Property Fund and REIT Valuation

Running head: PROPERTY FUND & REIT VALUATION
PROPERTY FUND AND REIT VALUATION
Name of the Student:
Name of the University:
Author’s Note:

1PROPERTY FUND AND REIT VALUATION
Executive Summary
The aim of the assignment is to construct a real estate fund with an initial amount of 500
million dollars and the same will be invested in the different group of real estate properties.
The various type of real estate properties taken into consideration are the commercial,
residential, industrial and warehouses projects. The company will be engaging in developing
the properties and also leasing the same. The buying and selling of the properties will be
primarily focused on the residential properties. The economic and the business factors of the
fund under which the fund will be operating are discussed in the first section of the report.
The second part of the assignment deals with the evaluation of the Cromwell Property Group
and the analysis of the same. The financials for the company was forecasted in order to
determine the future prospects of the fund. The valuation for the company was done by using
the dividend discount model and the valuation was compared with the current market share
price of the company.

2PROPERTY FUND AND REIT VALUATION
Table of Contents
Part A.........................................................................................................................................3
Cityrise Property Fund...............................................................................................................3
Investment Vehicle.................................................................................................................3
Strategic Objective of the Fund..............................................................................................3
Debt/Equity Structure.............................................................................................................4
Property Portfolio Construction Issues..................................................................................4
Risk Management and Compliance Issues.............................................................................4
Economic and Property Market Concept...............................................................................5
Future Outlook of Performance of the Property Fund...........................................................5
Ongoing Critical Portfolio Management Issues.....................................................................5
Part B..........................................................................................................................................6
Cromwell Property Group..........................................................................................................6
Forecasting Financials............................................................................................................7
Valuation of the Stock............................................................................................................9
Investment Recommendations.............................................................................................10
Reference..................................................................................................................................11
Appendix..................................................................................................................................13

3PROPERTY FUND AND REIT VALUATION
Part A
Cityrise Property Fund
The property fund developed for the purpose of the investment aims to cover the
major aspect of the real estate property market by incorporating the commercial, industrial
and warehouse properties. The proposed fund will be aiming at investing into companies
which develops properties and sells the properties directly. The properties and companies
selected for the fund will primarily from the local domestic country that is Australia. The 500
million would be primarily invested in the real estate properties where the weightage given
for the commercial and industrial properties would be the highest (Hoesli and MacGregor
2014). Around 50% of the funds investible amount of money will be invested into the
commercial properties and companies whose operations are primarily based on the operations
of such properties. The Cityrise Property Fund will be equally distributing the investible set
of amount among the various types of properties group and real estate companies. The
primary sources of income generation for the fund would be derived through capital gains
and dividend income received from the real estate property investments (Chandra 2017).
Investment Objective The Cityrise property fund developed for the purpose of the
investment aims to cover the major aspect of the real estate
property market by incorporating the commercial, industrial
and warehouse properties.
Fund Overview The proposed fund will be aiming at investing into
companies, which develops properties and sells the
properties directly.
Investment Manager Cityrise Investment Group
APIR Code MF1234567AU
Property Type Commercial, Residential Property, Industrial property
Investment Type Closed Ended, Unlisted property Type
Status Open for Investment
Equity Target $500,000,000
Management Cost 1.5% p.a
Team Experience 40 years

4PROPERTY FUND AND REIT VALUATION

5PROPERTY FUND AND REIT VALUATION
Investment Vehicle
The investment vehicle considered for the fund is the commercial, industrial and real
estate properties where the fund will be focusing on utilizing the $500 million into leasing the
properties or involve in transaction sale of properties. The investment vehicle selected for the
fund is the commercial and residential properties after assessing the macro economic
conditions and the business factors under which the fund will be operating (Booyens and De
Beer 2016).
Investment Approach:
 Active Management
 Risk Management
 Diversification
Asset Allocation
Location Allocation
Melbourne 50%
Frankston 50%