Hello all,
I am a third year surveying student (land, not quantity), studying at the Queensland University of Technology. I am enrolled in a property development subject and am currently in the early stages of a group project (with 5 other students from various urban development fields) looking at preparing a feasibility report for a development project to present to the Board of the company which we are currently employed. I have been given the task of preparing an acquisition strategy for the proposed property. I was wondering if anyone could help out with some advice as it would be greatly appreciated.
Here is some background information on the company that we are pitching the feasibility report to:
• Ten-year track record of successful projects, all in South East Queensland and Northern NSW. These projects have been of varying sizes (maximum value around $80 million), in the residential, commercial, industrial and retail sectors. To date, all projects have been undertaken solely by the firm (i.e. with no other equity partners); however this is now up for review as a result of the influence of the independent Managing Director and market conditions.
• The firm has total net assets of $35 million, though much of this is currently committed on other projects. No more than $10 million in equity is currently available until a current project is sold in June 2012, at which stage a further $10 million net will be freed up.
We are proposing a project consisting of both retail and office space. The lower level would be retail, perhaps a cafe or convenience store or both, whilst the upper two levels would be targeting law firms, accountants, GP’s or specialists. The property is located in the inner northern suburbs of Brisbane. The Lot is vacant and 1050 sq meters and sold earlier this year for $1,100,000.
I apologise for the length of the post but the financial aspects of property development are a new area for me and having browsed this site for a while now I know there are some really considerate and helpful people who give advice.
Thanks
BradNow to check if it will fly!
What is the fsr for the site? Most sites around New Farm/Tenerieffe are relatively low-rise.
How does the zoning match your proposal?
Is there a current DA in place? Is that inn itself a benefit or a restriction?
What is the competition for such developments in the area? Eg hospitals/medical centres/large dental facilities (also complementary services).
It sounds more like an acquisition AND development plan.
You need to know the companies market focus and business plan for the next however many years they’re planning out to. If you decide to head in a direction contrary to Co’s current direction then you would have to make a corporate business case for a change of direction.
When pitching to BoD’s find out who they are their history, personalities, preferences etc. Along with their business plan you can design a proposal that aligns with their current philosophy and thinking.
It seems their risk appetite has diminished somewhat and any future projects would have to be attractive to potential partners to spread that risk. Your prop is going to have to consider how to make it attractive to potential investors. What type of investor would this be, retail, wholesale etc? Props are usually designed around the type of investment vehicle used ie; partnerships, new company, property trust and so on. You’ll need to give consideration to this. (Not my field)
That aside I would tend to look at the area over all and identify what amenities it is short of. If it already has plenty of retail and professional service in the area it’s going to be a hard sell. You want to consider what companies are currently successful in the current market. EG JB Hi-Fi are performing well, some luxury brands are doing well.
So you would develop a menu of target businesses and possibly develop a proposal around them. This may require a multi dimensional proposal to account for rejections by some. In other words flexible.
If you do go with the retail option and do select target companies actually go and see them to discuss the potential with them. Many of these companies will only be too glad to help budding students with projects like yours.
Jack
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