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