Mohamad Mourad – UNSW Sydney T3,2022  
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FINS5533 Real Estate Finance and Investment  
Group Assignment Information Sheet  
Term 3, 2022  
DUE: Friday 18 November 2022 – 5pm (Sydney Time)  

The group assignment is worth 30% of the total grade for this course. The assignment  
consists of four (4) stages totalling 100 marks. This assignment will serve as some  
preparation for the final exam.  

Students will form groups of 3 via the group formation link available on the Moodle webpage  
no later than the end of Week 2. The groups formed will remain in place for the entire term.  
The task:  

Each group is a CRE independent valuations and advisory firm. The building you select will  
be placed on the market for sale. Your task is to prepare an investment proposition for that  
commercial real estate building to convince investors that it is a viable investment. An  
investment proposition is a report containing all necessary information required for  
considering acquisition of the building. The report will be a maximum of 10 pages (including  
tables, graphs and photos).  

Practical benefits of this task:  

1) provides students with the exact technical and communication skills (you are advised  
to contact industry operatives for information) to value a building should you wish to  
work in the commercial real estate sector.  
2) If you are applying for jobs that involve any form of valuation then this assignment  
can be used to highlight your understanding of the general valuation process.  
3) Working in groups. In industry, valuations are not individual work but rather  
teamwork.  

Stage 1: Specifying the building to value [10 marks]  

Ideally Completed by The End of Week 3  

Each group must conduct a candidate search for 3 (each group member proposes 1  
building) suitable commercial real estate buildings on which to conduct a valuation. A  
“suitable” building means one that is considered to be investment grade. Students may  
choose either an office, industrial or small retail building to value. However:  
Mohamad Mourad – UNSW Sydney T3,2022  
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a) Given time constraints, large shopping centres are NOT suitable buildings for this  
assignment.  

b) Avoid buildings where more than 10 tenants occupy space in it.  

c) Hotels, pubs, petrol stations, greenfield sites, brownfield sites, englobo sites,  
student accommodation, stand-alone childcare centres, stand-alone gyms or any  
other alternative forms of commercial real estate building do NOT qualify for this  
assignment.  

Suggestions to start searching for suitable CRE buildings to value are on the websites of the  
following real estate investment companies. Simply visit their website and locate their  
property portfolio:  

- Charter Hall  
- Dexus  
- Mirvac  
- Stockland  
- Centuria  
- GPT Group  
- Cromwell  
- 151 Property  
- Goodman Group  
- Investec (A South African REIT that has a significant commercial property exposure  
in Australia).  

However, students need not use these websites if they can conduct searches via alternative  
sources.  

Students, as a group, must email the Lecturer in charge (Mohamad Mourad:  
m.mourad@unsw.edu.au). The email is to contain a list of their 3 selected properties in  
ranked in terms of their preference. Choice of building to value will be on a first-come-first- 
served basis. The LIC will then reply by granting the group permission to value their first  
choice. If the first property is not appropriate or taken by another group, the LIC will indicate  
that the team must value the second property, and so on. Students must email the list of  
properties with the full address of each property shown. For example: Barangaroo Tower 1 –  
100 Barangaroo Avenue, Barangaroo.  

The group will then physically visit the building site and conduct on-the-ground analysis. This  
is an opportunity to collect information to include in your investment proposition. Photos of  
the building should be taken to include in your report. Including photos in the assignment will  
attract marks.1 Students are NOT to use images or photos sourced from the internet or any  
commercial property agency. Ensure the photos are clear and as professional as possible.  
When visiting the building, note down the positive and negative aspects to include in your  
investment proposition.  

1 Students enrolled in FINS5533 and not physically present in Sydney, Australia during T3,2022 will be excused  
from this task. Thus, such groups will be graded out of 90.  
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Stage 2. Valuing the building using the three (3) approaches [45 marks]  

Ideally Completed by The End of Week 7  

- discounted cash flow method [17.5 marks]  
- capitalisation rate method [17.5 marks]  
- direct comparable and on a price per sqm basis. [10 marks]  

How to value a property. The information and steps involved are:  
1. Identify the property source information regarding land and financial summary  
2. Analyse the tenancy schedule and the rents – define gross rents or net rents. Collect  
rental evidence to directly compare (direct comparison approach)  
3. Determine the net market rent for the building.  
4. Compile sales evidence to directly compare and apply a capitalisation rate.  
5. Adjust for vacant tenancies (letting up), agents fees to lease up, incentives,  
refurbishments and maintenance.  
6. Adopt the assessed value of the property.  
Provide a recommendation, based on the three valuation approaches, as to what the price of  
the building is at the time of your valuation. Provide professional justification for your choice.  
There is freedom for group members to decide what is the preferred valuation method and  
hence value. The most important thing is to justify your choice.  

Stage 3. Conducting Sensitivity Analysis and Scenario Analysis [15 marks]  

Ideally Completed by The End of Week 8  

For this section, think about why the prospective buyer should accept your valuation report  
of the building. Typical questions asked by investors upon receiving an investment  
proposition report are:  
- What factors drove your decision to arrive at this yield or price?  
- Suppose there was an adverse event during the holding period. What are the risks  
we would face, and should this not be reflected in the yield?  
- What if we face strong competition for buying this asset? What are the implications?  
These are not the only questions you should be answering in this section. The ones listed  
above are a general guide. You will be marked on how critically you think about this section  
and what possible questions you think are important.  
Stage 4. Providing Investment Advice [20 marks]  

Ideally Completed by The End of Week 9.  

This stage is in three parts:  
1) Examine the dynamics of the real estate market of the building which you have selected.  
What are the forecasts for supply and demand in that market? What are the implications for  
the market balance?  
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2) Provide analysis on the financial strength of the tenant(s) that currently occupy space  
within the building. Any potential risks?  
3) Provide analysis and detailed commentary on where this building will fit into an investment  
portfolio. Why is it a “good” investment? How do you define “good”? What will make it a  
“good” investment? Which type of investor will be most suited to buying this building? Why?  
Provide advice or suggestions on the holding period for this investor with justifications. This  
section will test your understanding of the whole valuation and investment proposition  
process.  
Presentation of report [10 marks]  
Each group must present a report that contains no grammatical errors, is easy to read and  
follow. The report must be polished. Graphs and tables are consistently and correctly  
labelled. Grades will be based on the degree of ease with which the report can be  
understood.  
Week 10 should be used to review the entire report, models and making the final  
touches.  
A peer evaluation survey will be completed by each student in the week following the  
submission of the assignment. If there are no issues among the group, then all members will  
obtain the same grade. However, based on the peer evaluation, if there is an issue then the  
LIC will adjust the mark of the student(s) depending on the situation. Students must provide  
proof to justify their claims.  














Mohamad Mourad – UNSW Sydney T3,2022  
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IMPORTANT INFORMATION  
1) It is highly recommended that you work on this assignment frequently. Cramming is a bad  
strategy.  

2) Students are to work together on ALL the aspects of the assignment. If the assignment is split  
up into parts and each person does a part on their own, then that will NOT serve as  
preparation for the final exam.  

3) Students are highly encouraged to attend the LIC’s weekly consultation hours to receive  
general feedback on their progress.  

4) It is highly recommended that groups select buildings sold during the past 3-5 years or  
recently constructed buildings. The fact that a building has been sold provides us with a signal  
that information about it is available. However, there are buildings where financial information  
and general information will not be given. Bear this in mind while searching for properties.  

5) Valuation is both an art and a science. There is no one correct or incorrect answer. What  
each group will be marked on is the degree of consistency they show in their valuation  
approaches along with the degree of transparency. Ensure that you reference all sources.  
The appendix will NOT be counted in the 10-page limit.  

6) All students, especially those that currently work in the real estate industry or have previously  
worked in the industry, are advised that using a company valuation model or getting an  
industry professional to complete the assignment for you will be considered academic  
misconduct. All groups must create their own model(s) from start to finish. Using free online  
models will also be considered as a form of academic misconduct.  

7) One member of each group is to upload the report to Turnitin on Moodle. The same group  
member will also have to upload the Excel file containing the model created and any other  
calculations. Failure to submit the Excel file will result in a deduction of 10 marks.  

8) Groups will only be allowed to make one submission. There is NO multiple submission option  
available.  

9) Groups must preface the report with a UNSW assignment cover sheet with student signatures  
agreeing to the university’s rules about academic misconduct. This is currently available on  
the Moodle course page. Groups that submit the assignment without a UNSW assignment  
cover sheet will result in 5 marks deducted for each student from their final assignment grade.  

10) There is NO grace period for this assignment.  

11) The School of Banking and Finance’s policy stipulates late submissions will attract a 5%  
penalty per day following the assignment due date (weekend days included). A submission  
made one week (7 days) after the specified due date will result in a grade of 0.  

The LIC reserves the right to add to this list in light of any changing conditions. Any changes made  
will be communicated with students as an announcement via the Moodle webpage.