MMP212 Property Investment Trimester One

MMP212 Property Investment Trimester One

Assessment Two Property Valuation and Investment Analysis Group

DUE DATE:Friday, 24 May 2024, by 8:00pm (Melbourne time)

PERCENTAGE OF FINAL GRADE:25%

Documents to submit:A 2,000-words report and an Excel file showing calculationsBrief

This is a group assignment completed within the group of maximum three students, please read the instructions carefully.

This is the second part of a two-stage assignment process. This assignment builds on the information gathered for assignment one (market and property report) and consists of (a) a basic valuation using the direct capitalization method, (b) the Discounted Cash Flow (DCF) valuation, and (c) investment feasibility and financing strategy analysis. The property to be valued and analysed is 606 Burwood Highway, Vermont South, VIC, 3133. The process behind undertaking of these valuation and analysis approaches for this assignment will be discussed during the lectures and seminars and reference should also be made to the required readings and in particular the prescribed text.

Task

Following the submission of your first assignment that investigated and provided information about the subject property and the market, your client has now decided to invest in this property under consideration and would like you to advise them on the current market value of the property and the feasibility of this investment. This investment can be financed up to 80% by debt. The investment term is 10 years.

Your task is to prepare a valuation and investment analysis report for the property 606 Burwood Highway, Vermont South, VIC, 3133. The research data required to undertake this analysis will be sourced from (a) your first assignment (b) from materials provided on CloudDeakin and (c) other related materials you found online.

Suggested sections and headings within this part of the reportThe following headings are provided for guidance only. Changes, additions and deletions from this list may be necessary as you see fit. Within these categories you should also provide a definition of the method you are applying to demonstrate your understanding.

Rental rationale Here you need to analyse the market rents provided as a benchmark, excluding any aberrations, and compare these to existing rents with the aim of determining and validating rents for use in the analysis process.

Direct Capitalization Method In this section market value of the property should be determined using the direct capitalisation method. In order to do that you should analyse the sales and rental comparability and provide justification of data used etc. (the section of Sales evidence) and include discussion and application of outgoings. Clear conclusions on the adopted rental levels are needed as well as a clear discussion of sales to explain your valuation approach. You must provide detailed step-by-step annotated calculations explaining all assumptions, capitalization rate derivation and final valuation.

Discounted Cash Flow (DCF) Valuation In this section market value of the property should be determined using the DCF method. You must provide all the information to explain all assumptions and interim findings, showing how cash flow estimations and discount rates have been arrived at etc. DCF model has numerous assumptions throughout which must all be discussed and justified. The DCF must be calculated over a TEN (10) YEAR PERIOD and on a properly working Excel spreadsheet.

Reconciliation of valuation Here you must discuss the merits and weaknesses of each method (DCM and DCF) you have used in this valuation and reconcile the valuation outcome that you believe is most appropriate with pertinent justifications.

Investment and financing analysis- The feasibility of this investment should be tested by criteria related to the DCF method such as IRR, NPV and Payback period etc. You also need to analyse and discuss the other issues related to the profitability of the investment, especially the financing choice. DCF model has numerous assumptions throughout which must all be discussed and justified.

Final conclusion Here you must provide your final comments for the property value, valuation limitations, investment feasibility, and financing recommendations for your client.

Please note: The spreadsheet must show all headings, and formulas (inserted in relevant cells) and be able to test by the marker by inserting new values to determine correct performance. You will need to individually discuss variables, projections and assumptions in the report, not just make small annotations in the spreadsheet.

Learning outcomes

This assignment has been designed to develop core professional knowledge and skills as part of your PRE course at Deakin. By completing this assignment responsibly you will be able to:

Critically analyse and summarise sales and leasing information to determine subject property value (links to ULO2)

Perform valuation of subject property using appropriate valuation methodologies and application of variables (links to ULO2 and ULO3)

Justify and explain valuation determination in a manner that clearly demonstrates understanding of applied valuation methodologies strengths and weaknesses and applications (links to ULO2 and ULO3)

Communicate findings accurately and professionally in accordance with industry practice standards (links to ULO3)

The skills and knowledge noted above are highly regarded by property professionals and employers.

These specifically relate to the Unit Learning Outcomes:

ULO2- Analyse the investment viability of property assets utilising contemporary industry methodologies and data

ULO3- Apply discipline knowledge and investment analysis methodologies to make informed judgementsSubmission

The group must submit one report and one Excel showing all the calculation with function into a group assignment drop box with all student names and IDs on the front page of the submission on or before the due date. When uploading your assignment, name your document using the following syntax: <your surname_your first name_your Deakin student ID number_[unitcode].doc (or .docx). For example, Jones_Barry_123456789_ABC123.doc.

Submitting a hard copy of this assignment is not required. You must keep a backup copy of every assignment you submit until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced you will need to submit your backup copy.

Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism and for authenticating work.

When you submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after upload and check for, and keep, the email receipt for the submission.

Marking and feedback

The marking rubric indicates the assessment criteria for this task. It is available in the CloudDeakin unit site in the Assessment folder, under Assessment Resources. Criteria act as a boundary around the task and help specify what assessors are looking for in your submission. The criteria are drawn from the ULOs and align with the GLOs. You should familiarise yourself with the assessment criteria before completing and submitting this task.

Students who submit their work by the due date will receive their marks and feedback on CloudDeakin 15 working days after the submission date.

Extensions

Extensions can only be granted for exceptional and/or unavoidable circumstances outside of your control. Requests for extensions must be made by 12 noon on the submission date using the online Extension Request form under the Assessment tab on the unit CloudDeakin site. All requests for extensions should be supported by appropriate evidence (e.g., a medical certificate in the case of ill health).

Applications for extensions after 12 noon on the submission date require University level special consideration and these applications must be must be submitted via StudentConnect in your DeakinSync site.

Late submission penalties

If you submit an assessment task after the due date without an approved extension or special consideration, 5% will be deducted from the available marks for each day after the due date up to seven days*. Work submitted more than seven days after the due date will not be marked and will receive 0% for the task. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date. *'Day' means calendar day for electronic submissions and working day for paper submissions.

An example of how the calculation of the late penalty based on an assignment being due on a Thursday at 8:00pm is as follows:

1 day late: submitted after Thursday 11:59pm and before Friday 11:59pm 5% penalty.

2 days late: submitted after Friday 11:59pm and before Saturday 11:59pm 10% penalty.

3 days late: submitted after Saturday 11:59pm and before Sunday 11:59pm 15% penalty.

4 days late: submitted after Sunday 11:59pm and before Monday 11:59pm 20% penalty.

5 days late: submitted after Monday 11:59pm and before Tuesday 11:59pm 25% penalty.

6 days late: submitted after Tuesday 11:59pm and before Wednesday 11:59pm 30% penalty.

7 days late: submitted after Wednesday 11:59pm and before Thursday 11:59pm 35% penalty.

The Dropbox closes the Thursday after 11:59pm AEST/AEDT time.

Support

The Division of Student Life provides a range of Study Support resources and services, available throughout the academic year, including Writing Mentor and Maths Mentor online drop ins and the SmartThinking 24 hour writing feedback service at this link. If you would prefer some more in depth and tailored support, make an appointment online with a Language and Learning Adviser.

Referencing and Academic Integrity

Deakin takes academic integrity very seriously. It is important that you (and if a group task, your group) complete your own work in every assessment task Any material used in this assignment that is not your original work must be acknowledged as such and appropriately referenced. You can find information about referencing (and avoiding breaching academic integrity) and other study support resources at the following website: http://www.deakin.edu.au/students/study-supportYour rights and responsibilities as a student

As a student you have both rights and responsibilities. Please refer to the document Your rights and responsibilities as a student in the Unit Guide & Information section in the Content area in the CloudDeakin unit site.