Essentials of the Development Process

Date: March 2 - April 27, 2016 8 Week Course Day/Time: Wednesdays; noon - 2 p.m.
Eastern Location: Your Office Format: Online
This introductory course examines the seven stages of a comprehensive real estate development
model. With an emphasis on practical workplace applications, this course begins with raw land in
the land banking stage and continues through land packaging, land development, building
development, and building operations.
The real estate development model continues through the development process to include
building renovations and property redevelopment. The life cycle of a real estate development is
analyzed in terms of how value is created in each stage of development.
Session One presents the theoretical context of this seven stage model. Starting with Session
Two, each successive session will examine each principle development stage by outlining how
value is created, key players, critical tasks, controllable costs, and major risks. Examples
discussed in each stage will describe how to apply those principles to real world practices.
Finally, a special skills section will be presented at the end of each module. These special skills
will teach students how to perform basic calculations to estimate and analyze real estate values in
order to better understand value creation throughout the real estate development process.

Learning Objectives
Learning Objectives
By the end of this course, students will be able to:

Define the seven stages of the real estate development process in terms of
- How value is created
- Key players
- Critical Tasks

- Controllable costs
- Major Risks

Analyze one example of each stage

Estimate overall property value, land value, mortgage value, and equity value
using direct capitalization methodology

Understand the relationships among value, income, and capitalization rates

March 2, 2016
Overview of the Real Estate Development Process

Time: noon - 2 p.m. (Eastern Standard Time)

During this session, students will discuss what real estate developers are and what real estate
developers do from several points of view. Students will also review various perspectives of real
estate development from the writings of James A. Graaskamp. The discussion then moves to the
seven-stage real estate development process using a schematic diagram, a box diagram, and a
Venn diagram.
The seven stage model is combined with the eight required tasks for each stage to define the real
estate Development Matrix. This 56-cell matrix is analyzed to demonstrate how real estate
developers and real estate professionals interact throughout the life cycle of a real estate project.
The students will expand this two-dimensional model to include property types and thereby
define a three-dimensional real estate Development Cube. At the end of this module, students
will have a working knowledge of the development matrix.
March 9, 2016
Land Banking

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the first stage, Land Banking, in the real estate development process in
terms of how value is created in this stage. Students will review the critical tasks, major risks,
key players, and controllable costs of this stage. Students will learn to identify land bankers and
understand the role of land banking in its relation to other stages. Students will learn to
understand the varied nuances of the term value in real estate and the difference between
market and investment value. This module also demonstrates the three variable Direct
Capitalization Model and compares it to the more complex Discounted Cash Flow Model. This
course will utilize the Direct Capitalization Models to calculate and compare values throughout
the real estate development process.

March 16, 2016

Land Packaging

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the second stage of the real estate development process, Land Packaging.
Students will review the critical tasks, major risks, key players, and controllable costs of this
stage. Students will identify the steps in the land packaging process and recognize the important
roles of the numerous stakeholders required in this stage. Students will learn to calculate
stabilized Net Operating Income (NOI) using gross income, vacancy & collections, and
operating expenses. Students will also learn to estimate overall capitalization rates and
understand the difference between market and investors rates. Estimating property value using
the direct capitalization model will also be covered in this module.
March 30, 2016
Land Development

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the Land Development stage. We will review the critical tasks, major risks,
key players, and controllable costs of this stage. Students will learn how value is created through
constructing infrastructure needed for future building development. In order to better understand
the relationship between land developers and building developers, students will learn to estimate
building development costs. The special skills section will continue with a review of how to
calculate land value, using those cost estimates.
April 6, 2016
Building Development

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the Building Development stage. We will review the critical tasks, major
risks, key players, and controllable costs of this stage. The special skills section will focus on
project feasibility by reviewing four components: 1) return on total costs compared to overall
market capitalization rate 2) required spread as a measure of riskiness 3) the four step process to
estimate a building developers justified land price 4) reviewing overall project feasibility with
pessimistic, most likely, and optimistic outcome predictions.
April 13, 2016
Building Operations

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the Building Operations stage. We will review the critical tasks, major
risks, key players, and controllable costs of this stage. The special skills section will instruct
students how to estimate property value using a mortgage-equity analysis. This will be broken
into four parts. First, understanding how an underwriter may analyze a propertys value using
debt-coverage ratio, land to value ratio, and borrowers character. Second, how to estimate
mortgage value in terms of annual debt payment and mortgage constant. Third, to estimate the
equity value with the after financing cash flow and equity dividend rate. Finally, this session will
conclude with estimating returns after financing.
April 20, 2016
Building Renovation

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the Building Renovation stage. We will review the critical tasks, major
risks, key players, and controllable costs of this stage. Students will learn how renovation of a
property may increase the value to better optimize the existing use. In order to better understand
how this value is created, the special skills section will focus on estimating the building
renovation costs and the coinciding property value after renovation. After a review of those
components, we will then discuss how to determine if a renovation project is feasible using
overall net disposition cap rate analysis.
April 27, 2016
Property Redevelopment

Time: noon - 2 p.m. (Eastern Standard Time)

This session explores the Property Redevelopment stage. We will review the critical tasks, major
risks, key players, and controllable costs of this stage. This is the eighth stage of the real estate
development process and completes the development cycle. To complement this stage, the
special skills section focuses on the hold versus sell decision. This analysis uses the marginal rate
of return and reinvestment rates, first examining how to estimate each, and then the comparison
between the two in order to make the decision.
Advanced Development Practices

Date: October 20 - December 15, 2016 8 Week Course Day/Time: Thursdays; noon - 2 p.m.
Eastern Location: Your Office Format: Online
Advanced Development Practices is a sequel to the Essentials of the Development Process and
builds on the concept of a Development Matrix where the seven stages of Real Estate
Development are combined with the eight Tasks required in each stage to produce a 56-cell
matrix.
This survey course focuses on the eight Tasks in each stage of the real estate development
process. Each Task is really a category of tasks that must be completed in order to create value
throughout the development process. Each Stage of Development begins with the Acquisition
Task and ends with the Disposition Task. In between, the developer must address and complete
the following Tasks: Finance, Market Studies and Marketing Strategy, Environmental, Approvals
and Permits, Improvements, and Transportation and Accessibility. In reality these Tasks are
completed in various orders and usually they are done simultaneously. The order of the Tasks
presented in this course is arbitrary, and most tasks interact with each other to some extent and
the completion of individual task is dependent on the completion of other Tasks. This course
broadly describes the Tasks and the sub-tasks from a developers point of view. Students are not
expected to be experts in all of these tasks, but they are expected to understand and appreciate
what needs to happen for a successful development, i.e. one that creates value in excess of the
costs needed to create value.

Course Objectives
Course Objectives

Define and explain the eight sets of tasks that are required in each stage of
development.

Define and explain at least two sub-tasks in each major task set.

Understand why each task must be address even if the developer decides to
undertake multiple stages of development.

October 20, 2016

Acquisitions

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This session begins with a brief review of the Development Matrix and then focuses on the five
sub-tasks in the Acquisition Task category. A review of various acquisitions strategies is
presented using two class exercises.
Learning Objectives and Outcomes

Explain the real estate development process, 7 stages

Articulate the five sub-tasks of acquisition

Differentiate among feasibility, underwriting, and due diligence

Define various acquisition strategies

October 27, 2016

Market and Feasibility Analysis

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This module addresses the need for accurate financial projections and record keeping as well as
the accumulation of debt and equity capital for the real estate development. The special skills
address the sources and uses of funds in a development, and estimating construction loans.
Learning Objectives and Outcomes

Articulate the 3 subtasks of financing.

Recognize importance of accurate record-keeping and timely reports.

Define various capital requirements needed in each stage of development.

Estimate development budgets

Estimate sources and uses of funds

November 3, 2016
Market Studies and Marketing Strategies

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This session discusses the need for accurate and thoughtful market forecasts and projections and
then emphasizes the need for a coherent marketing strategy to capture the market opportunities.
The special skills outlines estimation techniques for projected rental rates and absorption.
Learning Objectives and Outcomes

Estimate and analyze future market conditions

Create a matrix for market condition analysis

Evaluate and determine marketing strategies for each stage of development

Estimate market absorption rates and rental rates

November 10, 2016

Environmental Tasks

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This module discusses environmental challenges in terms of environmental studies; sustainability
certifications; surface, sub-surface and atmospheric characteristics of the site; and possible
historical and cultural restrictions on a site. Evaluating potential environmental concerns is
demonstrated through two class exercises.
Learning Objectives and Outcomes

Differentiate between Phase I, II and III environmental studies

Understand the role of sustainability certifications in the development

process

Provide examples of environmental conditions related to surface, sub-surface

and atmospheric characteristics of the property

Include historic and cultural factors when analyzing a properties environment

and understand the possible restrictions on use due to those facts.

November 17, 2016

Approvals and Permits

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This module emphasizes the need for developers to obtain permits and approvals that are specific
to the stage of development that is being undertaken. The special skills focus on deciphering
local approval codes and timelines. Students are also expected to provide examples of approvals
and permits they have encountered.
Learning Objectives and Outcomes

Understand the natural tension that exists between approvals, permits, and
various agencies.

Understand that the approval process is complex, with numerous agents and
agencies.

Identify communication and negotiation techniques of the approvals/permits

process.

List and define the various types of approvals and permits needed at the
federal, regional, state, local, and private level.

December 1, 2016
Improvements

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This module emphasizes that all improvements must be planned, designed, engineered,
constructed, maintained, and renovated or replaced. Each stage of development requires
improvements to be addressed in a different way. The special skills section compares design-bidbuild and design/build models, and promotes student discussion with two class exercises.
Learning Objectives and Outcomes

Define Improvements in the broadest sense

Articulate the sub-tasks of physical improvements

o

Plan and Design

Engineer

Construct

Maintain

Differentiate between Design-Bid-Build and Design-Build models

December 8, 2016
Transportation and Accessibility

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
This module discusses location, location, and location issues in terms of off-site transportation
systems and on-site accessibility requirements. The special skills section discusses how a
developer gets paid including a simple promotion strategy.
Learning Objectives and Outcomes

Differentiate between transportation and accessibility improvements

Explain the challenges of integrating new transportation systems into existing

systems

List and define accessibility issues on-site and inside buildings

Understand the importance of life-safety networks and systems.

Articulate how a developer gets paid using various payment and financing
structures

December 15, 2016

Sales and Disposition Tasks

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar

This module discusses the disposition tasks that include the sellers due diligence, sales
contracts, pre- and post-closing conditions, and seller-financing opportunities. Various sales
contracts are presented, with a discussion of strategies using two class exercises.
Learning Objectives and Outcomes

Define sellers due diligence

Explain a disposition strategy

List important features of a sales contract

Analyze the pros and cons of seller financing

Explain post-closing conditions and concerns

Financial Analysis of Development Projects

Financial Analysis of Development Projects

Date: TBD 8 Week Course Day/Time: TBD Location: Your Office Format: Online
The Financial Analysis of Development Projects course provides a combination of analytical
theory and practical tools needed to evaluate the financial feasibility of complex value added and
opportunistic real estate investments. This includes speculative land, land development, and
commercial and residential rehabilitation and development for all property types: office,
industrial, retail, multi-family and mixed-use. Accounting, risk management, taxation, capital
markets and organizational issues influencing the financial viability of these real estate projects
will also be considered and discussed. It is designed as an introductory to intermediate
experience level course. Class sessions are primarily lecture type with substantial participation
and discussion expected from the students. Outside speakers, group activities, case studies and
exercises will be utilized to reinforce and apply the concepts. Assessments are designed in such a
way as to measure student knowledge of content.

Learning Objectives
Learning Objectives

Recognize the role of participants of the public and private real estate capital
markets and define the types of real estate financed by the real estate capital
markets.

Identify the sources and types of financing for real estate investments and
apply the major indices which measure real estate investment returns and
risk over time

Define the investment strategies followed by investors and the required rates
of return for each these strategies and discern the components of the
expected total return on a real estate investment

Know how to measure return on real estate investments

Understand the complexities of valuing and assessing development projects

and learn the difference between valuing a for-sale vs. a for-rent development
project

Learn how to deal with changes in project risk over time and determine the
factors that drive the phasing and inventory decision for a multi- or mixeduse investment

Understand how land can be viewed as an option and how to use this to value
land

Demonstrate knowledge of the various tax classifications and exemptions

imposed on real estate

Determine how to assess the risk exposure and identify the assumptions
which must be made in the process of recommending a risk management
solution

Define terms associated with a private equity arrangements and understand

the investment strategies pursued by private equity

January 7, 2016
Overview of the Real Estate Capital Markets: Investment Strategies, Return
Measurement and Risk

Time: noon - 2 p.m. (Eastern Standard Time)

In this session, we'll identify participants in the public and private real estate capital markets and
examine the types of real estate financed by the real estate capital markets. Students will gain a

comprehensive understanding of the sources and types of financing for real estate investments in
addition to knowing the major indices which measure real estate investment returns and risk over
time. We will identify the investment strategies followed by investors and the required rates of
return for each these strategies. Students will learn to discern the components of the expected
total return on a real estate investment. Lastly, we will view some of the industry data sources for
cap rates and required returns and learn how to measure return on real estate investments.
markets and examine the types of real estate financed by the real estate capital markets.
Students will gain a comprehensive understanding of the sources and types of financing for real
estate investments in addition to knowing the major indices which measure real estate investment
returns and risk over time. We will identify the investment strategies followed by investors and
the required rates of return for each these strategies. Students will learn to discern the
components of the expected total return on a real estate investment. Lastly, we will view some of
the industry data sources for cap rates and required returns and learn how to measure return on
real estate investments.
anuary 14, 2016
Investment Analysis for Value-Added Properties: Case Study/Exercise 1: Office
Project

Time: noon - 2 p.m. (Eastern Standard Time)

Students will develop skills to identify and analyze value-added investment opportunities. In
doing so, we will review key metrics, data points and structural issues used when evaluating
value-added investments from both a debt and equity viewpoint.
January 21, 2016
Investment Analysis for Development Transactions; Case Study/ Exercise 2:
Industrial Project; Case Study/Exercise 3: Sale of a Residential Condo Project

Time: noon - 2 p.m. (Eastern Standard Time)

This session will provide a thorough overview of financing and investing in development. We
will discuss the complexities of valuing and assessing development projects and identify the
differences between valuing a for-sale versus a for-rent development project. Students will learn
how to deal with changes in project risk over time and how to determine the appropriate equity
return for a development project. Finally, students will complete two case studies: one evaluating
a for-rent development and the other a for-sale development.

anuary 28, 2016

Financial Analysis of Mixed and Multi-Use Development; Case Study/Exercise 4:
Mixed-Use Development Analysis (includes: retail, office and multifamily)

Time: noon - 2 p.m. (Eastern Standard Time)

We will focus on financing and investing in a mixed-use development during this session. We'll
discuss the complexities and nuances involved in mixed-use development projects and identify
the factors that drive the phasing and inventory decision for a multi- or mixed-use investment.
The session concludes with completion of a case study/exercise evaluating a mixed-use
development.
February 4, 2016
Investment in Land for Future Development; Case Study/Exercise 5: Analysis of a
Land Investment

Time: noon - 2 p.m. (Eastern Standard Time)

We will focus on financing and investing in a mixed-use development during this session. We'll
discuss the complexities and nuances involved in mixed-use development projects and identify
the factors that drive the phasing and inventory decision for a multi- or mixed-use investment.
The session concludes with completion of a case study/exercise evaluating a mixed-use
development.
Real Estate Development Deal Structuring and Underwriting; Case Study/Exercise 6:
Modeling Joint Venture and Partnership Profit Sharing and Partitioned Returns

Time: noon - 2 p.m. (Eastern Standard Time)

In this session, we will examine the sources of equity financing and discuss the organizational
forms and joint ventures for value added and opportunistic real estate investments. We will
define terms associated with private equity arrangements and discuss the investment strategies
pursued by private equity. Students will learn to analyze the fees structures of private equity
investment vehicles and comprehend the workings of joint ventures, in addition to understanding
common deal structures for private equity joint venture and partnerships with profit sharing and
partitioned returns. We'll explore the commercial mortgage capital markets in terms of lenders,
mortgage types and terms. We'll review the contents of a loan submission package and
development and value-added loan underwriting guidelines and discuss how lenders make
decisions on financing these properties. Finally, students will work through a case study/exercise
detailing a private equity joint venture deal structure with profit sharing and partitioned returns.

February 18, 2016

Accounting and Taxation issues for Real Estate Development Projects

Time: noon - 2 p.m. (Eastern Standard Time)

This session will cover the various tax classifications and exemptions imposed on real estate in
addition to addressing accounting and tax issues for development projects. We will explore
affordable housing programs and discuss the Low Income Housing Tax Credit (LIHTC). Other
tax incentives and programs that affect development will also be examined.
February 25, 2016
Risk Management for Real Estate Development Projects

Time: noon - 2 p.m. (Eastern Standard Time)

The final course session will focus on risk management. We will identify and pinpoint risk
exposures during the development process as a problem to be solved with a risk management
solution. Students will gain a better understanding of the principal risk exposures in real estate
development and how to assess the risk exposure and identify the assumptions which must be
made in the process of recommending a risk management solution. We will discuss the
differences between insurable versus uninsurable risks and address how insurable risk exposures
and theoretical concepts of risk affect insurance policy design, coverage and contractual
provisions.
Site Feasibility and Market Analysis

Site Feasibility and Market Analysis

Date: Anytime Anytime Day/Time: At your convenience Location: Your Office
Format: On-Demand

The Site Feasibility and Market Analysis course is designed for the intermediate experiencedlevel real estate professional. The course starts with an analysis of macro- economics that drive
and support the demand for real estate development. Students explore how to navigate through
the capital considerations of a project to include the cost and availability of financing. The
underlying contributors to supply, what drives the demand for development and the potential
political, legal and regulatory challenges are also examined. As the site feasibility study process
continues, each of the due diligence check points are defined and examined. Once the research
process leads to consideration of a specific site, learners will identify and analyze the physical
attributes, environmental considerations and potential issues with the project.
This is an edited version of a previously recorded, live, online course. Student and instructor
comments are the opinions of the individuals and do not necessarily reflect the views of NAIOP.
All handouts and resource materials are posted along with the module to which they belong with
an evaluation and assessment at the end of the course.

Learning Objectives
Learning Objectives

Recognize the critical components included in a feasibility analysis and the

overall impact to the viability and success of a project.

Develop analytical assessment skills which include how to conduct

investigative research to develop a site feasibility study.

Perform a national, regional and local economic analysis to determine the

state of the market, economic base, availability of resources and the
availability supply and demand.

Define the due diligence process and the intended outcome. Identify the
critical players in the process. Develop a plan to work within the budget and
timeframe of the project.

Conduct simple highest and best use analysis taking into consideration:
valuation using direct capitalization approach, land use controls and
insurability.

Recognize the critical components of a site analysis and the impact of the
results to the success or potential risks to the project.

Module 1
Overview and Market Analysis - Defining the Problem

Time: noon - 2 p.m. (Eastern Standard Time)

In this session we will discuss the first step in the Feasibility Study Process: Defining the
Problem. We will cover property analysis, site analysis checklist, and location analysis.
Module 2
Market Analysis

Time: noon - 2 p.m. (Eastern Standard Time)

In this session we will discuss the second step in the Feasibility Study Process: Market Analysis.
We will address three basic questions:
1. Will there be users to rent or buy the proposed project;
2. How quickly, and at what rent or price, will the proposed project be absorbed
into the market;
3. How might the project be planned or marketed to make it more competitive
in its market.
Module 3
Market Analysis Supply and Demand Analysis

Time: noon - 2 p.m. (Eastern Standard Time)

In this session, we will continue to cover the second step in the Feasibility Study Process: Market
Analysis. We will discuss Supply and Demand Analysis.
Module 4
Market Analysis Local Analysis and Regulations

Time: noon - 2 p.m. (Eastern Standard Time)

In this session, we will continue to cover the second step in the Feasibility Study Process: Market
Analysis. We will discuss the important of research into the local area and the government
regulations and processes. A group-based case study will be assigned as homework, with the
results being presented during the next class session.
Module 5
Highest and Best Use and Valuation

Time: noon - 2 p.m. (Eastern Standard Time)

In this session, we will discuss the third step in the Feasibility Study Process: Highest and Best
Use. This step determines the projected sites highest and best use. The highest and best use case
study provides an economic basis for the chosen use by addressing the four factors of value:

utility, desire, scarcity, and effective purchasing power. Groups will also present results from the
assigned case study.
Module 6
Due Diligence

Time: noon - 2 p.m. (Eastern Standard Time)

This session will walk students through the due diligence process. Students will discuss the
appraisal report, environmental issues, and insurance review, as well as surveying the property.
Module 7
Data Sources

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
In this session, students will discuss and review the variety of data sources available, both free
and fee-based. A case study will also be assigned to teams.
Module 8
Site Feasibility Team Review

Time: noon - 2 p.m. (Eastern Standard Time)

Add to Calendar
All teams will present their results from the previously assigned case study. In addition, the
instructor will walk the class through an actual Site and Market Feasibility analysis to
demonstrate how everything works in the day-to-day development world.