Teaching real estate finance with cases SUNLIGHT VILLAGE case study

Investment valuation activity presents several issues regarding zoning, market analysis, construction, but also valuation and financing. The latest are mainly financial issues, that require both the logical framework of analysis and a financial model as supporting tool. Sunlight Village is a teaching case study on land development valuation which aims to make students and practitioners reasoning about some important issues hidden behind an investment valuation. Moreover the purpose of the case is developing financial model skills by working with a spread sheet. An empty plot of land close to the seaside, purchased by a real estate building company a few years ahead, has received the municipality approval for the development either of residential buildings or of residential buildings and a hotel. At the same time the company has been offered by an international fund a certain amount of money to sell the land. All input data are given but, in order to solve the case study, students need to create a financial model (including P&L statement, balance sheet and the cash-flows statement for two alternative projects). Final considerations on the profitability have to be done by determining some key indicators.