Why Attend

After multiple years of skyrocketing growth and production activity, why are there so few real estate options in these oil- and natural gas-rich regions? While horizontal drilling technologies promise to keep shale plays in production mode for decades, conventional thinking among real estate professionals is only beginning to catch up with the trajectory of production from the plays.

Intense demand for both commercial and residential real estate has driven production teams to improvise temporary solutions such as trailer offices and temporary housing units constructed of modular boxcar-like compartments, but that simply will not suffice much longer.

Rapid economic growth is a welcome opportunity for any region, but one that can also come with growing pains. The communities near Nigeria’s oil and natural gas “shale zones” face many challenges resulting from booming development activities. One obvious challenge is infrastructure, including a significant lack of buildings to provide housing and structures appropriate for conducting highly technical operations and business.

However, real estate solutions to these challenges are emerging as investors learn more about the long-term potential of shales. This evolving interest will help address the dearth of residential and commercial real estate in communities in and around the nation’s unconventional oil and natural gas deposits.

At the end of the course participants will have better knowledge to:

• Learn how to calculate land and profit residuals
• Learn how to structure a full development cash flow, including phased sales, S-curve and straight line cost functions
• Learn how to find maximum bidding prices for site development and building refurbishments
• Understanding development financing considerations and learn how to optimise financing
• Analyse financial and project completion risks
• Employ best practice and find solutions to common modelling problems

CONTENT

• Gross versus Net Yields, calculating Net Development Value (NDV)
• Profit residual, with and without financing
• Site residual, how to calculate profit without knowing your costs.
• Introducing financing to site residual calculations
• Purchase price and acquisition costs
• Phased Sales, marketing and disposal costs
• Modelling construction costs using straight line basis, fixed costs, variable costs, incidental costs and construction fees
• Professional fees
• Income and expenditure project functions
• Logic functions, logic tables and array formulae
• Multiple IRRs, competing projects, scoping and linear programming, maximising performance
• Return metrics: Equity profit ratio (EPR), Costs paid out of proceeds (POP), Profit on cost ratio (PCR)
• Alternative site calculation, Net present value (NPV),
• Modelling construction costs using S-curve , variable costs,incidental costs and construction fees
• Switching between scenarios
• Introduction to Development financing, Pari Passu versus Equity First Financing
• Debt scheduling: brought forward and carried forward method
• Consideration of the impact of development finance interest, fees and covenants

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.