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Group 4 Aura Investments
“an investment in knowledge pays the best interest” Benjamin Franklin.
Aaron Leahy Christian Gibney Fergal Rafter Roger Hayes Jeff Hughes
Residual Value & Developers Profit
The following two slides show the residual value and developer’s profit for the development at Stepaside Heights, Enniskerry Road, Kilternan, Dublin 18.
Residual ValueGross Development Value
Income (Selling price) € 625,000
No. Of units 20
Capital Value € 12,500,000
Development Costs
Building Costs
20 (186sq. Mt. x €1398 per sq. mt.) € 5,200,000
Site Development € 200,000
Professional fees
Architect (3%) € 150,660
Quantity Surveyor (3%) € 150,660
Structural Engineer (3%) € 150,660
Project Manager (3%) € 150,660
€ 602,640
Contingency (5%) € 251,100
Stamp Duty on land (1% of 1st million, 2% after) € 40,000
Marketing (2%) € 100,500
Overheads € 54,000
Planning fees (€65 x 20 units) € 1,300
Site Investigation € 17,500
Sales Cost (1%) € 125,000
Agents Acquisition fee (1%) € 25,000
Legal fees on Acquisition (2%) € 50,000
Building Certifcates € 16,600
Contributions (€21000 x 20 units) € 420,000
Social Housing (20%) € 400,000
Interest on Bank loan (8.25%) € 70,794
Total Development Cost € 7,574,434
Profit @ 20% € 1,514,887
Cost Plus Profit € 9,089,321
Residual Value € 3,410,679
Professional fees as % of Total Development Cost 7.96%
Residual Value as % of Total Development Cost 37.52%
Developers ProfitNet Development Value € 12,500,000Less Purchasers Cost (2.75%) € 343,750Net Development Value € 12,156,250
Development CostLand CostsLand Price € 2,500,000
Stamp Duty (1% of 1st million, 2% after) € 40,000Agents Acquisition fee (1%) € 25,000Legal fees on Acquisition (2%) € 50,000
€ 2,615,000Building Costs20 (186sq. Mt. x €1398) € 5,200,000Site Development € 200,000
€ 5,400,000Professional feesArchitect (3%) € 150,660Quantity Surveyor (3%) € 150,660Structural Engineer (3%) € 150,660Project Manager (3%) € 150,660
€ 602,640Other CostsContingency (5%) € 251,100Overheads € 54,000Site Investigation € 17,500Contributions (incl. Social Housing) € 820,000Planning fees (€65 x 20 units) € 1,300Advertising/Promotion (2%) € 100,500Sales Cost (2.5%) € 125,000Building Certificates € 16,600
€ 1,386,000Funding feesBank's legal/professional fees € 5,000Bank's arrangement fees € 5,000Interest on Bank Loan (8.25%) €70,794
€ 80,794Total Development Cost € 10,084,434Developer's Profit € 2,071,816
Professional fees as % of Total Development Cost 5.98%
Developers Profit as % of Total Development Cost 20.54%
Sensitivity Analysis
For the purpose of conducting a sensitivity analysis, we adjusted different figures increasing and decreasing the figures to allow for three different scenarios.
These are shown in the next figure;
Sensitivity Analysis
Sensitivity Analysis
Positive Developers Profit 5% Negative 15% Negative
Selling price rises 10%, Construction costs
decrease 10%, Land Price decreases 10%,
bank interest rate down to 7%
Selling price drops 5%, Construction costs increase 5%, Land Price increases 5%, bank interest rate up
to 9.5%
Selling price drops 15%, Construction costs increase 15%, Land Price increases 15%, bank interest rate up
to 11%
Net Development Value €13,371,875 €12,156,250 €11,514,062 €10,332,812
Development Cost €9,259,040 €10,084,434 €10,529,047 €11,343,082
Developers Profit €4,112,835 €2,071,816 €985,015 -€ 1,010,270
98% increase 100% 53% decrease 148% decrease
Along with €2,000,000 of Capital Investment, Aura Investments require a loan facility of €1,700,000. Including interest, this is paid off through money raised by selling houses. When this is paid off, the Capital Investment of €2,000,000 must be accounted for before the company is debt free, so to speak. The capital investment is not debt, however if you put €2,000,000 capital investment into a project, and make €2,000,000 profit, this is not actually profit as you are no better off than before.
Bank Loan
Loan PaybackMonth 0 3 6 9 12 15 18 . (A) Total -€3,613,065.75 -€104,292.44 €1,578,316.04 €1,005,817.99 €374,895.74 €1,652,958.14 €402,043.59
(B) Opening Balance €0.00 -€3,613,065.75 -€3,682,966.98 -€2,068,500.75 -€1,060,470.25 -€685,574.51 €967,383.63
(C) Total (a+b) -€3,613,065.75 -€3,717,358.19 -€2,104,650.94 -€1,062,682.76 -€685,574.51 €967,383.63 €1,369,427.22
(D) Interest €0.00 €34,391.21 €36,150.19 €2,212.51 €0.00 €0.00 €0.00
Closing Balance (c+d) -€3,613,065.75 -€3,682,966.98 -€2,068,500.75 -€1,060,470.25 -€685,574.51 €967,383.63 €1,369,427.22
Closing Balance - Cap. Investment -€1,613,065.75 -€1,682,966.98 -€68,500.75
Total
Borrowings Required €1,650,000.00 €1,700,000.00 €70,000.00
Drawdown €1,650,000.00 €50,000.00 €1,700,000.00
Repayment to Bank €1,630,000.00 €70,000.00
Capital Investment €935,817.99 €374,895.74 €689,286.27 €2,000,000.00
Compounded Interest
€ 1,650,000.00 0.69% € 11,385.00
€ 1,661,385.00 0.69% € 11,463.56
€ 1,672,848.56 0.69% € 11,542.66 € 34,391.21
€ 1,734,391.21 0.69% € 11,967.30
€ 1,746,358.51 0.69% € 12,049.87
€ 1,758,408.38 0.69% € 12,133.02 € 36,150.19
€ 106,150.19 0.69% € 732.44
€ 106,882.63 0.69% € 737.49
€ 107,620.12 0.69% € 742.58 € 2,212.51
€ 72,753.91
Along with €2,000,000 of Capital Investment, Aura require a loan facility of €1,700,000. Including interest, this is paid off through money raised by selling houses. When this is paid off, the Capital Investment of €2,000,000 must be accounted for before the company is debt free, so to speak. The capital investment is not debt, however if you put €2,000,000 capital investment into a project, and make €2,000,000 profit, this is not actually profit as you are no better off than before.
Cash Flow Cash flow analyse is spread over 27
months. It shows our outgoing expenses and our
incoming revenue. The end of the first quarter is where we’re
most exposed, thus determining the size of the loan we must obtain.
Column1 Month 0 Month 3 Month 6 Month 9 Month 12 Month 15 Month 18 Month 21 Month 24 Month 27 Total
Cash Flow Statement Aura
Income
Sales €0.00 €0.00 €1,875,000.00 €1,875,000.00 €1,250,000.00 €2,500,000.00 €1,250,000.00 €1,250,000.00 €2,500,000.00 €0.00€12,500,000.0
0
Total Income €0.00 €0.00 €1,875,000.00 €1,875,000.00 €1,250,000.00 €2,500,000.00 €1,250,000.00 €1,250,000.00 €2,500,000.00 €0.00€12,500,000.0
0
Costs €
Site Cost -€2,590,000.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 -€2,590,000.00
Site Development -€28,571.44 -€42,857.16 -€7,142.86 -€7,142.86 -€7,142.86 -€78,571.46 -€7,142.86 -€14,285.72 -€7,142.86 -€200,000.08
Building Costs -€19,149.00 -€96,289.80 -€786,653.40 -€800,329.40 -€759,257.00 -€701,079.20 -€612,012.00 -€743,059.00 -€682,171.20 -€5,200,000.00
Professional Fees -€180,792.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€46,872.00 -€602,640.00
Other Fees -€18,800.00 -€2,490.00 -€2,490.00 -€1,660.00 -€3,320.00 -€1,660.00 -€1,660.00 -€3,320.00 -€35,400.00
Contributions -€420,000.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 -€420,000.00
Overheads -€2,000.00 -€4,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€6,000.00 -€54,000.00
Social Housing -€400,000.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 -€400,000.00
Marketing -€1,473.75 -€5,700.00 -€83,425.00 -€1,273.75 -€600.00 -€5,700.00 -€1,273.75 -€500.00 -€500.00 €0.00 -€100,446.25
Sales Fees €0.00 €0.00 -€18,750.00 -€18,750.00 -€12,500.00 -€18,750.00 -€12,500.00 -€18,750.00 -€12,500.00 -€12,500.00 -€125,000.00
Total Costs -€3,613,065.75 -€104,292.44 -€296,683.96 -€869,182.01 -€875,104.26 -€847,041.86 -€847,956.41 -€692,936.86 -€826,536.72 -€754,686.06 -€9,727,486.33
(A) Total -€3,613,065.75 -€104,292.44 €1,578,316.04 €1,005,817.99 €374,895.74 €1,652,958.14 €402,043.59 €557,063.14 €1,673,463.28 -€754,686.06 €2,772,513.67
(B) Opening Balance €0.00 -€3,613,065.75 -€3,683,203.19 -€2,069,697.15 -€1,062,430.16 -€687,534.42 €965,423.72 €1,367,467.31 €1,924,530.45 €3,597,993.73 €0.00
(C) Total (a+b) -€3,613,065.75 -€3,717,358.19 -€2,104,887.15 -€1,063,879.16 -€687,534.42 €965,423.72 €1,367,467.31 €1,924,530.45 €3,597,993.73 €2,843,307.67 €2,772,513.67
(D) Interest €0.00 €34,155.00 €35,190.00 €1,449.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €70,794.00
Closing Balance (c+d) -€3,613,065.75 -€3,683,203.19 -€2,069,697.15 -€1,062,430.16 -€687,534.42 €965,423.72 €1,367,467.31 €1,924,530.45 €3,597,993.73 €2,843,307.67 €2,843,307.67
S Curve
Program of Works A Program of Works shows what work will be
taking place over a certain time. It is estimated that this project of 20 houses
will take 24 months to complete. The project is divided into 9 sections. The
first 2 sections represent 3 house each. The 7 other Green sections represent 2 house each.
It is planned that the houses will close in the month that they are complete.
3 Houses = Blues INDICATIVE PROGRAMME OF WORKS
2 Houses = Greens
Works Description Duration WK Month 1Month 2Month 3Month 4Month 5Month 6Month 7Month 8Month 9Month 10
Month 11
Month 12
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
Month 19
Month 20
Month 21
Month 22
Month 23
Month 24
NR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 95 96 97 98
Site Development
SUBSTRUCTURES
Excavate Top Soil
Excavate Foundations
Foundations Poured
Blockwork
Floor Slab
HOUSE SUPERSTRUCTURE
Blockwork
Joisting
Roof Finishes
Windows
Plaster Works External
Additional External Finishes
Carpentry 1st Fix
M & E First Fix
Plastering Works Internal
Carpentry Works 2nd Fix
M & E 2nd Fix
Fixtures & Fittings
Kitchens
Tiling
Painting
Final Clean
EXTERNAL WORKS
Pavings
Landscaping
Loan to Value Ratio
13.6% of a Loan to Value ratio is very healthy. The majority of the
money required for the Construction of the units is being
provided through the sale of completed houses.
Interest Cover
• We have a very healthy interest cover ratio.
Break-Even Analysis
The break-even selling price of the project is the price we have to sell the houses at
to cover our costs. If we sell each house for €486374.32 then we will not make a loss
or a profit. This is a good indication of how reasonable our selling price of €625000 is.
The design for the houses were developed by studying the design of houses in the surrounding area and adapting a similar style.
Dun Laoghaire/ Rathdown County Council for pre planning consultation informed us, via email, that the development would be viable.
The were happy that we satisfied the Kilternan Glenamuck Local Area Plan, as well as the Government Guidance for ‘Sustainable Residential Development in Urban Areas’
House Design
House Design
Plans/Drawings
Marketing & Advertisement Develop a marketing plan. Using local demographics and recent
statistics we plan to expose our catchment market and develop our market plan around this.
Relating back to our SWOT analysis, a strategic plan can be optimised to exploit the sites strengths and opportunities.
Create business cards for each member of the company
Current Property Market Prices For Listed Properties In The Surrounding 5km Radius
PROPERTY ADDRESS NO. OF BEDS BATHROOMS TYPE SIZE PRICE PRICE PER SQ.M
1 1 Sleeping Meadow, Enniskerry Road, Kilternan, Dublin 18 4 5 Detached 337 sq.m €900,000 €2,670.62
2 5 Moss Cottages Enniskerry Road, Kilternan, Dublin 18 3 1 Semi-Detached 80 sq.m €375,000 €4,687.50
3 Hillfield, Rathmichael, Co. Dublin 5 5 Detached 370 sq.m €1,200,000 €3,243.24
4 Wheatfield, Kilternan, Co Dublin 5 4 Detached 284 sq.m €695,000 €2,447.18
5 Rathmichael Brook, Ballycorus Road, Rathmichael, Dublin 7 8 Detached 867 sq.m €1,995,000 €2,301.04
6 Four Winds, Ballycorus Road, Kilternan, Dublin 18 4 2 Detached 186 sq.m €450,000 €2,419.35
7 Seaview, Ballybetagh Road, Kilternan, Dublin 18 5 3 Detached 230 sq.m €950,000 €4,130.43
8 Rowan Hill, Ballybrack Road, Glencullen 4 2 Detached 242 sq.m €1,650,000 €6,818.18
9 59 Cairnbrook Avenue, Glenamuck Road, Carrickmines, Dublin 18 2 2 Apartment 113 sq.m €350,000 €3,097.35
10 5 Cairnbrook, Carrickmines, Dublin 18 1 1 Apartment 56 sq.m €199,000 €3,553.57
11 4 The Green, Carrickmines Manor, Dublin 18 3 2 Terrace 115 sq.m €415,000 €3,608.70
Average price per sq.m = €3,543.38
Our price per sq.m = €3,360.22
Our property is €183.16 per sq.m cheaper than the surrounding area
Sold Property Prices In The Surrounding 5km Radius Over The Last 12 Months
PROPERTY ADDRESS DATE SOLD NO. OF BEDS TYPE PRICE
A Kilternan Villa, Ballybetagh RD, Kilternan, Dublin 18 15/10/14 N/A N/A €650,000
B Carrig Dolgen, Barnaslingan Lane, Kilternan, Dublin 18 02/09/14 N/A Detached €1,217,000
C 2 Moss Cottages, Enniskerry Road, Kilternan, Dublin 18 20/08/14 1 Bungalow €285,000
D Merrifield, Barnaslingan Lane, Kilternan, Dublin 18 17/06/14 N/A N/A €625,000
E 9 Wayside Cottages, Kilternan, Dublin 18 13/06/14 4 Bungalow €415,000
F Kingston House, B arnaslingan, Kilternan, Dublin 18 21/02/14 N/A N/A €495,000
G Santa-Maria, Glencullen, Kilternan, Dublin 18 19/12/13 N/A N/A €275,000
H Verney House, Kilternan, Dublin 18 16/12/13 N/A Detached €2,060,000
Marketing & Advertisement Social Media marketing;
◦ Website: http://c12740375.wix.com/aurainvestments
Aura Investments
facebook.com/Aura Investments
twitter.com/Aura_Invest
Other Marketing Tools Design and create a property brochure with
detailed description of the development, the local area and the plan drawings.
Billboards, newsletters, bus ads, newspaper ads, property sites such as daft.ie and myhome.ie
Strategic Analysis
Environment Analysis Is there a demand in the area Social environment Competitors Industry structure Who’s in the market
Identify Options How much money do we have How much land do we have
Evaluate Options Is the option suitable Is the option feasible – enough money Will it be acceptable
Strategic Choice Do we have the skills and resources What can we do?
Planning and Allocating Resources Construction Programme (timing) Do a tactical plan People / finance / plan / builders – in place
Risk Analysis
Project Risk Assessment Project Risk Control
Identify risk Measure & control risk
Analyse risk Respond to risk
Classify risk Mitigate residual risk
Prioritise risk Establish contingencies
Risk Prioritisation Map
Rating Description Criteria
1 Very low or none Minor nuisance
2 Low or minor Product operable at reduced performance
3 Moderate or significant Gradual performance degradation
4 High Loss of function
5 Very high or catastrophic Safety-related catastrophic failures
Residual Value € 3,410,679 Developers Profit € 2,071,816 Loan to Value Ratio 13.60% Looked at cash flow, construction program,
compounded interest, banking financials, marketing plan, market competition, and strategy plan.
Summary
Thank you all for your attention, we welcome any question you may have.
