Case Study Basics Flashcards
What were the different site densities?
Omar: Units 1-3 (122,000 sq ft) 35% Site Density
Rettig: Units 4-8 (57,000 sq ft) 50% Site Density
What was the construction of the properties?
- Developed piecemeal since 1930’s
- Varying age and construction
- Typically steel-portal frame with pitched profile metal roofs
- Elevations brickwork and profile metal cladding
- Low eaves with 3.62m maximum
- Asbestos roofs to some of Omar units
When did the leases commence?
Both in 2018
What was the Credit Score of Omar?
96 (V Low Risk)
What was the Credit Score of Rettig?
78 (V Low Risk)
What did you learn from the comparables when establishing MR?
Storage Land comparables - £25,000 to £45,000 per acre
Unit comparables - £2.50 to £5.00 psf
Site Density comparables – 20% to 65%
What was your best comparable for establishing MR?
Comparable 5 – Hedon Road – 9.5-acre site with 86,000 sq ft unit (20% site density)
- Series of similar type units
- Holiday Home manufacturer (Willerby)
- Similar location
- £3.37 psf rent
- Sale and leaseback however
What were the MR calculations?
Valuation:
Omar - £3.25 psf (including land) x 122,000 sq ft = £400,000 p.a.
Rettig - £2.55 psf x 57,000 sq ft = £145,000 p.a.
= £545,000 p.a.
How did you triangulate the options?
TRIANGULATE -
- £2.65 psf units x 122,000 sq ft = £325,000 p.a.
- 3.7-acres x £20,000 per acre = £75,000 p.a.
= £400,000 p.a.
What did you learn from the comparables when establishing MV?
Yields comparables – 6% to 13.5% (provided on NIY)
Investment rates psf - £12 to £60 psf
What was your best comparable evidence for reaching MV?
Comparable 5 – Hedon Road – June 2021, £33 psf and 9.4% NIY
Comparable 7 – Grimsby – July 2020, 13.55% NIY – let on 2 leases
What voids did you assume in your MV?
Voids 9 months re-letting
3 months rent-free typical
What was your calculation for the MV?
Valuation:
Omar –
Term: Passing Rent £360,000 p.a. x 10.5% for 0.9 years (assuming break in 12 months)
Reversion: MR £400,000 p.a. x 12% in perpetuity (deferred 2 years)
=£2,985,000
Rettig –
Term: Passing Rent £115,000 p.a. x 10.5% for 1.12 years (14 months remaining)
Reversion: MR £145,000 p.a. x 12% in perpetuity (deferred 2 years)
=£1,050,000
= £3,800,000 after purchaser’s costs of 6.52%
(£21.16 psf)
What were the purchaser’s costs for the MV?
Purchaser’s Costs = SDLT £190,000
Agent 1%
Legal 0.5%
VAT on these at 20%
Total = £260,000
What was the equivalent yield?
11.98%