Question:
Your data is to be based on the information researched and established within in your Exercise assignment. The object of this Exercise 3 is to determine whether the proposed development site of 605-613 Lonsdale St, Melbourne, Victoria will, after considering the risks involved, provide the owner with a satisfactory investment return, and improve the value of the owner’s assets over the next 5 years. If it does neither, what do you recommend the owner’s course of action should be regarding the future of the property.
As you undertake the requirements listed below, consider any recommendations that you would make to modify your preferred Exercise 2 development option to enhance the potential returns to PVLC. Carefully and fully explain the justification for, and effect of these change.
• Gross annual rents and outgoings are to be estimated from the conclusions of the Exercise assignment.
• Sale values for the revenue earning components of your proposed concept plan are to be based on your Exercise 2 assignment.Revenue assumptions can be modified from Exercise 2 to Exercise 3 if sufficient justification is provided for the change.
• Construction costs are to be estimated as per your Exercise 2. You may have to ensure that costs are realistic.
• Construction costs should be escalated at 3.0% per annum if not already based upon on the date of commencement
• Development costs which will be incurred over the development period including rates and taxes,leasing costs, legal fees, etc. are to be provided for, and should be calculated at 5.0% of the final construction cost, and paid progressively during construction until practical completion and the date of project sale.
• Selling costs related to the future sale of the revenue-earning elements of your proposed development should be brought to account at the end of your development cash flow, computed on 5.5% of the sales price(s).
• Your project is to be funded by an initial injection of PVLC equity equal to 30% of the Total Project Cost, and thereafter funded by debt provided by an external financier via debt drawdowns at the end of each month over the development period. Interest at 7% p.a. will be paid by the project to the financier monthly in arrears. Total debt incurred during the development period will be repaid to the financier from sale proceeds following practical completion.
Answer:
| S. No. |
PARTICULARS |
No. of Floors |
Units per Floor |
Area of Each Unit in sq mt |
Total Area of each segment in sq mt |
Construction Cost in $ per sq mt |
Total Construction Cost in $ |
| 1 |
Retail Segment (Ground Floor) |
1 |
279 |
4.823 |
1,345.85 |
$ 2,700.00 |
$ 36,33,795.00 |
| 2 |
Office Segment (First Floor) |
1 |
1 |
883 |
883 |
$ 2,700.00 |
$ 23,84,100.00 |
| 3 |
Office Segemnt (Second Floor) |
1 |
1 |
981 |
981 |
$ 2,700.00 |
$ 26,48,700.00 |
| 4 |
Residential Segment |
40 |
4 |
192.5 |
30,800.00 |
$ 2,700.00 |
$ 8,31,60,000.00 |
| 5 |
Car Parking Segment (Basement 1 & 2) |
2 |
N.A. |
1,552.55 |
3,105.10 |
$ 2,700.00 |
$ 83,83,770.00 |
| 6 |
Car Parking Segment (Podium 1 to 6) |
6 |
N.A. |
1,466.56 |
8,799.36 |
$ 2,700.00 |
$ 2,37,58,272.00 |
| 7 |
Hotel & Restaurant Segment |
1 |
N.A. |
258.54 |
258.54 |
$ 2,700.00 |
$ 6,98,058.00 |
| 8 |
Leisure & Fitness Segment |
1 |
N.A. |
101.83 |
101.83 |
$ 2,700.00 |
$ 2,74,941.00 |
| 9 |
Others Segment (Mezanine) |
1 |
N.A. |
519 |
519 |
$ 2,700.00 |
$ 14,01,300.00 |
| 10 |
Others Segment (Roof) |
0 |
N.A. |
101.83 |
101.83 |
$ 2,700.00 |
$ 2,74,941.00 |
| S. No. |
PARTICULARS |
No. of Floors |
Units per Floor |
Area of Each Unit in sq mt |
Total Area of each segment in sq mt |
Selling Cost per sq mt |
Development Costs (5% of Const. Cost) |
|
|
| 1 |
Retail Segment (Ground Floor) |
1 |
279 |
4.823 |
1,345.85 |
$ 2,889.00 |
$ 1,81,689.75 |
| 2 |
Office Segment (First Floor) |
1 |
1 |
883 |
883 |
$ 2,916.00 |
$ 1,19,205.00 |
| 3 |
Office Segemnt (Second Floor) |
1 |
1 |
981 |
981 |
$ 2,916.00 |
$ 1,32,435.00 |
| 4 |
Residential Segment |
40 |
4 |
192.5 |
30,800.00 |
$ 2,889.00 |
$ 41,58,000.00 |
| 5 |
Car Parking Segment (Basement 1 & 2) |
2 |
N.A. |
1,552.55 |
3,105.10 |
$ 2,916.00 |
$ 4,19,188.50 |
| 6 |
Car Parking Segment (Podium 1 to 6) |
6 |
N.A. |
1,466.56 |
8,799.36 |
$ 2,916.00 |
$ 11,87,913.60 |
| 7 |
Hotel & Restaurant Segment |
1 |
N.A. |
258.54 |
258.54 |
$ 2,970.00 |
$ 34,902.90 |
| 8 |
Leisure & Fitness Segment |
1 |
N.A. |
101.83 |
101.83 |
$ 2,970.00 |
$ 13,747.05 |
| 9 |
Others Segment (Mezanine) |
1 |
N.A. |
519 |
519 |
$ 2,970.00 |
$ 70,065.00 |
| 10 |
Others Segment (Roof) |
0 |
N.A. |
101.83 |
101.83 |
$ 2,970.00 |
$ 13,747.05 |
| S.No. |
PARTICULARS |
Investment by Promoter |
Cost of Construction |
Expenses on Development |
Total Investment |
Revenue @ 100% from Sales |
Gross Profit @100% Revenue |
|
|
| 2 |
Retail Segment (Ground Floor) |
$ - |
$ 36,33,787 |
$ 1,81,689 |
$ 38,15,476 |
$ 40,69,841 |
$ 2,54,365 |
| 3 |
Office Segment (First Floor) |
$ - |
$ 23,84,100 |
$ 1,19,205 |
$ 25,03,305 |
$ 26,94,033 |
$ 1,90,728 |
| 4 |
Office Segemnt (Second Floor) |
$ - |
$ 26,48,700 |
$ 1,32,435 |
$ 27,81,135 |
$ 29,93,031 |
$ 2,11,896 |
| 5 |
Residential Segment |
$ - |
$ 8,31,60,000 |
$ 41,58,000 |
$ 8,73,18,000 |
$ 9,31,39,200 |
$ 58,21,200 |
| 6 |
Car Parking Segment (Basement 1 & 2) |
$ - |
$ 83,83,770 |
$ 4,19,189 |
$ 88,02,959 |
$ 94,73,660 |
$ 6,70,702 |
| 7 |
Car Parking Segment (Podium 1 to 6) |
$ - |
$ 2,37,58,272 |
$ 11,87,914 |
$ 2,49,46,186 |
$ 2,68,46,847 |
$ 19,00,661 |
| 8 |
Hotel & Restaurant Segment |
$ - |
$ 6,98,058 |
$ 34,903 |
$ 7,32,961 |
$ 8,02,767 |
$ 69,806 |
| 9 |
Leisure & Fitness Segment |
$ - |
$ 2,74,941 |
$ 13,747 |
$ 2,88,688 |
$ 3,16,182 |
$ 27,494 |
| 10 |
Others Segment (Mezanine) |
$ - |
$ 14,01,300 |
$ 70,065 |
$ 14,71,365 |
$ 16,11,495 |
$ 1,40,130 |
| 11 |
Others Segment (Roof) |
$ - |
$ 2,74,941 |
$ 13,747 |
$ 2,88,688 |
$ 3,16,182 |
$ 27,494 |
| S. No. |
PARTICULARS |
Percentage of Total Develop. Cost |
Percentage of Total Const. Cost |
Percentage of Total Revenue Generated |
Development Costs (5% of Const. Cost) |
Total Construction Cost |
Total Revenue Generated |
|
|
| 1 |
Retail Segment (Ground Floor) |
2.87% |
2.87% |
2.86% |
$ 1,81,689.75 |
$ 36,33,795.00 |
$ 40,69,850.40 |
| 2 |
Office Segment (First Floor) |
1.88% |
1.88% |
1.89% |
$ 1,19,205.00 |
$ 23,84,100.00 |
$ 26,94,033.00 |
| 3 |
Office Segemnt (Second Floor) |
2.09% |
2.09% |
2.10% |
$ 1,32,435.00 |
$ 26,48,700.00 |
$ 29,93,031.00 |
| 4 |
Residential Segment |
65.68% |
65.68% |
65.47% |
$ 41,58,000.00 |
$ 8,31,60,000.00 |
$ 9,31,39,200.00 |
| 5 |
Car Parking Segment (Basement 1 & 2) |
6.62% |
6.62% |
6.66% |
$ 4,19,188.50 |
$ 83,83,770.00 |
$ 94,73,660.10 |
| 6 |
Car Parking Segment (Podium 1 to 6) |
18.76% |
18.76% |
18.87% |
$ 11,87,913.60 |
$ 2,37,58,272.00 |
$ 2,68,46,847.36 |
| 7 |
Hotel & Restaurant Segment |
0.55% |
0.55% |
0.56% |
$ 34,902.90 |
$ 6,98,058.00 |
$ 8,02,766.70 |
| 8 |
Leisure & Fitness Segment |
0.22% |
0.22% |
0.22% |
$ 13,747.05 |
$ 2,74,941.00 |
$ 3,16,182.15 |
| 9 |
Others Segment (Mezanine) |
1.11% |
1.11% |
1.13% |
$ 70,065.00 |
$ 14,01,300.00 |
$ 16,11,495.00 |
| 10 |
Others Segment (Roof) |
0.22% |
0.22% |
0.22% |
$ 13,747.05 |
$ 2,74,941.00 |
$ 3,16,182.15 |
