RE3DAF-Development Appraisal and Finance

Module Provider: Real Estate and Planning
Number of credits: 20 [10 ECTS credits]
Level:6
Terms in which taught: Autumn / Spring term module
Pre-requisites: RE2VAL Property Valuation and RE1IAP Investment Appraisal
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Module version for: 2017/8

Module Convenor: Prof Pat McAllister

Email: p.m.mcallister@henley.reading.ac.uk

Summary module description:

The module covers the approaches used to evaluate and appraise the financial viability of real estate development projects. Specifically, this module will provide knowledge and understanding of a range of financial appraisal techniques and their application to real estate development opportunities. An understanding of the way in which land value is assessed and the distribution of returns from real estate development underpins the content of this module. It then builds on this understanding in order to investigate the way in which risks and rewards associated with real estate development activity might be shared.  The module examines a range of debt and equity investments in real estate development projects.amination Board where appropriate.



This module is delivered at University of Reading and University of Reading Malaysia.


Aims:

The module examines the methods used to appraise the financial viability of development projects. Specifically, this module will critically examine the inherent value systems of various development viability appraisal techniques in an economic, social and environmental context. An understanding of the way in which land value is created and distributed underpins the content of this module. It then builds on this understanding in order to investigate the way in which financial risk and reward associated with development activity might be shared.


Assessable learning outcomes:

By the end of the module it is expected that the student will be able to:



Apply different development appraisal techniques and evaluate their relative strengths.

Critically evaluate methodologies involved in the appraisal of development projects.

Identify potential development sites, propose an optimum development strategy and evaluate its financial viability.

Incorporate equity and debt funding in real estate development appraisals.

Appreciate the nature of the key inputs into development appraisals.

Use appropriate software and computer techniques to price development opportunities.

Understand the nature and distribution of development risk and reward.

Appreciate the problems of risk identification, measurement, management and control in real estate development projects.


Additional outcomes:

Outline content:

1 Recap and critique of simple residual valuation

2 Cash-flow residual valuation (100% debt finance) – period-by-period and DCF

3 Development finance structures 

4 Modelling and software 

5 Risk analysis  – forecasting, sensitivity analysis, scenario modelling and simulation

6 Development viability appraisal in the planning system



 


Brief description of teaching and learning methods:

Lectures supported by workshops.


Contact hours:
  Autumn Spring Summer
Lectures 10 10
Practicals classes and workshops 10 10
Guided independent study 80 80
       
Total hours by term 100.00 100.00
       
Total hours for module 200.00

Summative Assessment Methods:
Method Percentage
Report 100

Other information on summative assessment:

Formative assessment methods:

Seminar questions and IT sessions.


Penalties for late submission:
The Module Convenor will apply the following penalties for work submitted late, in accordance with the University policy.

  • where the piece of work is submitted up to one calendar week after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for the piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
  • where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

  • The University policy statement on penalties for late submission can be found at: http://www.reading.ac.uk/web/FILES/qualitysupport/penaltiesforlatesubmission.pdf
    You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

    Length of examination:

    None


    Requirements for a pass:

    A mark of at least 40% overall.


    Reassessment arrangements:

    A 5000 word report or equivalent on a project-based assignment.


    Last updated: 5 September 2017

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