17776 Retail Investment Property Analysis

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Subject handbook information prior to 2024 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

Requisite(s): 12535 Property Investment and Development Feasibility
These requisites may not apply to students in certain courses. See access conditions.

Recommended studies:

It is an advantage to have undertaken the 12535 Property Investment and Development Feasibility prior, but it is not essential.

Description

This subject develops students' understanding of how to analyse investments in large and complex retail properties. Key to this understanding is an appreciation of the differences and similarities between retail and other classes of commercial real estate investments. Drawing on skills developed in 17556 Investment Property Valuation, the subject discusses the underlying drivers of value in particular types of retail. It examines the holistic retail asset lifecycle, the unique importance of retail and the retail offer on a retail investment, the retail development process feasibilities, viability analysis, process and approvals through to opening and stabilisation, and understanding the role of retail in the investment portfolio. Students develop an in-depth understanding of the due diligence process.

Subject learning objectives (SLOs)

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

1.	Demonstrate effective professional communication skills
2.	Understand the sensitivity of financial feasibility to a variety of factors
3.	Understand the retail asset lifecycle and how it affects portfolio choices
4.	Understand basis for difference in returns between assets and how these impact feasibility
5.	Develop sound arguments supported by appropriate evidence

Course intended learning outcomes (CILOs)

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

Effectively apply a variety of communication skills and technologies in professional contexts (C.1)
Apply appropriate technical analytic skills to a professional standard (P.1)
Apply a comprehensive understanding of contemporary portfolio theory in real estate investment (P.2)
Apply financial principles to property investment decisions (P.3)
Engage in an advanced level of critical and reflective thinking and judgement in property investment contexts (R.1)

Contribution to the development of graduate attributes

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

C = communication and groupwork

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.).

Teaching and learning strategies

This subject is delivered in intensive blocks, using a combination of lectures and workshops to apply principles covered in lectures, guest lectures, field trips, discussion of case studies, and critiques of peer presentations. Students will be engaged in learning through the medium of assessment tasks that draw on real-world case studies and offer authentic professional tasks such as developing Board Briefing papers providing recommendations on investment/asset management and allocation strategies. Feedback will be provided through Review or Turnitin.

The subject incorporates flipped learning strategies, with students taking responsibility for identifying and reading current industry commentaries to inform their participation in in-class discussions. Active learning opportunities include group discussion, class workshops and in-class participation by students. Using both quantitative and qualitative methods in class will promote student's ability to articulate the rationale behind their professional recommendations for investment and asset allocation decisions. During blocks, students will work collaboratively to solve problems that directly relate to the subject content covered through both the online and in-class material.

Content (topics)

Retail Asset Lifecycle: key elements, asset management stakeholders, implications for asset performance;
The Retail Offer: physical attributes, on-line retail impacts, trade area demographics, retailers and retail mix;
Retail Development: opportunity evaluation, feasibility analysis, owner and statutory approvals, construction, opening and stabilisation;
Due Diligence: income security, Retail Leases Act, operating costs and facilities management, valuations.

Assessment

Assessment task 1: Examine the weighting of retail assets in a selected REIT

Intent:

Analyse the stated objectives of a selected REIT, and consider the differences between the property holding groups. Recommend the target holding for Retail within the REIT and the consequential actions arising from this recommendation. Present and explain the evidence that supports this argument. The Results are to be presented as a board briefing paper by the students to the group. The presentation should take approximately 3 minutes with a further 5 minutes available for Q&A.

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.):

C.1, P.1 and P.2

Type:

Essay

Groupwork:

Individual

Weight:

30%

Length:

A concise board briefing paper to be submitted by COB 9 March, to be followed by a 3 minute presentation to the group and limited Q&A with the class on 6 April (1.30-4.30)

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Clear communication of evidence and argument	30	1	C.1
Understand risk, return and performance of retail assets	30	2	P.1
Explain implications of retail asset lifecycle for investment decisions	40	3	P.2

SLOs: subject learning objectives
CILOs: course intended learning outcomes

Assessment task 2: Analyse a scenario and develop a briefing paper

Intent:

A scenario will be presented of a major tenant within a shopping centre that has advised that they will be vacating at the end of their lease in nine months time. Students will submit a Board Briefing Paper putting forward a recommended strategy for the space to be vacated.

The Board Briefing Paper should cover:-

Catchment Retail Demand, alignment of the existing retail offer to the local demographic,
Existing and proposed Retail Strategy – Major tenants, specialities and non retail uses,
Impact on Asset valuation in particular the impact on the asset yield.
Risks, concerns and opportunities.
Board Recommendation.

Present the results in a short report board report accompanied by a spreadsheet summarising the analysis.

Objective(s):

This task addresses the following subject learning objectives:

1, 2 and 5

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.):

C.1, P.1 and R.1

Type:

Report

Groupwork:

Individual

Weight:

50%

Length:

Board Report - Maximum 1,500 words

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Clear communication of evidence and argument	30	1	C.1
Explain demographic demand underpinning retail asset performance	30	2	P.1
Validity of argument based on evidence	40	5	R.1

SLOs: subject learning objectives
CILOs: course intended learning outcomes

Assessment task 3: Prepare a due diligence briefing to the Board

Intent:

A scenario will be presented comprising a new potential asset purchase linked to a major redevelopment of the subject asset. Students will submit a Board Briefing Paper making commentary and recommendations regarding the potential purchase.

The Board Briefing Paper should cover:-

Consideration of the allocation of retail property within the overall investment strategy for the REIT.
Asset Overview including the retail positioning strategy for the asset wit reference to the local demographic.
The existing and proposed tenant profile of the centre including risk and opportunities arising from specific major tenants and the weighting of each specialty retail classification.
Analysis of the proposed development feasibility highlighting significant sensitivities and their impact on financial return. Three main elements to be covered:-
1. Construction cost, timing and risk,
2. Income risk, opportunities and stabilisation,
3. Operational costs and facilities management.
Consideration of the proposed two joint venture partners and recognition of how their circumstances will impact on the variation in returns they will receive.
Board Recommendation.

Objective(s):

This task addresses the following subject learning objectives:

1, 2, 4 and 5

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.):

C.1, P.1, P.3 and R.1

Type:

Report

Groupwork:

Individual

Weight:

20%

Length:

Board report - no more than 1,500 words

Criteria linkages:

Criteria	Weight (%)	SLOs	CILOs
Clear communication of evidence and argument	25	1	C.1
Critically analyse a development feasibility	25	2	P.1
Analyse differential returns on assets	25	4	P.3
Validity of argument based on evidence	25	5	R.1

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.

Students must achieve at least 50% of the subject’s total marks.