Case study Flashcards
What other methods of valuation did you consider?
Comparable valuation - using comparable restrictive covenant releases but they would need to be specific, which is rare to find and even then don’t know the basis of valuation for the comp.
Damages under section 84 - valuation of the impact of losing the benefit of the restrictive covenant – this figure would be nominal – this ignores the commercial benefit of the release
Run me through your freehold investment valuation…
I was given the HoTs for the development which outlined a 40 year 16 MW BESS scheme at a rent of £2,300 per MW.
This equated to an annual rent of £36,800
I capitalised the rent by 7% for 40 years using the parrys table figure, which gave me a value of just over £490,000.
I adopted a 7% yield as this was considered suitable by my energy specialist team.
What Parrys figure did you use?
13.3317
What does project value mean?
The value to be able to build and operate the BESS scheme with planning, land rights and grid connection in place.
How did you arrive at a project value rate of £100,000 per MW?
The energy team maintains a comparable database of similar transactions. The range is £70,000 and £150,000, I went broadly in the middle and discussed this with the energy team, who agreed with this approach.
Can you tell me about the case law you considered in your negotiations?
The valuation of a strip of land that unlocks the development. A percentage is taken of the uplift in value of the development land.
Stokes vs Cambridge - 33% - The Court held that one-third of the increase in value should be attributed to the ransom strip as ransom holder would benefit from the development
Ozanne v Hertfordshire County Council - 50% - on the basis that there was only one practicable access.
Batchelor v Kent County Council - 15% - due to the availability of alternative accesses.
