Real Estate Investment and Development

Real Estate Investment and Development: Assessment brief 2020-21

MSc Real Estate Management and MSc Real Estate Investment & Finance 1

Real Estate Investment and Development (UBLMLW-30-M)

Assessment brief The assessment breaks down into two components as follows:

• An Individual Coursework component consisting of a report with two (2) parts (in one MS Word-file

and one excel file) (75%)

• VIVA component (25%)

Scenario

In reaction to the uncertainty in the Brexit aftermath and the volatility of the stock market in the UK and other

western economies, the board of directors of the New Universities Pension Fund has decided to allocate a

specific block of capital to a real estate-based fund. This fund will be split into two separate parts 1) investment

and 2) development.

You have been appointed as the head of the New Universities Pension Fund and been tasked by the board to

advise them on both the investment and development aspects of the Fund. Your task is to produce one report

with two (2) separate parts, one part relating to investment and the other relating to development. Each part

of the report should contain a separate ONE-page executive summary.

Word count

For the UWE word count policy click here. The +/-10% tolerance does apply.

The executive summaries should be a maximum of ONE page each (approximately 400 words). These

executive summaries do not contribute to the total word count.

The Report – 75% (2 parts)

1) Investment Report– 37½%

The Fund would like to create a real estate portfolio for the investment side of the fund. The directors have

instructed you, as co-heads, 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 £250m which MUST all has to be exhausted;

▪ 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 to contribute to the short-term cash needs of the

pension fund as a whole;

▪ The £250m 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 the top fund level; and

▪ You should NOT drill down to property level i.e. looking at particular buildings, but you

should work at the sector level. Finding the actual buildings will be done in the next stage

by someone else.

Real Estate Investment and Development: Assessment brief 2020-21

MSc Real Estate Management and MSc Real Estate Investment & Finance 2

Requirements

You should submit a typed report of 2,500 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 professionally 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;

▪ Indicate what has been included in the portfolio (use of appendices and schedules is advisable);

▪ Explain the selected investments concerning 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 analyses of the performance forecasts; and

▪ Undertake simple analysis of the portfolio concerning its diversification.

To be awarded a distinction, submissions should:

▪ Demonstrate all of the criteria required for a pass, and;

▪ Be presented professionally 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 several areas;

and

▪ Provide an in-depth analysis of the projected performance of the portfolio and its constituent elements

against a range of established forecasts.

2) Development Report- 37½%

On the development side of the fund, interest has been shown in 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.

▪ The site should be developed as a mixed-use development, containing both residential and commercial

property;

▪ The gross development value should be at least £25 million; (£50m if the chosen site is in greater London).

There is no maximum GDV, but students are encouraged to keep the size manageable (If your chosen site

is very big, you can just develop a portion of it);

▪ The development should contain both tenures: owner-occupancy as well as rental properties;

▪ If relevant to the size of the site, there should be sufficient space for water, green areas and road

infrastructure;

Real Estate Investment and Development: Assessment brief 2020-21

MSc Real Estate Management and MSc Real Estate Investment & Finance 3

▪ 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 council’s website to find a strategic

housing document. If your site is in Bristol, you could refer to the SHLAA (you will be guided on the first

day of development) for pockets of land that could be developed over the next decades. If your site is

outside Bristol try to find a similar document from the Local Council and reference it.

The Site and Development Appraisal

You must prepare a written report based upon primary and secondary sources of information relating to a site.

This part of the report should be 2,500 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 concerning viability. This will be demonstrated by using Microsoft EXCEL

spreadsheets, these Excel spreadsheets have to be submitted alongside the MS Word-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, analysis and calculations

▪ Reference sources and material used to draw up the report (use the UWE Harvard referencing system).

Submission date for Reports

The assignment should be submitted online in accordance with normal Faculty practice before 14.00hrs BST on

May 13th, 2021.

The most significant point to stress at this time is that your submission will need to be two 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 for parts 1 and

2 labelled appropriately.

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.

References- (ensure that you use the UWE Bristol Harvard System check the library website for guidance through the referencing link) Appendices – these should be used appropriately to show the working or relevant supporting information. Ensure that important information is within the report and not relegated to the appendices. Electronic Submission Full instructions will be provided at least 4 weeks before submission. 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 ECs. Anticipate that very close to the deadline blackboard usage will surge and may cause upload speed issues.

Real Estate Investment and Development: Assessment brief 2020-21

MSc Real Estate Management and MSc Real Estate Investment & Finance 4

Please note electronic format provides the ability for word counts to be completed and added to the report. Anything more than 10% over the limit (not including the executive summaries) will not be marked. This will leave your submission incomplete and disjointed; this could be a major penalty. The electronic submission also provides us 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.

The VIVA – 25% Each student will be required to attend a formal individual (viva) 10-minute interview in May/June 2021 [TBC].

These interviews will be conducted via phone, MS Teams, skype or blackboard collaborate ultra.

The purpose of the interview is to evaluate the understanding of the investment decisions made in creating

real estate portfolio, and valuations and development appraisal concepts applied in the project assignment.

In particular, the interview will require you to assess the likely impact of adding your proposed development

(part 2) to the investment portfolio created in part 1. You will be expected to use the appropriate terminology

and have an answer to the question of whether it would be sensible to add it to your portfolio.

Real Estate Investment and Development: Assessment brief 2020-21

MSc Real Estate Management and MSc Real Estate Investment & Finance 5

Guideline assessment criteria for postgraduate work

Student Performance Formative work Summative work % Level M

A full, coherent and well- rounded submission showing rigor, 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