Assignment Paper

You have been recently appointed senior analyst to a Major International Fund (MIF). The fund is
wishing to capitalize on current global economic movements to invest into one (or more) Real Estate
assets. The fund is dependent on International and European Real Estate to provide medium to long term
return, within an added value risk/return profile. You need to report to the Board on your findings,
critically addressing and taking into consideration the following:
1. Give a strategic plan or argument to the fund with regards to your analysis of worldwide investment
opportunities. It would be expected that you either highlight either a country, city or asset class. You may
wish to refer to fundamentals of the market, market dynamics (cycles), investment hot spots and/or cross
border investment considerations. Alternatively you may use portfolio theory metrics such as correlations
and asset allocation. You may use third party data for this. (30%).
2. However the Board has decided against your suggestion and has instructed you to invest into Europe
allocating you a budget of €5 million with a maximum of €10 million spend. The country for your
investment has also been chosen for you as you are part of a team of European wide Investment drive.
The chosen market will be one of Germany, France, Spain, Portugal, Italy, Poland, Nordics and the
Netherlands. Each analyst will have to choose a specific country market and there should be equitable
representation. Within your choice of country choose a city and a property. Give strategic reasoning as to
the choice of city compared to other cities in that specific country and provide a snapshot of a specific
property that could be the potential purchase for the fund and present it in a professional manner. Ensure
to also give proactive asset management measures and 10-year strategy for the property. No more than
two/three pages. Be succinct and utilise the space on your page well. The property needs to be currently
on the market and the property spec needs to be attached as an appendix. You may make assumptions or
estimations should there be a lack of information (size, rent, etc) (20%)
3. In your country of choice, critically examine the following lease aspects which you consider could
impact your client’s investment decisions: (20%)
(a) Any leasing regulatory controls
(b) Lease lengths
(c) Sureties
(d) Tenant outgoings
4. Prepare an individual cashflow based on the proforma excel example given to include all property
tenants. (30%)
• Draw up a simplified cashflow (Annual or Quarterly) at a Portfolio level and include your choice of
properties (Excel or Argus). Show RoE before and after debt. (60%)
• The cashflow is deemed to be strategic so ensure that you reflect correctly the following: local lease
characteristic, management costs, transactional costs, ongoing property fees, and typical refurbishment,
construction costs and any other costs that could impact your cashflow. Present these findings in a
comparative table format in the appendix and ensure they are reflected in your cashflow. (20%)
• Ensure to include graphs to exemplify income, outgoings, CapEx and RoE. Also one graph showing
current and indexed rent and ERV over time (20%)
It has been decided that this Portfolio will run for a term of eight years with the possibility of two one
year extensions.
The fund should typically be producing at its lowest level an average annual income return of app. 5%
looking to exit with an IRR of 10% or above. Leveraging (Debt) is not to exceed 70%.
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