Case Study

Question 1

What was the purpose of the valuation?

Answer 1

Financial Reporting purposes

Question 2

Given that you have been valuing for this client for some time, do you think that recommending a different firm carry out this valuation may have been appropriate?

Answer 2

RICS considers it good practice, albeit not mandatory, to rotate valuers at intervals not
exceeding seven years; my firm has been providing the valuation services to the client for six years and during this time the responsible valuers have rotated. My firm and I comply with this good practice.

Question 3

What was the construction type for the building and how did you identify this?

Answer 3

Reinforced concrete
Identified though exterior appearance

Building plans and specifications also can indicate the construction type of the building

Question 4

What condition aspects did you note down during your inspection?

Answer 4

Property appeared to be in a good condition with no apparent defects

Question 5

How did you calculate the WAULT?

Answer 5

Calculated remaining term for each tenant
Multiplied by rental income it generates
Sum the figures
divide by the total rental income

Question 6

Why did you settle on a single yield approach?

Answer 6

I adopted the weighted average yield between initial and reversionary yields to combine the risks of the current income stream and income stream on reversion

Question 7

Why did you choose trad val over DCF?

Answer 7

I considered that the growth implicit method is appropriate given the Property is relatively stabilised reaching the reversion potential in short term (within 12 months); I had yield transactional evidence to rely upon, although not plentiful. The characteristics of the assets were relatively straightforward.