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APC Session 2 > Case study > Flashcards

Case study Flashcards

1
Q
  1. Describe the construction of unit 6?
A

a. Steel portal frame with a brick and glazed elevation under a flat roof

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2
Q
  1. What are the defects to look out for?
A

a. Cracks in the brick work
b. Damage to the glazed elevation
c. Blocked gutters
d. Damp
e. Rust on metal work
f. Leaks

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3
Q
  1. Were you instructed to do void checks? What are they?
A

a. Turn off water but if not then ensure toilets regularly flushed
b. Electric on to feed fire and security systems
c. FRM checks monthly
d. Looks for fire hazards, evidence of rodents and leaks
e. Ensure service charge being billed to landlord
f. Council informed for business rates to Landlord

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4
Q
  1. Anything to be mindful of due to age?
A

Asbestos and RAAC

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5
Q
  1. Do you have a procurement policy in place? What is it?
A

a. Yes, whilst I have limited amount of experience in the procurement we do have a policy that ensures
i. Competent contractors that complete Savills pre-contract checks
ii. Value for money, scope of appointment, fee bid, analysis
iii. Appropriate insurance
iv. Comply with laws and H&S

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6
Q
  1. Is there anything else within the lease you could have used aside from forward funding?
A

a. No there wasn’t but I am aware that sum leases may include a sinking or reserve fund

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7
Q
  1. Is it fair that tenants are picking up the shortfall because the unit doesn’t exist?
A

a. Lease clause within the service charge schedule allows change to configuration of the property.
b. landlord was invested £5m to regenerate an area that uninviting and increase to increase trade and footfall.

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8
Q
  1. What is the LL paying for resurfacing vs cap breaches?
A

a. The resurfacing costs are £300k but the breach in caps were £23k

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9
Q
  1. Why was 6 years forward funding decided?
A

a. The unexpired term certain for the retail park is 7.31 so it meant that the funding would be paid off before any vacancies occurred.

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10
Q
  1. Why was the building demolished and not carved up?
A

a. Because the plans was to increase parking spaces for tenants employees and easier access into the loading bay area which required removing the back of the unit.

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11
Q
  1. What is the cleaning in the schedules for?
A

This is for things like litter picking, sweeping of leaves, emptying bins, cleaning signage and general keeping clean and tidy.

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12
Q
  1. What was the inflation before issuing budget?
A

a. 11.1% in October it has now fallen down to 6.7% (August 2023)

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13
Q
  1. What do plans need to be registry compliant?
A

a. Title
b. Scale
c. North point
d. Redline

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14
Q
  1. What does it mean when a landlord goes into administration?
A

a. when a company becomes insolvent and is put under the control of Licensed Insolvency Practitioners.

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15
Q
  1. What is the difference between FRI and IRI?
A

a. Under an FRI lease the landlord has no repairing or insuring liability. IRI stands for an Internal Repairing Insuring lease where the tenant will have a narrower liability for maintenance, decorations, repairs and insurance confined to the internal parts of the property occupied by him/her.

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16
Q
  1. Do you know the average £ per sq ft for retail parks?
A

a. £1.40-£150 p Sq Ft

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17
Q
  1. Why was this retail park lower than the average £ per sq ft?
A

a. I am not 100% sure as I have not done analysis into this. I am aware that our maintenance costs, since having this on board, has remained low and the resurfacing is the first major works we are doing. In addition to this, we do not need to invest as much into the marketing budget due to the park sitting right next to the main centre

18
Q
  1. Is it a concern that the £ per sq ft has increased to £1.42?
A

a. No, at the moment the amount of the budget with unit 6 removed. The works for the three new units have now completed and once this is factored back in at the point of reconciliation then this will reduce it. In addition to this I did some analysis, projecting the increases for the next 6 years and once the forward funding for the roof works falls away in 2024 this will bring the £ per sq ft back to a normal level.

19
Q
  1. What is the current national living wage?
A

b. £10.90

20
Q
  1. How is the management fee set?
A

c. It used to be a percentage of the SC budget but now it calculated by benchmarking, finding out what work is involved, how big the site is, looking at comparable schemes.

21
Q
  1. Please can you explain what forward funding is?
A

a. It is where the landlord will front the cost of, in this case, the resurfacing costs and then charge the cost back to the tenants over a number of years

22
Q
  1. Is there any other way you could fund for these works?
A

a. No, not within these leases. But I am aware that, if the lease permits it, there is the possibility of using either a reserve fund or sinking fund. In this instance.

23
Q
  1. What is the difference between a sinking fund and reserve fund?
A

a. Sinking fund is where you money aside for planned expenditure
b. Where you put money aside for unexpected costs but this is really uncommon

24
Q
  1. Can you charge interest for forward funding?
A

a. Yes you can but only at the level the client is being charged

25
Q
  1. Where would you look for the FRI or IRI obligations?
A

a. You would look in the repairing and insuring obligations along side the description of the demise.

26
Q
  1. Is there any other ways apart from weighted you can apportion?
A

a. RV
b. Area
c. Percentage

27
Q
  1. Why did you apportion the retail park based on floor area?
A

a. Because this is the specified method within the lease

28
Q
  1. How did you manage the landlord and tenant relationship?
A

a. Primarily with the client, I ensured I kept them update on my progress and informed them of any delays. I had regular meetings with them and if I had any queries I would initially give them a call then follow up with an e-mail.

29
Q
  1. What budget have you had for previous tarmac repairs?
A

£5k -£15k pa

30
Q
  1. There was no savings made in doing the resurfacing works compared to the annual cost of maintenance, why was this the done?
A

a. Not done since 2007 possibly longer
b. Survey concluded resurfacing required
c. If not done this would invalidate insurance as ignored recommendaton

31
Q
  1. Why do Mcdonalds and Pizza hut pay towards drainage maintenance and repairs
A

a. This is in relation to drains within the common areas

32
Q
  1. When was the car park last resurfaced?
A

a. Before 2007 but it is believed to have never been done since the property was built

33
Q
  1. Is there any other staff costs in the retail park budget?
A

a. The only staff costs we have within the expenditure is for the cleaning of the site which as per the service charge statement advices these should be included within cleaning.
b. This is the same for security. We do not have physical security that walk around but they monitor from a main control room and

34
Q
  1. There is forward funding for the roof works on the terrace of units. Was the Toys R Us roof done within these works?
A

a. At the time of agreeing the forward funding, the landlord at the time, was not sure of the plans to Unit 6. Therefore 2 options were provided for. The option for the full roof and the option for the full roof less unit 6. At the time, it was fair for unit 6 to contribute towards this. Works not done. Now it is demolished, the cost of this will not be charged and therefore the LL should not pay towards it.

35
Q
  1. Do we charge interest on the roof works forward funding?
A

a. We do not but you can charge providing reasonable and commercial rates on borrowed money

36
Q
  1. What are the current commercial loan rates?
A

a. No experience
b. Dependent on amount and term
c. Around 2%-13%

37
Q
  1. Who owns the roads around the park ?
A

a. adopted highway

38
Q
  1. Is it fair that the roof works were phased?
A

a. It is standard practice that this would be phased. In addition to this, setting the fee at the start means you don’t pay for increases in the future.

39
Q
  1. What is included within expenditure of the retail park?
A

Management fees
Utilities
security
cleaning
marketing
repairs
maintenance

40
Q
  1. How would you deal with RAAC within a property?
A

a. Building survey to identify if present
b. if present, condition and recommendations on manging/removing.

41
Q

Why does the client want new units to be on FRI leases?

A

As they are brand new, you would expect them to be handed over to tenants in the best condition. The client wants to uphold that condition and by having an FRI lease in place means it is the tenants responsibility rather than the LL.

42
Q

Why does the LL want remaining units to convert to FRI?

A

Now that the the three new units are build, the retail park as a whole is far more presentable. The landlord would like to keep it to this high standards and FRI leases means the responsibility is pushed onto the tenant.

APC Session 2 (19 decks)

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