BPM303: Advanced Property Investment Group (API) is an Overseas Property Investment Company and Based in the USA: Project Development and Finance Assignment, SUSS, Singapore

Question 1

Advanced Property Investment Group (API) is an overseas property investment company and based in the USA. API plans to expand their market in Asia and Singapore is one of the destinations that they like to invest. However, with the outbreak of the Covid-19 virus in 2020, they are cautious in their investment and has appointed you as the consultant to research the Singapore real estates market after the pandemic.

You are to prepare a market report to analyze the following market sectors of Singapore, including market sentiment, areas of opportunities, innovations adapted by the respective markets, challenges, and outlook of 2021.

• Office real estate market (15 marks)
• Retail real estate market
• Industrial real estate market

Question 2

Frasers Centrepoint lists seven-year 3.65% retail bonds on SGX

The Business Times May 25, 2015

PROPERTY developer Frasers Centrepoint Ltd (FCL) on Monday listed its seven-year retail bonds on the Singapore Exchange (SGX) mainboard under the stock code “AXXZ”. This is its first retail bond offering issued by FCL Treasury Private Limited, a wholly-owned subsidiary, it has a coupon rate of 3.65 per cent per annum with a seven-year tenure. The total issue size for the bond is S$500 million.

Bonds and loans are two financial instruments commonly used by developers to raise funds for project development from external parties.

(a) Appraise the differences between Bonds and loans that are used to fund projects.

(b) Demonstrate your understanding of the THREE (3) causes which influences the company to choose Bonds over Loan.

Question 3

Eco Realty, a real estate private fund secures a plot of land in Beach Road at the $10,000 psm per GFA. Under the 5-year Master Plan, the site is intended for a predominantly office development with a site area of 15,000 sqm and a plot ratio of 4.

Eco Realty plans to sell the asset after ramping up the occupancy and holding it for a period of 24 months upon completion of the construction. The capitalised rate is worked out to be 5% at the time of the sale.

The project team advises that the all-in construction cost is forecasted to be $ 3,200 psm on Gross Floor Area (GFA). Basing on the design, the net lettable area (NLA) is 90% of the GFA. The schedule for the design and construction stage is 4 months and 24 months respectively. The estimated net rent at the time of completion of the comparable commercial office building is $100 psm per month. Eco Realty has also managed to secure a short-term loan at an interest rate of 6% p.a.

Analyse the data and apply the Profit Evaluation Analysis (risk/return) to determine the profit margin of the project.