Real estate management

Department of Architecture and the Built Environment

University of the West of England

Postgraduate Level

MSc Real Estate Management

Managerial Finance for the Built Environment

Resit Coursework

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Purpose

The coursework is intended to provide you with the opportunity to

demonstrate understanding and integration of the various aspects of

the programme and this module. The aim should be to obtain, analyse and

interpret financial data; and assess financial objectives and to integrate

them into a balanced decision-making

framework.

Project Brief:

MF4BE, a leading local housing

developer of the South West is considering a new housing

development to be built under a quasi- social housing agreement with a

national house-building contractor(s). Several sites were identified in the

initial feasibility studies, many of these required substantial demolitions of

Source: http://www.eastofharrystoke.com/proposals/

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existing dwelling houses and relocation during construction and have thus

been rejected.

The proposed development will take place on a site in a new neighbourhood called East of Harry Stoke (EoHS) situated on the urban edge of north

Bristol near the University of the West of England and close to the M32 and M4 motorways. This site is mostly owned by Crest Nicholson and South

Gloucestershire Council while some parts are owned by other private landowners who intend to deliver about 2000 houses. MB4BE has

purchased 3.125 hectares of the EoHS land for £3.5 million per hectare to enable it to carry out this development. MF4BE plans to develop the site to

provide a mix of housing (including family housing, flats and sheltered

accommodation), together with commercial uses in future and also provide some open spaces. In keeping with this, the average dwelling per hectare

for this development should NOT exceed 32.

To achieve this undertaking, MF4BE is considering engaging a reputable

construction company or a housebuilder from a list of firms that have expressed interest. MF4BE is also considering taking a stake in a national

construction company or housebuilder as part of its long-term expansion

goals of accessing other income.

You are required to provide a report that will contain the following:

Part 1: 60 Marks

Assessment of suitability of construction or housebuilder firm

(1800 words)

You are required to obtain the most recently published “FULL ANNUAL

REPORT” for a construction company or housebuilder of your choice. The annual report must be for a UK PLC that is listed on the UK Stock Exchange

and must be in the English language.

To assess the suitability of the chosen construction company or housebuilder, both as a building contractor and a potential investment, you

are required to prepare a report on the financial “health” of this company with the use of financial ratios as revealed or implied by the most recent

full annual report and its financial statements. Your report should be clear and succinct as if prepared for your boss (with no accounting knowledge)

who is a very busy person and may have limited time to read it before an important meeting. All relevant information in the annual report should be

used as necessary.

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The details of the calculations of all ratios must be shown in FULL and

must submit separately in the Appendices either in Microsoft Word or

Microsoft Excel (Note: Please only restrict yourself to the ratios covered in class). A complete copy of the FULL ANNUAL REPORT must

be submitted as part of the Appendices. Please DO NOT use the

interim (half-year) annual report.

You can get all the annual reports you need online by accessing the respective company website or by carrying out a search using your

preferred search engine. You can use FAME (a database that can be accessed through the UWE Library webpage) to check that the company is

a PLC.

Part 2: 40 Marks

Development decision making (1200 words)

a. Undertake a breakeven analysis (a chart included) based on only the

development of houses. With this in mind, you are required to decide the

number of residential dwellings that will be constructed on this site, the housing mix and types (e.g. 1 bedroom, 2 bedrooms etc.). Note: a

minimum of three house types is required.

Market information can be gleaned from a variety of databases e.g.

“Rightmove” that will provide reasonable comparables. Cost information can be obtained from sources such as the Building Cost Information Service

(BCIS) or Spoons.

(14 marks)

b. With reference to (a) advise MF4BE on the viability of the proposed

project by carrying out capital budgeting analysis for this development using the Return of Capital Employed (ROCE), payback period, Net

Present Value (NPV) and Internal Rate of Return (IRR). Discuss which of these methods IS the most suitable for this task.

Make appropriate assumptions regarding the timing of the construction and

sale of the units.

(18 marks)

c. Advise MF4BE on the pros and cons of outsourcing the development of

this project as opposed to doing it in-house.

(8 marks)

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The full report should include, among other things:

• One-page executive summary of both Part 1 and Part 2- containing the

key features and results of the report. This page must be placed at the beginning of the report

• A brief introductory section • Numerical investigation

• Findings - analysis and interpretation of results • Solutions, conclusions and recommendations

• References (ensure that you use the Harvard System check the UWE library website for guidance through the referencing link below)

• Appendices – these should be used appropriately to show the workings

and should be limited to information supporting the report. Definitions of ratios should be within the report while ensuring that important

information is not relegated to the appendices

Style

The typed report should be coherent, complete, clear and concise (maximum 3,000 words with a 10% allowance – see the University's policy

on word count) making good use of headings, tables, graphs, diagrams, etc. and presented professionally with balanced use of appendices,

contents listings, proper referencing, bibliography, word count, etc.

material in the appendices. The report should be predominately analytical

rather than descriptive.

Coursework hand-in

The coursework should be handed ONLINE (electronically) following normal Faculty practice BEFORE 14.00hrs BST on Tuesday, August 3rd,

2021. Note that you will be penalised even if your work is submitted even

one (1) second after the 14.00hrs

The most significant point to stress at this time is that your submission will

need to be three electronic files:-

1. The report containing both parts 1 and 2 and any appendices MUST be submitted as a single MS WORD document.

2. A single spreadsheet file (MS Excel or similar) containing (at least) two (2) separate worksheets (labelled appropriately) for the

appendices of all the calculations.

3. A pdf file of the FULL ANNUAL REPORT

Note: Please DO NOT just paste pictures of extracts of the Excel file since

we will need to see your calculations. Ensure that this Excel file is uploaded as a separate file and DO NOT EMBED it in the MS WORD file – embedded

files that cannot open will be deemed as missing.

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Electronic Submission

Full instructions will be provided at least 4 weeks before submission.

Ensure that you read the submission instructions carefully.

Hard copy submissions are NOT accepted under any circumstances.

Please do not leave submission to the last day. Computer and internet

connection problems are not acceptable grounds for Personal Circumstances. Anticipate that very close to the deadline blackboard usage

will surge and may cause upload speed issues.

The electronic format provides the ability for word counts to be completed. Anything more than 10% over the limit (not including any covering note)

will not be marked. This will leave your submission incomplete and

disjointed; this will be a major penalty.

The electronic submission also provides the marker with the ability to

process the whole batch of assignments through a piece of software called ‘safe assign’. This will compare the text in every assignment against

available electronic resources AND compare it to all the other submissions

in the batch.

Best wishes

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Guideline assessment criteria for postgraduate work

Student Performance Formative work Summative work % Level M

A full, coherent and well-rounded submission showing rigour, clarity and insights leading to elements of originality

Excellent 80-100

'Starred' Distinction

A well-structured, relevant piece of work based on an understanding of virtually all the important aspects, with good reasoning and insight, expressed throughout, that wholly supports the conclusions or solutions

Very good 70-79

Distinction

A submission that is well focused on the task, showing a good grasp of the subject and based on most of the important aspects being well integrated into the work with reasoned outcomes

Good 60-69 Merit

Reasonable coverage of the subject matter demonstrating logic and reasoning that is directed towards meeting the aims of the task

Good

55-60

'Solid' Pass

Work showing a grasp of the subject matter, having some omissions and confusions but in which the work presented is used to support conclusions and/or solutions

Barely

satisfactory

50-54

Bare Pass

Some of the relevant material is identified and there is some indication of an appreciation of the subject matter but with significant omissions, poorly structured and weak conclusion/solutions

Weak

40-49

Fail / Area of

Compensation at

Component Level

Work with a few relevant aspects of the subject matter, poorly linked together and lacking direction in addressing the question and providing no support for conclusions

Very weak

30-39

Fail

Very little of relevance to the question with an absence of focus and largely incoherent with little sign of understanding, leading to an inability to draw meaningful conclusions

Unacceptable Unacceptable