10146 Platinum Pointe Land Deal Assignment Sample

• Internal Code :
• Subject Code : 10146
• University : University of Canberra My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Accounting and Finance

Table of Contents

Question 1.

Key success factor for RBH (Robinson Brothers Homes)

Question 2.

The non-financial and financial benefits that RBH gets in using joint venture partners.

Question 3.

Briefly discusses why the land acquisition proposal’s needed rate of return is higher than its IRR.

Question 4.

Do you agree with the risk rating process of RBS’ land acquisition proposal? Explain.

Question 5.

References.

Built Environment Finance - Question 1

Key success factor for RBH (Robinson Brothers Homes)

Robinson brother’s homes were considered as the home builder of medium-sized categories. The company has built homes of high density and single family categories like condominiums and townhouses. By the year this company has successfully built over 2000 homes/ year. RBH achieved success by focusing on building authentic and higher quality homes for the first and second type of buyers. In the year of 2016 the closing sales price average for a particular RBH home was slightly above 4 lakh dollars (Adeniyi et al., 2016). The RBH organisation comprises the staff in the headquarters which are located in Colorado, Denver and other 15 divisions which are situated mostly in the metropolitan areas of different corners of the United States. The staffs of the headquarters were considerably small and generally the specialist in the field of information system marketing, sales legal accounting and customer service.

Each of the divisions was usually self-contained with its own supervision of construction Land Development acquisition of land accounting staff marketing purchasing and sales. The construction superintendents of RBH helped in supervising the general contractors who are involved in building the Homes according to the specifications of RBH (Hart et al., 2019). As a standard part in the process of land acquisition, the land acquisition personnel of RBH needed to progress with the preparation of a detailed proposal of land acquisition. This proposal generally contains vivid information about the infrastructure, design of the product, overview of the market, nature of request, the location and the entitlement. This helped Robinson brother’s homes to get a good position in the market.

Built Environment Finance - Question 2

The non-financial and financial benefits that RBH gets in using joint venture partners

Site development: The site is considered currently as a raw land but it can be delivered as the pad of Mars graded type. The grading permit has been received by the seller on the date of November 7 in the year 2006 and has initiated grading system grading is predicted to be completed in the month of January 2007 (Witt and Lill, 2017) . The seller has been set to construct all types of offsite backbones, sewer, street improvements, perimeter landscaping dry utility water and storm drain. Approval of the plans involving Street and storm drain is being done along with the plans of sewer and water. The utility plans of the backbones are designed currently. The Seller will provide sustainable utilities stubs to the site if the company is able to give them an entry location of fixed category prior to the installation of improvements (Scott, 2019). Otherwise the company will have to make connections to the particular systems. Master development infrastructure will not be completed prior to our close but the Seller will begin the improvements very soon.

The improvements are generally funded by the community facilities district. The organisation has the right to assume the responsibility for completing the remaining part of the seller work if the sellers generally fail to make any type of improvements in the presented timeline associated with the agreement. Their failure for completing the improvements which affects the site specifically as mentioned above the community facilities district will fund the overall infrastructure for the particular site. The CFD has a resolution of the intent which has been approved. The resolution associated with the former went to the City Council and was generally continued till the month of January 12 2007. The CFD was very confident that the formation will be established in the meeting of January 13th. The bonds can be sold in two different issues (Higham et al., 2018). The first bond sale was expected to be around 30 to 35 million dollars which will cover the infrastructure backbone including the storm drain, streets, sewer and water. It has been expected that this will occur in the month of March 2007. The second one cell will occur generally 36 months later and will involve the landscaping and the dry utilities. It has been told by CFD that an appraisal has been underway and will be completed very shortly.

Built Environment Finance - Question 3

Briefly discusses why the land acquisition proposal’s needed rate of return is higher than its IRR.

Unlike the purchase of land, land acquisition is a compulsory acquisition of private property by the government. The state was transferred for the implementation of the "public purpose" project. This includes public projects, public-private partnership projects, and private projects (Li et al., 2019). What is currently defined as “community goals” includes defence projects, infrastructure projects, and housing projects for the poor. As per the case study, the Seller will provide sustainable utility Stubbs to the site if the company is able to give them an entry location of a fixed category prior to the installation of improvements. Otherwise, the company will have to make connections to particular systems. Master development infrastructure will not be completed prior to our close but the Seller will begin the improvements very soon. The improvements are generally funded by the community facilities district (Case study).

Rate of Return works with all assets if the assets are acquired at a specific time and then generate cash flows. Investments are partially valued based on historical returns and can be compared with assets of the same type to determine the most attractive investments. According to this case context, the investors need to select the rate of return before making the land acquisition process. On the other hand, it can be demonstrated that the IRR (or Internal Rate of Return) rules are generally exposed that it provides guidance for deciding whether to take any further decision to acquire more land or not (Lankinen et al., 2019). At the same time, the rule states that if the internal rate of return is higher than the required minimum rate of return, the project must be implemented. This seems to make the acquisition fruitful.

In contrast, the return and risk are directly connected. Regarding this, this can be pointed out that the lower the rate of return, the lower the risk and then the profitability level will also be lower, whereas and the higher the rate of return, the profit will also be higher. Hence, to acquire the building acquisition process, it needs a high return of return rather than the internal rate of return (Liu et al., 2018). Because this investment acquisition is related to the investment market compared to the income (fixed) products. During the calculation of simple rate of return, the impact of inflation is not taken into account but the internal rate of return (IRR) sometimes takes into account the value of money. Hence, the building property can generate high returns as capital.

In addition to the property, there are other asset classes. However, these factors such as lack of liquidity and ease of purchase may lag behind the property (Penman and Zhang, 2019). In general, prices remain unchanged for a long period of time and remain almost the same after a sharp increase in prices over a short period of time. As an asset (building), it has low liquidity and requires a lot of capital to acquire. The most obvious idea it can get by maximizing the rate of return in marketing is where it should spend money to acquire land. If a specific part of the acquisition strategy does not significantly increase the rate of return, this can better allocate funds according to the funds suitable for the corporation. Similarly, the higher the marketing return rate, the better it can adapt the strategy to the acquisition.

Also, there is no need to focus on sales. However, the land acquisition opportunities to evaluate the risk for their establishment include different factors that are the political factors which entitle the proper timing and acquisition. Consequently, a proper development which can include all the site conditions so that the development cost of the project would be much accurate, there should be an appropriate implementation of the marketing strategies for the products that have been proposed to maintain the current market conditions as well as the future condition for the type of product price points and buyer types. Therefore, higher rate of return can help the process succeed. In other words, if this specific marketing tool assists to increase the profitability for the acquisition, it feels confident in spending the marketing time and money there.

Built Environment Finance - Question 4

Do you agree with the risk rating process of RBS’ land acquisition proposal? Explain. 

The land acquisition proposal for Robinson brother’s homes provided detailed information regarding the request nature and location, product design, infrastructure and entitlements, market overview and school information, environmental considerations, risky valuations, financial estimation and others. In this context the risks associated with these appliances are subjectively separated into three categories including low, moderate and high (as per case study). However the risk assessment is usually translated into a minimum internal rate of return requirements for the project.

Basically the land acquisition proposal of the company as reflected regarding four risk factors. These risk factors include political or entitlement related risk, development based risk, market and financial risks (case scenario). However the risk factors are rated with the consideration of their relational impact upon the financial and operational infrastructure of the company. Apart from that the highest probable impact of the existing risks can be also suspected by this risk rating procedure.

The rating score has been provided by evaluating the significant impact of those risk factors upon the organisational status in the current market. As an example it can be notified that the market related risks include product type, buyer types, product price points, current market condition based risk and others. Bonsall et al. (2017, p. 1430) stated that an organization should employ a credit risk assessment process under the lights off managerial ability to mitigate the existing risk factors. In this aspect the market related risk is noted to have a low probability with 5.0 and high probability with the score of 7.0. Hence it can be clarified that the market related risks might not play a deep impact as compared to the other risk factors. The political and development related risks and noted to have a high probability with the score of 8.0. In accordance with the rating it can be stated that the political and development related risks might make greater impact upon the company operations. Darwish and Abdelghany (2016, p. 11) stated that the fuzzy logic model might play an essential role in terms of completing credit risk rating within an organisation. The political or entitlement related risk include the inability to achieve suspected entitlements and timing. As per the risk rating process the company might not be able to attain expected entitlements within a predefined time period.

Similarly the development related risk reflects to monitor the overall conditions along with organisational potentiality for accurately estimating relational expenses behind development. Based on the risk rating process of RBH, it can be suspected that the company might not be able to properly estimate the overall development expenses. Moreover the company might be also accused of making inadequate monitoring applications over their inter operations. Gong and Tan (2019, p. 307) stated that an organization should pay attention in terms of performing risk rating procedure on the basis of existing probability risk value and reserved risk maintenance resource cost. The risk rating table clarifies that the development risk has scored 8.0 which means that the company might be largely affected in terms of providing inaccurate project development cost projection.

Similarly the financial risk reflects to have the organizational inability for achieving suspected results along with proposed financing obtainment (case study). In accordance with the risk creating table the highest probability of impacting the company has been 6.0 for financing risks. According to this measure, it might be clarified that the company might not be largely affected in case of achieving inadequate outcomes with respect to their estimation.

Hence it can be stated that this risk rating process can clarify the overall probable impact of those risks upon the organization (Callahan and Soileau, 2017, p. 125). Moreover, the company management might also be able to confirm and outline required action plans and strategic fit with an intention to mitigate those risks. This risk rating process might also force the company in terms of achieving greater benefits by means of contextualizing extensive service quality by addressing the potential barriers according to their impact on the company.

Built Environment Finance - Question 5

Harry has got two decision alternatives: 1) He submits his forecast as planned; or, 2) He makes the forecast more optimistic. Which decision alternative would you suggest for Harry? Why?

From the above two decision alternatives Harry would be making the forecast more optimistic. In the past years Harry assembled a great employees team which had performed very greatly for doing all the group projects as a team. Harry wanted the project to be done by him and his team but somehow the project would not on all the returns that has been compared as per the level of risk and therefore he had made the decision on his forecast that it would be a little more optimistic which will help him to ensure that the project would be approved. The project upon which Harry was working with his team was Thee Platinum Pointe Site. Which has been already been identified by Michael Borland who is basically vice president of land acquisition for the Southern California division. Instead of Harry the project was handed over to Tom Jackson who was like ok a long term friend with Mr Borland and therefore Harry was too much disappointed as he hoped that he will be doing the projects. He was expecting that he would on a good portion of revenue and profits from that project so that he could put proper detailing features in that proposal for better modification so that there should be a lower requirement to raise the projected IRR.

And those are requirements where like land acquisition opportunities to assessing the risk for their establishment which includes different factors they are the political factors which entitle the proper timing and acquisition, a proper development which can include all the site conditions so that the development cost of the project would be much accurate, there should be a proper implementation of the marketing strategies for the products that has been proposed by maintaining the current market conditions as well as the future condition for the type of product price points and buyer types. Last but not the least there should be a proper financing over that project that will be result and therefore it would be obtaining all the proposed financing (Scott, 2019). Henceforth the current IRR of the project is 21% but the IRR that is required is 24.5%.

Therefore it would be more suggest full for Harry that he would make his forecast more optimistic. He need to interact with his team so that his team will be e working smoothly without creating any conflicts and which will required to find a continuing stream of good projects in their hands for which they can work on. There should be a proper manner for Harry to deal with every projects so that it would be successful enough which will be helpful for him to earn revenue so that he can invest those revenue to another project and also would make their employees productively busy so that in return he can earn all the corporation requirements that is to be needed for any type of project with their level of risk. It will also help and to come implement his own projections with the optimistic manner so that everyone will ensure that the project would be approved which would help Harry to get more projects within his hand so that in future days he can set up his own organisation working as an home builder with having More big and promising projects in his hand and maybe his team would work in a way so that all the corporate executives would recommend there team for any e sort of works which will be a great advertisement for their own housing market.

References for Built Environment Finance

Adeniyi, O., Perera, S. and Collins, A., 2016. Review of finance and investment in disaster resilience in the built environment. International Journal of Strategic Property Management, 20(3), pp.224-238.

Bonsall IV, S.B., Holzman, E.R. and Miller, B.P., 2017. Managerial ability and credit risk assessment. Management Science, 63(5), pp.1425-1449.

Callahan, C. and Soileau, J., 2017. Does enterprise risk management enhance operating performance?. Advances in accounting, 37, pp.122-139.

Darwish, N.R. and Abdelghany, A.S., 2016. A Fuzzy logic model for credit risk rating of Egyptian commercial banks. International Journal of Computer Science and Information Security, 14(2), p.11.

Gong, Q. and Tan, S., 2019. Risk Rating Method Based on the Severity Probability Risk Value and Reserved Risk Maintenance Resource Cost of the Node Disconnection of the Power System. Processes, 7(5), p.307.

Hart, J., Adams, K., Giesekam, J., Tingley, D.D. and Pomponi, F., 2019. Barriers and drivers in a circular economy: the case of the built environment. Procedia Cirp, 80, pp.619-624.

Higham, A., Barlow, C., Bichard, E. and Richards, A., 2018. Valuing sustainable change in the built environment. Journal of Facilities Management.

Lankinen, P., Laasik, R., Kivimäki, M., Aalto, V., Saltychev, M., Vahtera, J. and Mäkelä, K., 2019. Are patient-related pre-operative factors influencing return to work after total knee arthroplasty. The Knee, 26(4), pp.853-860.

Li, H., Hua, Y., Feng, S., Li, H. and Chen, S., 2019. Lower Signal Intensity of the Anterior Talofibular Ligament is Associated with a Higher Rate of Return to Sport After ATFL Repair for Chronic Lateral Ankle Instability. The American journal of sports medicine, 47(10), pp.2380-2385.

Liu, J.N., Steinhaus, M.E., Garcia, G.H., Chang, B., Fields, K., Dines, D.M., Warren, R.F. and Gulotta, L.V., 2018. Return to sport after shoulder arthroplasty: a systematic review and meta-analysis. Knee Surgery, Sports Traumatology, Arthroscopy, 26(1), pp.100-112.

Penman, S.H. and Zhang, X.J., 2019. Connecting book rate of return to risk and return: The information conveyed by conservative accounting. Columbia Business School Research Paper, (14-21).

Scott, A.J., 2019. Land redevelopment and the built environment in third-wave cities: Review and synthesis. Journal of Urban Technology, 26(1), pp.57-81.

Witt, E. and Lill, I., 2017, June. Financing Mechanisms for Disaster Risk Reduction in the Built Environment. In 9th Nordic Conference on Construction Economics and Organization 13-14 June, 2017 at Chalmers University of Technology, Göteborg, SWEDEN (Vol. 13, p. 514).

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