APC: Competency - property finance and funding
This is echoed in the level 1 competency where the candidate must ‘demonstrate knowledge and understanding of the role and importance of finance in property, including the principal forms of investment finance and their sources’.
You do not have to be a financial wizard to demonstrate this level of competency but you do need to show you understand that the structure of property finance is diverse and that packages negotiated for financing commercial property are more often tailored to meet the specific needs of the developer or investor, rather than in a standardised form. You also need to know that key elements for shaping the product are tax considerations.
At level 2 candidates must demonstrate they can ‘identify the factors that affect the ability to obtain finance to fund any investment project’ and ‘identify appropriate sources of finance and understand the principles that apply to securing finance for different purposes’. This is primarily understanding the risk elements of the package and how they might be minimised.
At level 3 candidates must ‘provide evidence of reasoned advice on maximising the viability of any funding situation; demonstrate appreciation of the impact of property matters on valuation and funding; and demonstrate understanding of the impact of funding matters on the property market’.
Candidates should remember that, in addition to equity and debt finance, other distinctions exist, such as short, medium or long term, project based or corporate, direct or indirect, generated domestically or from overseas, for speculative or bespoke buildings.
Ben Elder is director the provider of distance learning to the property industry College of Estate Management. He is an RICS APC and ATC assessor.
Read the full article and follow more of Property Week’s APC advice at APC advice - 26 June 2009 - Week 49: month 23/24 counsellor and supervisor review: part 4 – conclusion.