Case Study Basics Flashcards

1
Q

What were the different site densities?

A

Omar: Units 1-3 (122,000 sq ft) 35% Site Density

Rettig: Units 4-8 (57,000 sq ft) 50% Site Density

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What was the construction of the properties?

A
  • 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

When did the leases commence?

A

Both in 2018

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What was the Credit Score of Omar?

A

96 (V Low Risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What was the Credit Score of Rettig?

A

78 (V Low Risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What did you learn from the comparables when establishing MR?

A

Storage Land comparables - £25,000 to £45,000 per acre

Unit comparables - £2.50 to £5.00 psf

Site Density comparables – 20% to 65%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What was your best comparable for establishing MR?

A

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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What were the MR calculations?

A

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 well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How did you triangulate the options?

A

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.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What did you learn from the comparables when establishing MV?

A

Yields comparables – 6% to 13.5% (provided on NIY)

Investment rates psf - £12 to £60 psf

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What was your best comparable evidence for reaching MV?

A

Comparable 5 – Hedon Road – June 2021, £33 psf and 9.4% NIY

Comparable 7 – Grimsby – July 2020, 13.55% NIY – let on 2 leases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What voids did you assume in your MV?

A

Voids 9 months re-letting

3 months rent-free typical

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What was your calculation for the MV?

A

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)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What were the purchaser’s costs for the MV?

A

Purchaser’s Costs = SDLT £190,000
Agent 1%
Legal 0.5%
VAT on these at 20%
Total = £260,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What was the equivalent yield?

A

11.98%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly