• Real estate finance vocabulary
• Net operating income, debt service coverage ratios, debt yield and loan-to-value concepts in determining appropriate loan amounts 
• Value in analyzing a rent roll and tenant credit risk characteristics 
• Capitalization rates in determining property values
• Appraisals used in the loan approval process
• Real estate loan structure decision process, including the use of covenants and other protective features useful to the bank lender
• Basics of construction lending
• Importance of scheduling property visits and site inspections

• Personal financial statements of the sponsor and their investments
• “Peeling away” of different asset classes presented by the sponsor, with a detailed examination of true asset values and cash flow
• Analysis of sponsor’s liabilities and contingent liabilities 
• Testing of actual cash flow of sponsor investments, including a detailed examination of the “waterfall” often present in real property investments
• Overall real estate portfolio evaluation
• Comprehensive risk assessment of sponsor’s financial strength

The real property underwriting concepts presented in the session include an explanation of net operating income (NOI) calculation, including replacement reserves and management fees, debt service coverage ratio and debt yield minimums, and loan-to-value parameters. 

While there is an emphasis on sound real property credit underwriting principles, equal weight is given to structuring and underwriting techniques designed to monitor existing loans secured by real property, particularly owner-occupied real property loans. Further analysis of scenarios where real property has inadvertently become the primary source of repayment will also be examined.