9 Class Hours
Instructor: Richard Hamm
Why these courses are important:
Commercial real estate (CRE) lending is a critical asset category for banks and a significant driver of profitability. Whether directly involved in lending or working in other areas of the bank, understanding the CRE lending process is essential for making informed financial decisions and managing risk effectively.
*Level 1 – Fundamentals of Commercial Real Estate Lending
Commercial real estate (CRE) loans continue to be one of the largest asset categories for banks and a key driver of bank income. This elective is designed to provide an overview of the CRE lending process for bankers that are new to lending or are based in other, non-lending functions of the bank.
Key takeaways of this course:
- Differentiate between various types of real estate loans, from residential to commercial
- Understand how to structure and analyze real estate loans based on property type
- Develop and interpret basic cash flow models to assess lease and expense structures
- Explain how capitalization rates link commercial real estate cash flow to market value
- Identify financial and non-financial risks unique to commercial real estate lending
The course also will provide an overview of the various guidelines and typical practices with appraisals and environmental due diligence.
*Level 2 – Advanced Real Estate Lending
Designed for experienced commercial real estate (CRE) lenders, this elective focuses on portfolio risk components, current trends and issues at a general level, as well as underwriting standards for specific property types. Participants will share best practices and approaches to stress-testing at the transaction level, plus break-even calculations and supportable loan amounts.
Key takeaways of this course:
- Describing the key inputs and factors that influence capitalization (“cap”) rates
- Discussing/providing examples of CRE non-financial risks
- Identifying approaches to controlling construction risk and dealing with cost overruns
- Describing issues encountered with complex CRE leases and best practices for mitigating the risk(s)
This course also will provide an overview and discussion of valuation options in addition to appraisals, current issues in environmental due diligence, plus other documentation items such as title insurance and surveys.
*GSBC will assign placement based on information collected in the registration survey.
Annual School Session
Second Year Elective Course
Competency: Lending