这是一个房地产相关的金融Take Home Final代写案例
Question 1: Is Real Estate Real (20 points)
You’re provided in an Excel file the monthly data on the adjusted close of Hang Seng Index, percentage change of consumer price index, price and rental indices for residential, office, retail and flatted factories in Hong Kong.
Analyze if Hong Kong real estate sector provides a good hedge against inflation for the period from 1993 to 2018. The period is chosen to cover the key business cycles.
Does real estate provide a better inflation hedge than the stock market in Hong Kong?
Which of the real estate sub-sectors provides the best hedge?
Question 2: Real Estate Market Analysis (REITs) (20 points)
What are the key factors that influence the office market? How do these factors impact the supply and demand dynamics in terms of the equilibrium rent, price, construction of new office space and stock of office space?
Please limit your answers to TWO A4-size pages.
Question 3: Real Estate Investment Trusts (REITs) (20 points)
Precisely and concisely explain in what ways REITs could enhance the overall performance of a stock portfolio. And why would investors invest in REITs?
Please limit your answers to ONE A4-size pages.
Question 4: Valuation of Income Property Using Cap-rate (20 points)
Suppose you are a potential investor in hotels and you’re looking into the valuation of hotel properties using comparable and market information. REGAL REIT (stock code: 1181.hk) is a hotel REIT listed in the Hong Kong Stock Exchange and its information can provide a good reference point for your further analysis.
The operating income as at Dec-30-2020 and Dec-30-2019 are respectively HK$745.017 and HK$831.211 million. Other key financials of REGAL and market information at the end of December 2020 are as follows.
The Excel file “Q5: REGAL REIT” contains the adjusted stock price of REGAL and the Hang Seng Index from Nov 2007 to Jan 2022.
- Determine the Cost of Equity for REGAL REIT using the stock price data provided in the Excel file “Q4: REGAL REIT” which contains the adjusted stock price of REGAL and the Hang Seng Index from Nov 2007 to Jan 2022. The market monthly return on Hang Seng Index should be about the same as its long-term average from 2007 to 2022. The market return is the sum of the dividend yield and the hang seng index return. (5 points)
- Suppose Regal REIT is going to maintain a constant debt/value ratio so that
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- Based on the business outlook, the expected rental growth of REGAL in the foreseeable future should be around 1.5%. Determine the capitalization rate for REGAL. (5 points)
Determine the asset return () for REGAL REIT. (5 points)
- Determine the fair value of REGAL’s hotel assets. (5 points）
- Based on the business outlook, the expected rental growth of REGAL in the foreseeable future should be around 1.5%. Determine the capitalization rate for REGAL. (5 points)
Question 5: Land Valuation Using DCF Approach (20 points)
You are the consultant to an asset management company giving advice on land valuation. You are evaluating a vacant land site in New Territories North that has been zoned for residential development. The land site area is 1,000,000 sq.ft. and the plot ratio is 4 times. The usable area after construction is 55% of total construction area which is equal to the site area multiplied by the plot ratio.
Currently, the maintenance cost of the vacant land site is $0.8 million per year and will grow at 3% per year. The cost of construction is estimated to be $3,800 per sq ft of the usable area. It is expected to increase by 3% per year.
The construction of the residential property will take one year. Upon the completion of construction, the residential property will start producing potential rental income for the purpose of valuation.
The current monthly NOI for such a residential property as if new is estimated to be $28 per square foot. Based on the Government’s development plan for New Territories North, the monthly NOI is estimated to grow at 9% per year for the indefinite future.
With proper maintenance and management, the property will have a useful life of 100 years, at the end of which the reversion value is zero. The appropriate discount rate for the construction cost and the future NOIs is 14%.
The regulatory time constraint for development is 5 years—if development fails to start within 5 years, the right of development will be forfeited by the government.
- What is the optimal timing for development AND the corresponding land value subject to the regulatory time constraint of 5 years? (5 points)
- Determine the corresponding value of the residential property today if the land site is developed at the optimal time in part (a). (5 points)
- Determine the value of the land site if there is NO regulatory time constraint for development. (5 points)
- What is the land value if you’re required to develop TODAY? (5 points)