (now UBS) in London where he was actively involved in the development and ongoing management of the bank's UK Commercial Real Estate lending activities. His Real Estate related skills were further developed at Debenham Tewson Financial, a subsidiary of one of the world’s leading Real Estate advisory firms.

Since 1992 he has been primarily focussed on training in the areas of Corporate Credit Analysis, Financial Restructuring, Project, Infrastructure and Structured Debt Finance, such as Real Estate Finance and Asset Securitisation. He has designed and delivered tailored and public courses in more than 60 countries. In these areas he has worked with a wide range of corporate and investment banking firms; Development Finance Institutions; public sector organisations; Export Credit Agencies; and a number of major corporations. Participants on courses run by him range from recent graduates to experienced line managers, and in areas as diverse as bond sales and trading to credit research and Relationship Management positions in financial institutions, as well as project engineers and professional advisers and public sector employees in the area of Project Finance.

In the area of Project Finance the trainer has run numerous public training programmes on a global basis. He has also provided tailored Project Finance training programmes for a range of financial institutions including Development Finance Institutions covering Project Finance in general as well as specific areas such as PPP and Infrastructure Finance and Renewable Energy.


Commercial Real Estate is a major investment Asset Class, represents a very substantial portion of corporate assets and provides collateral and credit support for a huge volume of bank and Capital Markets financings, ranging from lending to the SME sector to Commercial Mortgage-Backed Securitisations. Moreover, the Real Estate markets are extending from traditional investment categories such as offices and retail to now include increased interest in areas such as distribution centres, hotels and Private Residential Rental properties and student accommodation.



Commercial Real Estate values are very sensitive to the underlying economic fundamentals as well as the financial markets. With interest rates in the US, UK and the Eurozone starting to rise, there are concerns that this will adversely impact Commercial Real Estate values. Additionally, Commercial Real Estate values and performance are also influenced by specific factors such as the quality of the Real Estate, lease terms, tenant risk, market sector and geographic focus making it essential to understand the specifics of each Commercial Real Estate Asset.


Course methodology

There will be one or two core case studies involving large value Commercial Real Estate transactions throughout the training, using the example of a single asset financing, supplemented by other cases/exercises to illustrate specific issues in the programme.

Whilst there will brief reviews of a financial model for a core case study, for participants seeking to develop their financial modelling skills Redcliffe Training provides Real Estate modelling training programmes.


Target Audience

This programme is designed for personnel working on large scale Commercial Real Estate transactions, with limited or no practical experience of the practical aspects of Commercial Real Estate Finance working in organisations such as

  • Project developers and investors
  • Commercial and Investment banks
  • Commercial Real Estate Debt Funds
  • Private Equity firms investing in Real Estate
  • Sovereign Wealth Funds
  • Construction companies
  • Accountancy firms
  • Law firms
  • Real Estate advisory firms
  • Architectural practices and Quantity Surveying firms
  • Government and other Public Sector Agencies


Participant prerequisites

It has been assumed that participants will have limited or no prior practical experience of Commercial Real Estate Finance.

Participants should already be familiar with the core principles of financial analysis, the fundamental principles of investment appraisal techniques, the core functions in Excel and the main features of debt financing products.


Case studies

To maximise the benefit to participants case studies will

  • Mostly focus on the main types of Commercial Real Estate – office, retail and industrial
  • Concentrate on large scale transactions
  • Primarily relate to the financing of single-asset companies, both developments and existing investments. There will be limited coverage of Commercial Real Estate companies and Investment vehicles
Each participant will be required to bring a laptop to the course

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS

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