Choose an existing ongoing or recently completed real estate development in or around London. It can be mixed-use, residential, office, retail, industrial. Produce a report covering the following points and in particular produce an appraisal similar to the one in class. Where no data is available, make meaningful assumptions and explain the rationale for making such assumptions.
a) Description of the site: the proposed scheme and the business model.
b) Location of the site, etc.
c) Who are the owners/investors? If there are multiple owners, what kind of agreement
do they have – for example – a joint venture?
d) Provide information about the planning application process and the costs including Section 106 provisions for affordable housing where applicable.
e) Produce an appraisal using the Excel template provided in Moodle.
Make assumptions of find out the real proportion of debt in the project, include debt in the appraisal?
Make assumptions or find out the true construction costs.
Any other costs (legal).
Make assumptions about the revenues – like development size, rent per sqft if
commercial development, number of units if residential, etc.
f) Compare your selected scheme with similar schemes (same sector and similar location)
and the feasibility of your scheme.
g) Analyze development and current risks for the investors in the scheme. First,
analytically assess development project risks. Then assess local market risks. Finally, evaluate risks arising from the current economic/financial situation and/or any other market risks.
h) How do above risks affect your cash flow and the appraisal. Please provide various scenarios. Think of the discount rate (yield), changes in the prices, rents, other macroeconomic variables, unexpected events, changes in your financing costs, etc.
i) What should the current owners (investors) in the selected scheme do next and why? Discuss providing evidence.