REST0004: Property Finance

Session 1 2017

Assignment 1
Due date: FRIDAY 28th April 2017
Individual assignment
Assignment assessment weighting: 40%

Assignment Topic
You have recently commenced a new role as Chief Financial Officer at a large
institutional property fund manager. Your CEO has decided it will create a new
unlisted property fund (The Fund) with a capital allocation of A$500 million for
investment in the Australian real estate market.

The Funds investment objectives are as follows:

a) The Funds investment time horizon is for at least 10 years.

b) The target total return for the Fund is inflation (CPI) + 9% with a variable risk
tolerance.
c) The target allocation to listed property is 30%, with the remaining to be
allocated between unlisted, direct and development structures.
d) The Fund will primarily invest in Core sectors but may have up to 30% of its
allocation in opportunistic, development or non-core sectors. The target sector
allocations are to 30% office, 30% retail and 10% industrial and 30% other.
e) Investments in listed property will be selected only from the REITs included in
the S&P/ASX 200 A-REIT index.
f) The Fund will not itself have borrowings although it may invest in vehicles that
are geared.
g) No investment in any underlying asset or fund will account for more than 25%
of total assets.

You are asked to prepare a discussion paper to be submitted to your CEO and
Board of Directors which outlines an investment strategy that will meet the Funds
investment objectives.

Content
Your paper needs to discuss and evaluate the following areas:

1. Property investment landscape

REST0004: Property & Investment Finance [1] Assignment 1 - 2017

Discuss the main forms of property investment & development in Australia. You will
need to explain the benefits and risks of investing in the respective sectors.

2. Property investment market and performance

a) Discuss the performance of the non-residential property investment market over
time. You will need to compare and contrast investment returns across the core
property sector markets of retail, office and industrial. You should highlight key
drivers of investment performance and your expectation for trends over the next 3-5
years.

b) Should you propose to allocate some of the Funds capital into any property
development, you will need to discuss how and why you intend to invest into this
sector and highlight the key risks, mitigants and likely returns.

3. Property portfolio construction

Given the Funds objectives and the factors identified in 1 & 2 above, you are
expected to explain how you would construct an investment strategy for The Fund
that would meet the objectives. You should highlight the merits of your approach and
implementation risks of your strategy and factors to be considered for the eventual
exit strategy.

Scope of Strategy
For the listed REIT allocation you may identify individual REITs, but rather the
criteria by which you would select appropriate REITs for your strategy.

You are not expected to explain how to finance this strategy in Assignment 1. You do
not need to address tax implications.

Submission requirements
Your paper should be set out in an easy to read, conversational style.
You may use headings, bullet points, tables or charts to highlight points.
Sources should be referenced as per UNSW standards.
Written assignment on A4 paper, bound/stapled. We will consider accepting
assignments by email by prior arrangement only if you travel for work. This will
not change the submission date and normal penalties for late submission will
apply.
Maximum word limit is 3,000 words but as a guide your paper should have at
least 2,500 words (excluding headings, diagrams etc.).
A cover page has been provided (see following).
Assignments that do not include the standard university plagiarism declaration
will not be marked until this is supplied.

REST0004: Property & Investment Finance [2] Assignment 1 - 2017

 The University of New South Wales
Faculty of the Built Environment

REST0004 S1 2017 - Property Finance

ASSIGNMENT 1 COVERSHEET

DUE DATE: FRIDAY 28 APRIL 2017

STUDENT CHECK LIST (please tick)

Coversheet
plagiarism declaration
Discussion paper (Arial, Times New Roman or Verdana fonts only)

STUDENT NAME AND NUMBER:

Item Mark Value

Answers the question(s) asked 40%

Paper presentation and style 10%
Use of literature and referencing
5%
in the report
Use of tables, charts or data to
20%
support points
Report structure 15%
Conclusions 10%
TOTAL MARK /100%

Markers Comments (Optional):

REST0004: Property & Investment Finance [3] Assignment 1 - 2017