yo1 0 IntroductionA budget of 163 10 million has been allocated to purchase a property portfolio
... 0 Introduction A budget of £10 million has been allocated to purchase a property portfolio; the following report will identify the: · Investment strategy · How the properties chosen fulfil this strategy · A schedule of the properties chosen · A qualitative risk analysis · An appraisal of each property showing the IRR · In addition this report will contain supporting data and analysis of the portfolio chosen including information regarding the lot size and uses 2.0 Investment Strategy The following section will look at the investment strategy proposed and justify the reasons for the choice in the strategy: 2.1 Security of Income The properties chosen need to have the provision for security in the future in term of capital growth and income growth, the majority of the portfolio will be income growth to enable the re-investment of capital to provide protection for the real value of the capital invested. ... · Condition, (structural and aesthetically) · Size of the property. ... · Upward only rent reviews, due to the fact that the strategy is mainly made up of income growth property. · Long leases to provide security from the potential of vacant property. ... and rates of return Evidence from the IPD (investment property database) shows that in 2002 total returns for retail property in prime locations were just under 15%, while office performance was measured at under 5% and the industrial sector saw returns of just over 10%. ... In addition to this the IPD suggests that total returns on all property over the last 12 months was 9. ... 6 Location Properties need to be chosen in a location that is both marketable as explained above and that has seen growth in terms of rental return and total returns Scotland and the regions outside the South East are showing better returns in most sectors. The Industrial sector with the example of, Doncaster has seen compounded annual growth over the past 5 years of 14. ... 7 Risk In order to spread the risk of the investment the aim will be to chose a diversified portfolio in term of the type of property and its location, a quantified risk analysis of the properties chosen will follow later in the report.