Reference no: EM132701294

INV6IAP Investment Appraisal and Portfolio Management - University College of Estate Management

Learning outcome 1: Demonstrate a systematic understanding of the key aspects of investment and the ability to apply coherent detailed knowledge to real estate markets.

Learning outcome 2: Demonstrate knowledge and critical understanding of property investment markets and deploy established techniques of analysis and enquiry to evaluate assumptions; concepts and data; devise and sustain arguments; make judgements; and identify a range of solutions.

Learning outcome 3:Research and evaluate information to aid investment decision-making; critically evaluate arguments, assumptions, concepts and data; and make reasoned judgements in complex situations.

Learning outcome 4: Communicate information, ideas, problems, options and solutions effectively to specialists and non-specialists.

Scenario
You are an investment surveyor employed by a leading international firm of surveyors and based at their Berlin office in Germany.

You have just been fully retained as a consultant by ‘Uplands Real Estate (RE) Investments', a London based investor, on the acquisition and disposal of commercial property investments.

‘Uplands RE Investments' are long-term investors and generally risk averse regarding their real estate investments. As such, they only invest in Core or Core Plus type investments.

This client has a mixed portfolio of property investments in the United Kingdom held in their ‘Vitamax' portfolio, which is currently valued at £945,000,000.

Your client now wishes to diversify its investments by creating a separate second portfolio of German, Austrian and Hungarian commercial property investments called the ‘Danube' portfolio. Like the ‘Vitamax' portfolio, the ‘Danube' portfolio will hold Core and Core plus properties.

Task
You have been instructed by your client to prepare a fully referenced client report (with concise recommendations/conclusions), which provides the following:

a. Confirmation of the basis of valuation you have adopted in your appraisal and a detailed explanation that clarifies the differences between the expressions ‘market value' and ‘Investment value (worth)'.
(Approximately 600 words.)

b. A discounted cash flow (DCF) appraisal on whether to proceed with the possible acquisition of 1-5 Huntley Retail Park, Reading for the ‘Vitamax' portfolio.

In your appraisal you should use Microsoft Excel (or equivalent) to create a spreadsheet to calculate the Net Present Value (NPV) and Internal Rate of Return (IRR) for this investment opportunity. You should incorporate sensitivity and probability analysis in your appraisal. (Please refer to Appendices 1 and 2 for further information on this investment property.) You will need to separately upload your spreadsheet calculations to show the formulas you have used in your appraisal of this property.

(Approximately 500 words.)

c. A market update for the ‘Danube' portfolio on the Hungarian real estate investment sector.

In your assessment of this market you should report on the headline economic statistics, typical sale and purchase terms, typical lease terms, any foreign ownership restrictions, levels of foreign investment in recent years, property taxes, market strengths and any possible systemic risks which may affect this market over the next five years.

Attachment:- Investment Appraisal and Portfolio Management.rar