Case study Flashcards
What timescales did you adopt?
Timings – 35 month total Purchase – 1 month Pre-construction – 3 months Basement works – 8 months Construction – 14 months Sale – 12 months (phased to match completion of each block. 40% block 1 and 2 pre-sold, with 2 per month thereafter)
How did you apportion the sales?
12 month sales period
Phased to match completion of each block. 40% block 1 and 2 pre-sold, with 2 per month thereafter
What was the overall build cost?
£203 per sq ft GIA excl basement
What was BCIS measures?
Subject: £203 per sq ft
Median 3-5 storey: £150 per sq ft
UQ: £200
What did you professional fees include?
25% Architects
20% CRL Warranty
10% Internal design
10% QS
What was the CIL rate?
£180 per sqft
What was your fee?
£8,500
What was your PI?
£10m in aggregate
What was your average value?
£689 per sq ft / £450,000
What were you comparable values?
Silverwood: £619 psf / £550,000
Oakside Court: £506psf / £470,000
41a Green Lane: £619psf / £375,000
Salisbury Court: £696 psf / £680,000
What discount did you put on the studio?
Had regard to the tone of comparable evidence
£20k vs worst 1 bed; £75k vs same floor/aspect 1 bed
What premium did you put on the 3 beds?
Had regard to the tone of comparable evidence
£30k vs best 2 bed; £50k vs similar floor/aspect 2 bed
Silverwood values
£619 psf / £550,000
Oakside court value
£506psf / £470,000
Salisbury court values
£696 psf / £680,000
41a Green Lane values
£619psf / £375,000
Service
Working late to finish report
Trust
Detail in ToE of services fees
Detail all assumptions/comps in report
Integrity
Cross checking all information e.g. calling agents, discussing build costs
Respect
Respect agents who don’t want to disclose info
Responsibility
Setting up project sheet, CoI check, ToE
Why was Silverwood a better comp than Salisbury Court given the proximity of sale and location?
Development size (24 units vs 9)
Development design (3 blocks similar to subject v 1)
Salisbury: 1 sale useful for 2 beds rest too large
Salisbury on road corner, Silverwood along road (similar to subject)
Able to collate more detailed information on Silverwood than Salisbury
What was the LTV/loan terms?
LTV c.60% didnt know the loan terms - assumed it was commercial. Not my place to comment on as its their credit risk
How does the TPO impact value
Cost of report covering it
Cost to design to mitigate impact
Cost of managing it during development
Can bring additional value to the scheme
What was the service charge?
Was TBC but assumed it to have minimal impact on the units
Was there asbestos from the carehome?
No - had a third party environmental report (level 2)
Confirmed there was no contamination on site
How did you determine a new build premium?
1) Might expect one due to quality, insurance, scarcity
2) Depends on the market and is impacted by location, type and market
3) Spoke to agents to understand demand levels
4) Felt that the subject would get a premium but not a specific value as I had to consider than in relation to all other factors
Made an informed judgement based on the tone of the evidence
What were the developers timescales?
Excavation = 8 months Build = 14 months
Why did you consult the land agent? How do you know it was accurate info?
1) Understand the demand for the site
2) VPGA 2 - if there is a recent transaction, investigate it to understand the circumstances surrounding it.
1) Professional scepticism
2) Speak to my own land team
How did you account for ground rents? Why are they an issue? How do you account for them?
Gov. indicate they will remove. Prudent developers are not accounting for them.
Harder to get a mortgage on an “onerous” ground rent (i.e. double every 10 or 20 years or over 0.1% MV - depends on bank). Therefore need a cash buyer (who will want a discount)
Find comps on similar terms, investment method
What if your site was freehold with large ground rent?
Pass onto buyers in their lease
Extinguish by paying lump sum to freeholder (capitalise ground rent into perp)
What was the average value of a 1 and 2 bed?
1 bed: £693/sq ft / £395,000
2 bed: £686/sq ft / £535,000
Overall: £689/sq ft / £450,000
What size was your scheme / av. 1 and 2 bed?
Overall: 26,223 / 656 sq ft
1 beds: 570 sq ft
2 beds: 775 sq ft
What was in the s106 other than AH? What about future viability?
1) Alert council 5 days before commencement
2) Alert council 15 days before completion
3) Pay £1,750 engrossment fee
Substantial commencement 48 months from PP granted (23rd March 2021) or have update viability assessment. There could then be a commuted sum of up to £2m indexed at RPI from PP grant date.
What appraisal inputs did you have?
GDV = £689 psf
Build = £203 psf overall / £160 on main build
Contingency = 5%
PoC = 17.5%
Prof fees = 9.5%
Marketing = £150,000 / 1% GDV / £3,250 per unit
Finance = 6%
Resi agents/legals = 1.25% / £1,250 per unit
Land agents / legals = 1% / 0.5%
SDLT = 4.78%
CIL = £180/Sq m indexed at All in TPI
What proportion of build cost was the basement
21%
How would having AH impact your val?
Get AH team to value it - add their numbers into appraisal
- Package price, 30% golden brick 3 months, model revenue across construction
- PoC lower for AH so blended lower
- Build cost potentially lower for AH
- Sales rate as fewer private units
- Statutory costs (e.g. CIL) may differ
Average 3 bed value?
£580k / £650 psf
Studio Value?
£375k / £800 psf
1 bed avergae value
£394k / £690 psf
2 bed average value
£535k / £680 psf
overall average value
£450k / £689 psf
