Real Estate Financial and Investment Analysis                                                     2
                            I.  STRUCTURING A REAL ESTATE
                                     FEASIBILITY ANALYSIS
           This introductory session will address the concept of feasibility and real estate 
           investment analysis; development of the first-year pro forma; and the usefulness 
           of the CAP rate.
           Real Estate Financial and Investment Analysis                                                     3
           Yes, Virginia there are only three things that matter in real estate...
                                 LOCATION!  LOCATION!  LOCATION!
                           L                  x                   L                   x      L
             REGIONAL FACTORS                      NEIGHBORHOOD                     SITE-SPECIFIC
                           &                           ELEMENTS                        FEATURES
               MACROECONOMIC
                CIRCUMSTANCES
           Real Estate Financial and Investment Analysis                                                     4
                          OUTLINE OF A FEASIBILITY STUDY
           1. Site Analysis
                 •  Survey of site to determine net useable land area
                 •  Zoning of site and related constraints
                 •  Availability of utilities to site
                 •  Subsurface soil conditions
                 •  Preliminary title report, CC & Rs
           2. Initial Concept
                 •  Establish target land development concept in terms of developer’s goals, 
                    permitted zoning, and developer’s financial resources
           Real Estate Financial and Investment Analysis                                                     5
                          OUTLINE OF A FEASIBILITY STUDY
           3. Demand Analysis
                 •  Evaluate the economic base that supports the community in which project 
                    is located:
                       – Population projections
                       – Employment projections
                       – Income Projections
                 •  Study the demand forces that pertain to your specific project type
                 •  Analyze the competitive market within which you must operate
           4. Supply Analysis
                 •  Determine market area related to project
                 •  Analyze the present and future inventory of product that you will be 
                    competing with in relation to your delivery date
                 •  Determine product mix in relation to competitive rents, pricing, and 
                    amenities
           Real Estate Financial and Investment Analysis                                                     6
                          OUTLINE OF A FEASIBILITY STUDY
           5. Specific Development Scheme
                 •  With architects and engineers, developer relates concept to market 
                    conditions, with a specific development scheme, land use plan
           6. Cost Estimates
                 •  Based on a specific plan, developer then estimate all hard and soft costs 
                    based on the “bid date” of the project