17518 Real Estate Asset Class Analysis

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2025 is available in the Archives.

UTS: Design, Architecture and Building: School of the Built Environment
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

There are course requisites for this subject. See access conditions.

Description

This subject develops students' understanding of how to analyse investments in Real Estate Asset types such as residential, commercial, retail, industrial, student accommodation, and retirement village. Key to this understanding is an appreciation of the differences and similarities across property funds and going concerns real estate investments. Drawing on skills in investment property valuation, the subject discusses the underlying drivers of value for each asset types and levels of risk and return of property classes. It examines the holistic real asset lifecycle, and the unique importance of each property class. Students develop an in-depth understanding of the due diligence process involved in making real asset decisions and will also be exposed to the ESG implications associated with each Real Estate Asset type. The importance of green property finance and investment is also covered. Overall, students gain knowledge of the financial and market characteristics of real estate asset class which reinforces their investment analytical skills.

Subject learning objectives (SLOs)

On successful completion of this subject, students should be able to:

1.	Demonstrate an understanding of the types and main characteristics of various real estate assets.
2.	Develop critical thinking skills by identifying and assessing the drivers and cycles of different real estate types, as well as levels of risk and return of property classes.
3.	Make rational decisions on the type of real estate assets to invest, given a range of property alternatives by conducting due diligence around investment purpose, KPIs, risk and financial environment.
4.	Demonstrate an understanding of ESG that impact investment decision in the asset class.

Course intended learning outcomes (CILOs)

This subject also contributes to the following Course Intended Learning Outcomes:

Interpret, assess, and communicate complex relevant knowledge across the property development process to multidisciplinary stakeholders for positive outcomes. (C.1)
Demonstrate a capacity for a high level of autonomy, expert judgment, and accountability with creativity and initiative to new scenarios in property development management practice. (P.2)
Apply research and analytical skills to property development practice to synthesize complex information and formulate property development solutions. (R.1)

Contribution to the development of graduate attributes

The term CAPRI is used for the five Design, Architecture and Building graduate attribute categories as follows:

C = communication and group work
A = attitudes and values
P = practical and professional
R = research and critique
I = innovation and creativity

Course intended learning outcomes (CILOs) are linked to these categories using codes (e.g. C-1, A-3, P-4, etc.).

Real Estate Asset Analysis encourages student learning to develop these graduate attributes. The course content, learning strategies and assessment structure is explicitly designed with these attributes in mind.

Teaching and learning strategies

The subject is undertaken in block mode over two Friday & Saturday blocks.

The subject will be delivered through a blend of interactive lectures on key concepts and project-based learning relating to the financial and market characteristics of real estate asset class. The subject deliverables will include generating and assessing real estate data and information to inform investment decisions. There will be collaborative problem-solving exercises, involving current property markets and case studies, to strengthen key concepts discussed in class. Students are required to conduct real-life property market research on what to invest in and discuss the sustainability considerations of a chosen investment asset. There will be two separate guest speakers to share their expertise or perspectives about the subject to enhance learning outcomes. Online resource materials are also provided throughout the semester via Canvas to encourage flipped learning. Demonstration of learning is undertaken using a variety of assessment techniques that include group activities and presentations in class, evaluation of property data and information, property investment report writing, and a report on the green features of property assets.

OPELA

One of the aims of this subject is to help you develop academic and professional language and communication skills in order to succeed at university and in the workplace. To determine your current academic language proficiency, you are required to complete an online language screening task, OPELA (information available at https://www.uts.edu.au/research-and-teaching/learning-and-teaching/enhancing/language-and-learning/about-opela-students) . If you receive a Basic grade for OPELA, you must attend additional Language Development Tutorials from Week 3 to Week 12 in order to pass the subject. These tutorials are designed to support you to develop your language and communication skills. Students who do not complete the OPELA and/or do not attend 80% of the Language Development Tutorials will receive a Fail X grade.

Content (topics)

Block 1 (Part A & Part B): This Block will examine important characteristics of various property types such as (locations, income streams, income yield, capital growth, lease terms, tenants, minimum funds allocation, tax transparency, dividend payout, liquidity, right and burden of property ownership, property management skills, transaction cost, and building features) as well as the drivers (demand and supply, property cycles, macro/micro economic factors etc.) that affect investment decisions. This Block will also cover how property quality is divided into classes such as A, B, and C and the levels of risk and return of property classes. These characteristics will be examined for the following property types:

Residential (houses/apartments)
Office
Industrial (Logistics & Manufacturing)
Large Format Retail
Shopping Centres
Student Accommodation
Retirement Village
Going Concerns (Self-storage, Childcare, Pubs & Hotels, Service Stations)
Emerging Investment Opportunities
Property Funds
+ Guest Speaker

Block 2: Part A: Property Investment and Financial Due Diligence: Block 2 will cover the concept of due diligence in real estate to aid investment decisions. Students will learn how to conduct financial due diligence checks for an underlying property type with emphasis on the following:

Purchasing price check and acquisition costs
Profit and loss statement of the current year and the past 3-5 years, if available.
Tenancy-mix and lease term, lease expiry date, and various lease agreements
Repairs and capital improvement including HVAC
Property taxes including land tax
Strata fee or insurance premium
Potential gross rental income
Other incomes from the property
Vacancy loss
Management fees
Council rates
Other expenses
Current year income Analysis (gross income multiplier, net income multiplier)
Current year financial analysis (operating expense ratio, break-even ratio, debt coverage ratio, and loan to value ratio)
Current year profitability analysis (capitalisation rate, equity dividend rate)

Block 2: Part B: Property Investment and Sustainability Considerations. The sustainability component of due diligence is covered in this part with a focus on the following:

Introduction to property investment (motivation for property investment, concerns of property investment, property clock, property investment players, property investment vehicles)
Green and environmentally friendly property investment (evidence/indices of global warming, local initiatives, environmental, social and governance (ESG), green vs non-green investment performance)
Summary of concepts
+ Guest Speaker

Assessment

Assessment task 1: Property Investment Preliminary Analysis

Intent:

The aim of this assessment is to conduct a preliminary analysis of a real estate for investment purposes. You are required to make a case for investing in an underlying asset.

Objective(s):

This task addresses the following subject learning objectives:

1, 2 and 3

This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.):

.3, C.1 and P.2

Type:

Report

Groupwork:

Individual

Weight:

40%

Length:

Approximately 2,500 words.

Criteria:

Full assessment criteria will be outlined in the assignment brief.

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Identify the key characteristics of an underlying property	34	1	C.1
Compare and contrast current investment returns across core property sector markets and examine key market drivers.	33	2	P.2
Elaborate on the future performance, risks and mitigating measures of the underlying asset	33	3	.3

SLOs: subject learning objectives
CILOs: course intended learning outcomes

Assessment task 2: Financial Due Diligence

Intent:

The aim of this assessment is to conduct financial due diligence to establish the financial state of a subject property.

Objective(s):

This task addresses the following subject learning objectives:

1, 2 and 3

This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.):

.2, C.1 and R.1

Type:

Report

Groupwork:

Individual

Weight:

40%

Length:

Approximately 2,500 words

Criteria:

Full assessment criteria will be outlined in the assignment brief.

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Examine current and future cashflows of the subject property	33	1	C.1
Examine the income, financial, and profitability aspects of the underlying property	33	2	R.1
Dig up information about the current and future financial situation of the subject property	34	3	.2

SLOs: subject learning objectives
CILOs: course intended learning outcomes

Assessment task 3: Sustainability

Intent:

The aim of this assessment is to examine the Environmental, Social, and Governance (ESG) considerations of a chosen Property Company or Listed Property Trust (LPT) in the past 5 years.

Objective(s):

This task addresses the following subject learning objectives:

2, 3 and 4

This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.):

.4, .5 and .8

Type:

Report

Groupwork:

Individual

Weight:

20%

Length:

Approximately 1,500 Words

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Discuss the ESG benchmarks being used in the report.	20	3	.5
Relate the sustainability considerations of the Company/Trust to these ESG benchmarks.	20	2	.4
Examine the sustainability considerations of the underlying Company/Trust	60	4	.8

SLOs: subject learning objectives
CILOs: course intended learning outcomes

Minimum requirements

The DAB attendance policy requires students to attend no less than 80% of formal teaching sessions (lectures and tutorials) for each class they are enrolled in to remain eligible for assessment.

Other resources

Reading List

Brueggeman, W and Fisher, J. D. (2022), Real Estate Finance and Investment, 17th edition, McGraw Hill Irwin, New York, USA

Clauretie, T, M & Sirmans, G, S (2010), Real estate finance: theory and practice, 6th edition, Cengage Learning, London.

Geltner, D, Miller, N, Clayton, J & Eichholtz, P (2014), Commercial real estate analysis and investments, 3rd Edition, OnCourse Learning, Mason OH 45040.

Jaffe, A, J & Sirmans, C, F (1995), Fundamentals of real estate investment, 3rd edition, Prentice Hall, Englewood Cliffs, NJ.

Rowland. (2009). Australian Property Investment & Financing. Thomson Reuters (Professional) Australia Pty Limited.

Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment. Available from: https://www.gresb.com/nl-en/real-estate-assessment/#assessment-resources

Building Energy Efficiency Disclosure Act 2010 – Australian Government Department of Climate Change, Energy, the Environment and Water