Intermediate Pro Forma: A Development Pro Forma

Online: On-Demand Course

Intermediate Pro Forma: A Development Pro Forma

In this course, you will learn to manage Excel functions and processes to build a pro forma to analyze a contemplated multifamily project during the construction process. You will start with an itemized development budget and move on in steps from there. In the process, you will see how to build a financial model that shows the monthly cash flow through stabilization and calculates the developer’s interest reserve needed during construction. By the end of the course, you will have built a pro forma model that is designed to analyze the cash flow from loan closing through stabilization.

Overview

Building on the Introduction to Pro Forma Excel Modeling course, or your own basic understanding and practice of pro forma modeling, this webinar covers the financing of a new construction project.

In this course, you will learn to manage Excel functions and processes to build a pro forma to analyze a contemplated multifamily project during the construction process. You will start with an itemized development budget and move on in steps from there. In the process, you will see how to build a financial model that shows the monthly cash flow through stabilization and calculates the developer’s interest reserve needed during construction. By the end of the course, you will have built a pro forma model that is designed to analyze the cash flow from loan closing through stabilization.

Each session starts with a conceptual discussion of the task at hand. You will then receive instructions on how to complete the task, learning by doing. At the end of the course, you will have a pro forma model that is designed to analyze the cash flow from loan closing through stabilization.


This course counts toward the Pro Forma Fundamentals Certificate.

Learning Objectives

Upon completion of this course, students will be able to:

  • Understand how and why a development pro forma is used.
  • Create a development pro forma.
  • Understand and model the project stages from construction lease-up to stabilization.
  • Understand basic sensitivities related to assumptions of the pro forma.

Curriculum

Components of the course include the following:

Introduction

  • Review of a Basic Model
  • Review of a Basic Development Budget
  • Additional Components of a New Construction Project
  • Review Monthly Construction Draw Estimates
  • Linear Cost Distribution
  • Escalating Cost Distribution
  • Contractor’s Estimate

Project Cash Flow during Construction

  • Review
  • Calculating Required Equity at Closing
  • Fixed-Rate Interest during Construction
  • Budget Item Timing
  • How Equity Is Used during Construction
  • Build a Cash Flow Model of the Construction Process
  • Calculate Consumption of Equity
  • Calculate Monthly Loan Balance
  • Calculate Construction Interest Reserve

Post-Construction Leasing (Stabilization Stage)

  • Lease-up Period
  • Discuss Project Debt during Stabilization
  • Review Assumptions for Absorption Rate and Duration
  • Calculate Gross Income

Post-Construction Operating Expenses (Stabilization Stage)

  • Operating Expenses during Lease-up
  • Review Assumptions for Op-Ex
  • Calculate Net Income during Stabilization
  • Calculate Interest Reserve during Stabilization


ULI Learning is provided by the Urban Land Institute.

Topics

  • Finance and Investment
  • Pro Forma Modeling

Experience Level

  • Intermediate

This course is designed for intermediate-level participants who have some experience with the topic and are looking to deepen and extend their knowledge and insights.

Career Stage

  • Mid-Career Real Estate Professionals

This course is designed for those with industry experience who are looking to build and extend their knowledge base to progress along a career path.

Course Format

This course takes between six and eight hours and is available at your convenience on demand.

David Farmer. PE, AICP

Principal, Keystone Development Advisors

David H. Farmer is the Principal of Keystone Development Advisors, LLC (KDA) a real estate development firm. KDA is an advisor to lenders and investors in Florida. David has more than 30 years of experience in real estate development and entitlement negotiation. He joined ULI as a Full Member in 2002 and served as an officer and Executive Committee member to the ULI Southwest Florida District Council. In 2010 he was named District Council Chair and completed his term in 2013. David is a passionate ULI member and promotes their mission wherever he has an audience.  His background in civil engineering and planning provide a unique perspective to deal sourcing, analysis and execution. In 2015 David formed Metro Forecasting Models, LLC (MFM) a company which provides development forecasting for housing, commercial uses, industrial uses and public schools for governments to assist with their planning endeavors.

David began his career in the development industry in 1989 with an engineering firm designing commercial and residential projects for private clients. A professional engineer, he left the engineering field in 2000 to work full time for Keystone Communities overseeing the entitlement, design and construction of residential communities, resort facilities, and commercial projects. In 2002, after earning his Certified General Contractors license, he also became responsible for the permitting and construction of their projects.

Following a large sale of entitled and developed residential lots in 2003, the company’s focus shifted from development to entitlement and infrastructure development. At that time, David took on the additional responsibility of site selection and acquisition for the company. In 2005, he was made a principal of the company and participated in both the rewards and costs of acquisition, entitlement, and development.

David’s development experience includes both very successful projects and those with limited success. In the tradition of ULI, he feels it is important to focus heavily on mistakes made and lessons learned when teaching the real estate development process. One learns quickly what not to do when you are spending your own money on development projects.

David has brokered more than $70 million in real estate transactions and entitled thousands of homes and millions of square feet of commercial property. His favorite quote is “Begin with the end in mind.”

Pricing

  • ULI Members: $395.00
  • ULI Members (Government/NonProfit/Academic): $350.00
  • Non-Members: $525.00
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