Case Study Questions Flashcards
Please can you tell me about Golders Green and the sort of market it is?
Golders Green is an affluent suburban location which is located north of Central London
It has strong transport links with Golders Green Tube Station being served by the northern line.
The location itself is a secondary retail pitch
East of the property there is a good retail offering
Located close to the property are several national occupiers including KFC, Cafe Nero, Natwest, Llyods Bank, Sainsburys
Junction 1 of M1 is just over 1 mile west
Please can you tell me about the specification of the building?
The Property forms part of a period building parade which was constructed in the early 1911-1912 and is of traditional construction with sold wall construction
Solid wall construction - Solid brickwork with headers normally at least one brick thick this is different to cavity walls where no headers are used
The Property itself comprises a metal framed glass shop front including partial rendering to the return frontage onto Golders Green Way.
Additionally, the Property sits under a flat roof
What are some common building defects in period retail buildings?
Dry rot and wet rot
Tile slippage on the roof
Damp penetration at roof and ground floor level
Water ingress
Structural movement / settlement
What are some common defects with flat roofs?
Excess pooling of water which would result in leaks
Tears and holes in the material
Generally has a shorter life span of around 15 years in comparison to a pitched roof which is much longer at 30 years
Can you tell me about Regent Street Disease
Corrosion related damage which occurs in some buildings constructed in the first half of the 20th Century
Construction uses a steel frame embedded within the facing stone
Problems arise when the steel corrodes and causes a secondary effect and cracks the stone work
How could the flat roof impact trading?
If this needs replacing it could disrupt the trading of the store
Additionally, if it has caused internal damage for example leaks this could further disrupt the store
Common defects with rendering?
Cracking walls
Damp and mould
Hollow or loose render
What did your planning inquiries identify?
Grade II Listed Property
Located within Golders Green Conservation Area
Chimney Stacks
Triple shafted chimney stack is present
Common defects with chimney stacks
Deterioration due to the age and exposure to weather
Cracking
Flacking / Crumbling of the brickwork
Water penetration
What is the equivalent yield?
The internal rate of return of the cash flow for the Property assuming a rise to ERV at the next review
It will lie between the initial yield and the reversionary yield
How did you apply an equivalent yield to the comparables?
The comparables were ran through Argus Enterprise
I discussed the inputs with the relevant agents to gauge their opinion as to the Market Rent
Why did you utilise the equivalent yield?
It is a common practice to apply the equivalent yield to the comparable evidence
Due to the difficulties in the retail market at the time it was a useful to identify the equivalent yield to understand the changes in the market rents at the time
Did you consider Vacant Possession?
Within the instruction letter the Client did not request the vacant possession value
However due to the nature of the covenant and property type i considered vacant possession sales too
Based upon my opinion of Market Value with Vacant Possession £640,000 equating to £285 per sq ft an equivalent yield of 7.50% and a reversionary yield of 8.36%
12 Mont void period and 6 months rent free
What alternative method could be used to value this property?
Discounted Cash Flow
Please can you outline the DCF method?
Did you consider a reinstatement figure?
Due to the nature of the Property the reinstatement value was done on the basis of the entire mixed use building and was estimated to be £1,730,000 the value was derived from BCIS
The reinstatement figure was not on a formal reinstatement cost assessment and is purely for guidance only and should not be relied upon
If there are any discrepancies I outlined that a formal reinstatement cost assessment should be commissioned
The basis of the reinstatement figure?
For fire insurance purposes
Including cost of clearance and professional fees but excluding VAT except on fees
Loss of rent
Cost of alternative accommodation for the reinstatement period
Consideration of reinstatement?
It is an end terrace property
Consideration for party walls and neighboring units
There are several national occupiers on the pitch at what level would you consider that they would transact at?
I would expect a stronger covenant to transact at a much lower yield
This is evident in the sale of 58-60 Golders Green Road - this transacted after the valuation date but i am aware it achieved Net Initial Yield of 5.11% and included 3 residential flats
What was the total Market Value for the property inclusive of the residential element?
£3,260,000
5.02% NIY, 4.93% EY, 4.94% RY
What is the black dashed line on the OS Map?
This are denoted paths which have been identified by Ordnance Survey but they are not necessarily rights of way as their status is not defined or known
What is the red cross on the OS Map?
This is the Spot Height which records the elevation at that point which is 0.67m
What is GP & TCB on the OS map
Guide Post
Telephone Call Box
What is the purple dashed line?
Boundary line
PO and PW on a map?
Post office
Place of worship
What occurred with regards to the Liquidation?
The original tenant Wallers Clothing Stores Limited appointed a liquidator for a voluntary wounding up
What is voluntary winding up?
This is where you choose to liquidate your company
The company stops doing business and employing people
This is where you choose to liquidate your company
Both private limited companies
What is liquidation?
Where assets are sold to repay debt
What occurred in the assignment?
Wallers Clothing Stores Limited assigned the lease to MP Menswear Limited in November 2020
MP Menswear Limited were a new start up ran by the same principle
There was no guarantee
There was a rent deposit of 3 months which equated to £15,625
Did you run checks on the tenant?
I undertook a Dun&Bradstreet
I was also aware that the tenant had gone through a liquidation process the previous year
How do you think that asset would transact in the current market?
So i think in comparison to when the valuation took place last year the effect of Covid-19 seems to have hopefully disappeared
Now there is the factors of inflationary pressures and weakening economic sentiment start to exert an influence on occupier confidence
Based upon this secondary location may face a reduction in demand and a downward pressure on rental levels
However, Golders Green retail pitch is still a well populated pitch with its primary offering being to the residents in the surrounding area rather than
What did you include in the terms of engagement?
What section of the Red Book deals with Terms of Engagement?
What does Loan Sec vals come under in the Red Book?
What are the additional requirements for Loan Security vals?
Talk me through how you inspected the property?
How did you measure the property?
What do you include and exclude in NIA ?
How would NIA v IPMS differ?
What are the three catergories of comparable evidence under the RICS guidance?
Catergory A - Direct Comparables
Catergory B - General Market Data
Catergory C - Other sources
What purchasers costs were deducted?
SDLT - Standard rates
Agents fees - 1%
Legal fees - 0.5%
