APC CASE STUDY Flashcards
What was the construction of the retail property?
Steel Frame Construction: Many retail units from the 1960s and 1970s used steel frames for the main structural framework. Steel frames were commonly used because they provided greater flexibility in design and could support larger spans for open retail spaces.
Reinforced Concrete: Some buildings also used reinforced concrete for the frame or floors, often combined with a steel frame or used for the upper floors of multi-story units.
Brickwork or Precast Concrete Panels: Exteriors were typically finished with brick or precast concrete panels, offering durability and fire resistance. Some might also have a combination of glazed brickwork or render on the exterior.
What defects are common in units 17A?
How did you inspect 17A in accordance with RICS Surveying Safely?
section 6 covers inspection
- I confirmed I had the competence, knowledge and skill to complete the inspection
- I assessed the risks prior to attending the site and noted there were very few, the main one being slip/trip hazards
3.I ensured I would personally be safe on site because I went with my manager, took a charged mobile phone and made my other colleagues aware of my location and when I was due back
4.I was aware of the ‘safe person’ concept whilst on site which meant I was responsible for my own, my colleagues and others health and safety
How did you measure Shared Earth in accordance with the Code of Measuring Practice?
I determined I would need to use NIA for valuing a retail unit
I reviewed the examples in the Code of Measuring Practice as well as the NIA definition
I measured the useable area and measured to the internal face of the perimeter walls but excluded toilets, cleaners cupboards and areas under 1.5m in height
What defects are common in units like Shake Shack?
dry rot
wet rot
damp penetration
structural movement around windows
Why did you use overall NIA basis for measuring 17A rather than zoning?
zoning is valuation technique used for comparing retail units with different frontage to depth ratios
all my comparable evidence was on NIA basis, rather than ITZA
likely due to small size of retail units
If the unit had been larger, how would you have used zoning?
I would have halved back in zones of 6.10m/20ft to express the floor area in terms of Zone A
I would have then multiplied by the market rent per sq ft at the Zone A rate
Return frontage, how would you have dealt with it?
I could have added an uplift for the depth of the return, depending on the pedestrian flow EG 5% uplift
if the pedestrian flow had been equal, then the whole unit would have become Zone A
How would you have measured the lower floor storage area if you had used zoning?
I would have taken a fraction of Zone A for the basement area
What did the client accountant look for in the internal credit check?
internal Workman client accountant carried out external credit check using CreditSafe which gives rating between 100 (low risk) and 1 (high risk) - predicts how likely a company is to fail in next 12 months
assessed Shared Earths creditworthiness based on their Company Registration Number
assessment is based on balance sheet, outstanding debt, payment history etc
score was low, at 30 whereas in 2015 when the T took on the lease the score was nearer 90
How did you determine Shared Earths covenant strength?
looked at profit and loss account
shows income and expenditure over a year
income = sales
expenditure = cost of goods, salaries, cost of running business (insurance, electricity, rent etc)
Compared to previous year profits and saw they used to be higher
What’s included in void costs?
Insurance, Rates and SC (£27,722.21)
What was the purpose of the update to the Use Classes Order in September 2020?
provide more flexibility
provide greater freedom
buildings can change use without planning
Class E = shops, restaurants, cafes, gyms, nurseries, health centres, professional / financial services
How would you have surrendered the lease?
T would have had to request surrender
LL would not have had to agree (T would have had to wait and exercised break instead in September 2025)
if LL did agree, may have requested premium from T for early surrender
Note: LL could ask T to surrender in exchange for reverse premium
What is included in Sui Generis? (Latin ‘Of its own kind’)
Theatres, nightclubs, casinos, car showrooms
Purpose of Statutory Demand?
Preliminary step to winding up petition (liquidates tenant)
How can Landlord right to forfeit be waived?
agree payment plan with T instead
CRAR exercised
s25 notice served under LL&T Act 1954
What are Tenant rights under CRAR?
can apply to Court for order that no further steps can be taken without permission from Court
What are key considerations when reviewing rent arrear recovery methods?
chance of re-letting the property
current passing rent v market rent
vacant possession value (and void costs) compared to value as let
How can a Landlord forfeit a lease for failure to repair?
must be forfeiture clause in lease
serve S146 notice in tenant (state breach, timeline and proposed action)
What are the company accounts you reviewed?
Profit and Loss Account (Income Statement) -Shows the company’s revenues, expenses, and profit or loss over a specific period.
Helps assess profitability and financial performance.
Balance Sheet (Statement of Financial Position) - Summarizes the company’s assets, liabilities, and equity at a given point in time.
Indicates the financial stability and net worth of the business.
Cash Flow Statement - Details the cash inflows and outflows from operating, investing, and financing activities.
Helps understand the company’s liquidity and cash management.
Statement of Changes in Equity - Shows changes in the company’s equity due to profits, losses, dividends, or share issuance.
What is the importance in company accounts?
Legal Compliance: Required for regulatory filings (e.g., tax authorities, Companies House in the UK).
Financial Decision-Making: Helps management and investors assess performance.
Tax Calculation: Used for corporate tax filing and payments.
Investor Confidence: Provides transparency to shareholders and potential investors.
What is CRAR?
- introduced in 2014 to replace Law of Distress for rent
-recover rent, VAT and interest
- 7 days rent due as minimum
LL serves Notice of Enforcement via email/post/hand-delivered which states address, T type, due date of most recent funds and any notes
Notice of Enforcement (Parkinson Bailiffs) gives 7 days notice
- on day 8, enforcement agent enters and takes inventory and ‘takes control of goods’
enforcement agents waits 7 days before selling goods
T charged £75 for service
Note: cannot take goods that are on purchase agreements or belong to 3rd parties, anything that will breach the peace, work tools (if worth less than £1350) or perishable goods
CRAR Legislation
Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) – Part 3, Chapter 2
The Taking Control of Goods Regulations 2013
The Taking Control of Goods (Fees) Regulations 2014
What s a Stat demand?
preliminary step to pursuing winding up proceedings (or bankruptcy)
must be no dispute on arrears and they must be over £750
(at least - Individual £5,000)
Serve a demand property (in person or by registered post)
T has 21 days to pay or propose a plan
after this time, LL can present bankruptcy/winding up petition to court
Statutory Demand Legislation?
Insolvency Act 1986 – Section 268 (individual bankruptcy)
Insolvency (England and Wales) Rules 2016 – Rule 10.1 onwards
For companies: Different rules apply under Section 123 of the Insolvency Act 1986 (statutory demand for companies requires £750+).
Forfeiture - Right to terminate the lease early
must be forfeiture clause in lease and rent must have been properly demanded
LL enters peacefully/commences Court proceedings to regain possession of lease after 21 days of non payment of rent (only advisable if got another tenant lined up to go in)
if breach other than rent, LL serves S146 notice under Law of Property Act 1925 providing details of breach and how to remedy
Types of Forfeiture:
For Non-Payment of Rent
Can be exercised immediately if the lease allows.
No Section 146 Notice required.
Peaceable re-entry or court proceedings.
Exercising Forfeiture - Peaceable Re-Entry
For commercial properties only – no force can be used.
Usually done by a bailiff securing the premises.
Risky – unlawful forfeiture can lead to damages claims.
Relief from Forfeiture (Tenant’s Rights to Reclaim the Lease)
For non-payment of rent
Tenant can apply for relief within 6 months (longer in some cases).
Court usually grants relief if arrears are paid.
Exercising Forfeiture: Court Proceedings
Required for residential leases (due to Protection from Eviction Act 1977).
Also used if peaceable re-entry is not feasible.
Waiver of Forfeiture
If a landlord accepts rent after a breach, they may waive the right to forfeit.
Must act quickly after a breach is discovered.
Impact on Business Tenancies
Landlord and Tenant Act 1954 protects tenants by granting renewal rights.
If forfeited, tenant loses renewal rights.
What accounts did you review?
Micro company accounts year ending 28th February 2020 and 2021
What’s companies accounts?
Company accounts are financial statements that provide an overview of a company’s financial performance and position. They are required for legal compliance, tax reporting, and decision-making.
Unaudited Micro-Entity company? if meets two of the following:
✔ Turnover ≤ £632,000
✔ Balance sheet total ≤ £316,000
✔ Employees ≤ 10
Advantages of Unaudited Micro-Entity Accounts
✅ Advantages:
No audit required – Reduces costs and administrative burden.
Simplified reporting – Less detailed financial statements.
Greater privacy – Fewer disclosures published at Companies House.
Easier to prepare – Uses FRS 105 (simplified UK GAAP).
⚠ Limitations: of Unaudited Micro-Entity Accounts
Limited disclosures – Less transparency for investors/lenders.
No fair value accounting – Assets must be recorded at historical cost.
May not meet stakeholder requirements – Some creditors and suppliers may demand full accounts.
Restrictions on revaluation & deferred tax under FRS 105.
What are business rates and how did you calculate them?
What is a Winding-Up Petition?
A formal request made to a court to close down a company and liquidate its assets to pay its debts.
Who Can File a Winding-Up Petition?
Primarily creditors (those to whom the company owes money).
The company itself in some cases, if it wants to be liquidated.
Why is a Winding-Up Petition Filed?
The company is insolvent (unable to pay its debts).
The company is unable to meet its financial obligations.
What Happens After a Winding-Up Petition?
The court hears the petition and may order liquidation of the company.
A liquidator is appointed to sell the company’s assets to pay creditors.
Consequences for the Company
Company assets are seized and sold.
Company is removed from the official register.
Loss of control by directors; liquidators take over.
How does weak covenants effect investment value?
A tenant with weak covenants (financial instability or poor creditworthiness) negatively affects the investment value of a shopping centre by increasing the risk of rent defaults, vacancies, and reduced demand from other tenants. This uncertainty leads to unpredictable income, higher vacancy rates, and potential rent reductions. As a result, the shopping centre’s overall value may decrease, and investors may require higher returns or face difficulty securing financing.
How is Tenant mix advantageous?
A well-planned tenant mix in a shopping center boosts foot traffic by offering a variety of businesses, such as retail, food, and services, which attracts more customers. It stabilizes revenue by diversifying income sources and reduces risk by avoiding reliance on a single type of tenant. A strong mix improves the customer experience, making the center more appealing, and increases its attractiveness to investors due to better long-term stability and growth potential.
What is business rates?
Taxes that businesses, including retailers, must pay on the property they occupy. The rates are set by the local council and are based on the rateable value of the property, which is an estimate of how much the property would rent for on the open market. Business rates are collected to fund local services like education, transport, and law enforcement.
How is business rates it calculated for a retail unit of 1,527SQ FT
Rateable Value: £20,000 (hypothetical)
Multiplier: 0.512 (standard multiplier for 2024) (VOA)
Annual Business Rates: £20,000 × 0.512 = £10,240 per year
