Executive Summary: Investec Australian Property Fund (Essay Sample)

Executive Summary
Investec is a publicly traded organization that deals with commercial investments. It is mainly engaged with real estates, capital assets, as well as rentals. It has as a major objective a need to grow as well as diversify the asset base. In addition, it moves towards satisfaction of its shareholders through high returns on investment.
The current analysis will thus focus on the rationale through which the firm has been founded. This will be through assessment of ratios, valuation, ways of managing risks, and portfolio arrangements. In addition, assessment of value and growth of the firm will be key to determination of sales and purchases.
Company Overview
Investec Australian property fund is an Australian domiciled real estate registered under the corporate act 2001. It follows the law and regulations of Australian securities and investment. It has severally been listed on JSE to be among the best firms in real estates. For instance, in 2013 it was ranked 9th. It has a wide scope which has given it a competitive edge as it has been able to link its customers to properties in Australia as well as New Zealand. The fund primary objective is to grow and diversify its assets base and to deliver stable income and capital returns to unit holder’s overtime. The firm has thus bee relying on fundamentals of making investment decision which would help in ensuring value creation. Following, founded decision policies, the firm has been able to accumulate value. It has been able to sustain the high competition in its environs and it has also been able to realize wealth for its shareholders. For instance, since its listing it has been able to up its value by more than 8.2 times. Therefore, the firm has a sustainable future. However, it would need to look into more reaching alliances like contractual renting, ensuring they are bale to balance been debt and equity fiancé, and ensure they are able to assure efficiency as well as profitability through proper assets management.
Investment
As of 2019, the firm has been moving towards offering more quality office assets, rental investments, as well as ensuring they have commercial apartments. For this they have moved to urban areas to attract more clients. To achieve their objective, by 2019 they had acquired investments worth AUD 49.2 mn. Consequently, the value of the firm rose to AUD 1063mn. Out of the investments about 28 of them were well founded on bases of track records as well as fundamentals supporting their acquisitions to ensuring the firm is able to meet its strategic long-term goals.
KPIs

2017

2018

2019

No of properties

24

26

28

Asset values

AUD 779mn

AUD 987mn

AUD 1063mn

Gross lettable Area

230 864m2

290281 m2

270511m2

Weighted av.lease expiry(by revenue)

4.6 years

4.7 years

5.1 Years

Occupancy(by revenue)

94.6%

99.4%

98.5%

Following the investments the firm’s portfolio has been growing. For instance, there was witnessed an 8.2 times growth. This was from 8 assets worth AUD 130 mn to 28 assets worth AUD 1,063 mn. The value can be attributed to choices especially investment in urban areas as well as high commercial areas. The firm has also been able to manage its assets which has given it high preference among customers. It is worth noting that the firm has a low level of vacancies. It has been estimated at around 0.6% which means that most of their rentals are usually occupied which gives then a sustained stream of inflows.
Valuation
For valuation, the firm has been making use of fair value. This means that they are able to appropriately account for impairments which has a close reflection of the market value. Consequently, low chances of over/under valuation of assets.
Ratio Analysis
Liquidity ratios
* Current ratio
=Average current Assets÷Average current liabilities
= (14200+10976)/2÷(60320+30,662)/2
=0.168
* Net working capital
Current assets-current liabilities
(14200+10976)/2-(60,320+30662)/2
=-20315
* N.W. C to total assets ratio
Average current assets-Average current liabilities÷Av.total assets
14,200+10976-60320+30662÷998,639+1083411
=0.0195
Leverage ratios
* Equity multiplier
Av.total assets/Av .owners equity
1, 041025÷336250
=3.0
Profitability Ratios
* Operating profit Margin
EBIT/Net sales
64,292+57523/89,469+77,596
=72.9%
Risk Analysis
For risk evaluation, the fund has major bases as cash as well as cash equivalents. Therefore, they are able to determine the exact liquidity of the fund. In addition, they are bale to estimate the level of operations, financing, and investment, which would be used to guide decision. They would opt for less risky investments or reduce their operation cost. They can also be able to assess increases and decrease on current inventories, receivable, and payables.
The fund has exposure to the following risks from its use of financial instruments.
* Credit risk
This are risk that would come up due to