GSB – Developing a Global Analysis of Property Holdings

In many instances of commercial real estate (CRE) lending, the risks to a borrower/owner/guarantor from contingent liabilities outweigh the strength of the property your bank is proposing to finance. How can you effectively evaluate the risks of these guarantees? This program provides a framework not only for arraying the various properties, but a strategy for determining the risk of individual properties. Yes, developing property cash flows for tax returns and other data is the first step, but bankers need to go deeper into estimating collateral value and any potential shortfall within the property that becomes a direct liability to your borrower/owner/guarantor. Due to the high incidence of banks requiring owners to guarantee a percentage higher than the person’s ownership percentage, minority interests in CRE create a more complicated analysis, even best case/worst case/most likely scenarios. Finally, issues such as property type, location, length of leases in place and strength of tenants quickly take the analysis beyond tax return or operating statement data.

Covered Topics

Net operating income (NOI) components and concepts
Understanding key variables within NOI: vacancy, management fees, replacement reserves and capital expenditures
Understanding cap rates and how they are used to link cash flow to property value
Using tax returns and customer rent rolls, plus issues with commercial leases
Unique characteristics of the major types of real estate
Transaction-level stress-testing of debt service coverage (DSC) and loan-to-value (LTV)
How to use a sample worksheet to explore the major issues, including stress-testing
Issues faced in the global analysis of the various holdings of the borrower/guarantor
Taking the global analysis beyond the face values of guarantees (contingent liabilities analysis)
Using the cash flow analysis as part of ongoing loan monitoring, including estimated property
values, not in lieu of appraisals, but as a key part of the overall CRE process
Brief look at residential rentals and related cash flow and property value issues

Target Audience
Commercial lenders, credit analysts and small business lenders; consumer lenders, mortgage bankers and private bankers; loan review specialists, special assets officers, lending managers and credit officers

Richard Hamm, Advantage Consulting & Training

Registration Option

Live presentation $275

Recording available through Jan. 26, 2022


Oct 26 2021


8:30 am - 10:00 am



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