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Investor Presentation for a UK Commercial Property Real Estate Fund –    £200m equity raised for a Commercial Property Real Estate Fund –    Investor risk appetite is low-mid –    Investors require income return with some capital growth –    Hold period of fund is 5-7 years

Investor Presentation for a UK Commercial Property Real Estate Fund

–    £200m equity raised for a Commercial Property Real Estate Fund
–    Investor risk appetite is low-mid
–    Investors require income return with some capital growth
–    Hold period of fund is 5-7 years

Consider the setup of a commercial real estate fund. Write a report for the investors which is backed up by an Excel based cash-flow model. In your report consider at least one established real estate fund and its performance and structure. Your report should address all of the following issues:

–    Draw up a strategy for your fund, with the following in mind
o    Asset class (consider Office, Retail, Shopping Centres, Logistics, PRS, Student Housing, etc.)
o    Locations
o    Quality of assets
o    Macro and Micro economic factors affecting strategy
o    Planned infrastructure changes (e.g. Crossrail, HS2, etc.)
o    Government incentives or restrictions
–    Should it be an Open Ended or Close Ended fund
–    Consider tax status of fund, what will the structure of fund be and will it be on-shore or off-shore
–    Consider REIT status and cost/benefit implications
–    Consider purchase of at least 5 different assets and provide sales particulars
–    Who will asset manage and what are the cost implications
–    Consider appropriate debt for your fund
o    Who are the likely lenders
o    What LTV will you aim for
o    Will there be a requirement to amortise
o    Will the IR be fixed or variable and what will it be
o    What are the likely LTV/ICR covenants
–    Create an annual cash-flow over a 5-7 year period for investor presentation
o    Excel based
o    Show entry and exit values
o    Show income stream
o    Show all costs including Fund Management Costs, Asset Management Costs, estimated vacancy costs, estimated capital expenditure
o    Show debt costs
o    Show fund taxation costs (not investor level)
o    Show cash distribution to investors
o    Show yields on entry and exit
o    Show rental growth, if any considered
o    Show returns, IRR and NPV calculations
o    Carry out sensitivity analysis and outline key risks

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