3 Approaches to Commercial Real Estate Financing [INFOGRAPHIC]

During their second year at GSBLSU, junior students have several elective courses from which to choose. These courses take a deeper dive into specific areas of banking and lending such as asset resolution and treasury management. One of these course offerings is “Commercial Real Estate Financing” by Professor Calvin Evans. Professor Evans earned his BBA in economics and his MBA with a dual concentration in real estate finance from the University of Georgia.

Throughout his one-week course, students focus on the state of the commercial real estate industry, the techniques that are used to analyze, finance, and structure successful real estate transactions, and the state of the current regulatory environment.

To begin, Professor Evans’ course takes a look at the principles of property valuation. Specifically, students will learn about three main approaches to commercial real estate valuation: development, sales, and cost. When determining final value, it will be paramount that lenders consider each approach that was used in the appraisal and apply all available data to their findings. A brief overview of each of the approaches as outlined in Professor Evans’ class is included in the infographic below.

Following the overview of property valuation, students quickly dive into the specifics of underwriting and lending for the many various types of commercial property from multi-family dwellings to retail establishments. In the end, students leave this course with a much more robust understanding of the detailed and multifaceted arena of commercial real estate financing.