The Reports
1) Investment Report
The Fund would like to create a real estate portfolio for the investment side of the fund. The directors have instructed you to advise them on assets that can be acquired to set up this real estate-based investment portfolio. They have given you the following parameters:
- The amount of capital for investment is £150m;
- The portfolio is to be set up as an investment fund separate from the rest of the pension fund with its own management team;
- The portfolio should produce a balance of capital growth and income. Income will not be re-invested in the property fund but used to buy fixed interest bonds in order to contribute to the short-term cash needs of the pension fund as a whole;
- The £150m capital is not projected to be required to meet any pension fund needs within the next ten years, given the age profile of the members of the pension scheme;
- The pension fund has a low/medium risk attitude and the property fund should attempt to keep in line with this;
- International investment is permitted;
- Direct and indirect property investment is permitted,
- Transaction costs should be ignored as this will be covered at fund level; and
- You should NOT drill down to property level i.e. looking at particular buildings but you should work at sector level. Finding the actual buildings will be done in the next stage by someone else.
Requirements
You should submit a typed report of 10 to 12 pages [around 3,000 words], properly referenced where appropriate and an Excel-file with calculations regarding the composition of the portfolio and calculation of performance measures
The report should address three key areas:
1. The development of an investment strategy, explaining the reasoning, assumptions and objectives of the portfolio;
2. The construction of the portfolio within the parameters set out above, justifying how it fulfils the investment strategy outlined; and
3. An analysis of the portfolio to include performance measurement and risk analysis.
Assessment criteria
To be awarded a pass, submissions should:
• Be presented in a professional manner with few grammatical or typographical mistakes;
• Develop clear investment objectives in line with modern portfolio theory;
• Clearly explain why investment strategies are preferred over other alternatives;
• Clearly indicate what has been included in the portfolio (use of appendices and schedules is advisable);
• Explain the selected investments in relation to the investment strategy;
• Work within the parameters of the board of directors;
• Offer brief risk analysis in relation to the portfolio constructed;
• Offer simple benchmarking analysis of the performance forecasts; and
• Undertake simple analysis of the portfolio in relation to its diversification.
To be awarded a distinction, submissions should:
• Demonstrate all of the criteria required for a pass, and;
• Be presented in a professional manner with good use of supporting graphics, tables and appropriate images;
• Provide detailed connections between the investment strategy and the construction of the portfolio;
• Undertake detailed and in-depth analysis of the portfolio in terms of its diversification in a number of areas; and
• Provide in-depth analysis of the projected performance of the portfolio and its constituent elements against a range of established forecasts.
2) Development Report
On the development side of the fund, an amount has been set aside for a real estate development in the UK. You are required to carry out a "Site and Development Appraisal" to establish the residual land value of the site.
Module Guide and Coursework: Real Estate Investment and Development
- The site should be developed as a mixed development, containing both residential and commercial property;
- The gross development value should be between £25-50 million; (£50-100m if chosen site is in greater London)
- The development should contain both tenures: owner-occupancy as well as rental property;
- If relevant to the size of the site, there should be sufficient space for water, green areas and infrastructure;
- Your RLV should consider section 106 agreement contributions as well as community infrastructure levy (when applicable in your area);
- Students can pick any site they want, but are advised to use their local councils website to find a strategic housing document .If your site is in Bristol, you could refer to the SHLAA (tutorial 1 will guide you there) for pockets of land that could be developed over the next couple of years. If your site is outside Bristol try to find a similar document from the Local Council and refer to it.
The Site and Development Appraisal
Working independently, you will prepare a written report based upon primary and secondary sources of information relating to a site. This part of the report should be 10 to 12 pages [3,000 words], must explain and justify the land bid price for the site as part of the assessment for its viability. To pass the coursework students will need to show that they can:
- Carry out a development appraisal and prepare a land bid (Residual Land Valuation - RLV) - and explain what this means with regard to viability. This will be demonstrated by using Microsoft EXCEL spreadsheets, these spreadsheets have to be submitted as well as the pdf-document;
- Recognise the importance of appropriate planning policy and other frameworks that might impinge on a site's development potential;
- Search, identify and use relevant research evidence together with relevant theories and concepts to demonstrate understanding and application;
- Present findings effectively in the form of a prepared written report supported with tabulated and graphically presented data and information;
- Support their arguments with evidence and
- Reference sources and material used to draw up the report (UWE Harvard referencing system).
Attachment:- VIABILITY.rar