Case Study Questions (Refer to APC 1) Flashcards

1
Q

How big is the Silvertown Masterplan?

A

27 hectares

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2
Q

Did you formalise the instruction in any way?

A

Written confirmation in an email

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3
Q

How many units are there in the project?

A

599

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4
Q

How many BTR units are there in the project?

A

423

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5
Q

How many affordable units are there in the project?

A

176

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6
Q

What was the affordable tenure split?

A
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7
Q

What is RIBA Stage 2?

A

Concept Design

  • Architectural concept developed and approved by the client
  • Aligned to the Development & Project Brief
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8
Q

What is a RMA?

A

SAALL

  • Scale
  • Access
  • Arrangement
  • Layout
  • Landscaping
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9
Q

How many phases are there in the masterplan?

A

5

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10
Q

What is the role of the GLA in the scheme?

A
  • GLA are the landowner
  • Strategically, GLA are responsible for the strategic administration of Greater London, including regeneration
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11
Q

What is a Registered Provider?

A
  • Organisations that provide social housing
  • Three types
  1. Not for profit (housing associations)
  2. For profit
  3. Local authorities

Overseen by the Regulator of Social Housing

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12
Q

What are the different types of affordable housing?

A

RENT:

  • Affordable / Intermediate Rent (20% lower than market rent)
  • Social Rent (50%lower than market rent)

E.g. London Affordable Rent (20% lower than market rent)

BUY:

  • Affordable / Intermediate Sale (20% lower than market value)

E.g. Shared Ownership (20% lower than market value)

Also First Homes Scheme (30-50% lower than market value)

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13
Q

How can an amenity offer support rental values?

A

A rental premium can be charged where developers have a suite of amenities

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14
Q

How did you determine what rental values would be attractive to target tenants and the investor market?

A

Tenants:
- As can be seen in the appendix, I undertook thorough investigation to understand what demographic the plot should be looking to attract
- I also referred to residential agents

Investors:
- Investors will look at the financial performance of an asset, so ensuring there is strong revenue and cap value, it ensures the IRR is higher

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15
Q

What are key metrics that investors would look at?

A

IRR

(Check with James??)

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16
Q

Why did you discount Option 1 - No / limited amenity offer?

A

Positives:
- Reallocate amenity spaces to units

Negatives:
- Not attract target tenants who would expect onsite amenity
- Not attract investors if rental values weren’t attained

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17
Q

Why did you discount Option 3 - Premium amenity offer?

A

Negatives:
- Not attractive target tenants due to unaffordable rent
- Not attract target investors due to increased operational expenditure

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18
Q

Why did you advise to proceed with Option 2 - Standard amenity offer?

A

Positives:
- Attract target tenants who are likely to be working a desk based job and could utilise the co-working space / enjoy the convenience of an onsite gym, but not be willing to pay higher rent for amenities they wouldn’t utilise
- Attract target investors as operational expenditure would not be increased through additional amenities

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19
Q

What is operational expenditure?

A

Typically 21.5 - 24.5%
Void of 4%

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20
Q

What does op ex include?

A

Op ex:

  • Staff costs
  • Security
  • Cleaning and refuse
  • Utilities
  • Repairs and maintenance
  • Property admin expenses
  • Health, fire and security
  • Lift servicing
  • Landscaping / external management
  • HVAC
  • Insurance and fees
  • Property manager fee
  • Individual flat refresh allowance

Leasing ex:
- Leasing staff and admin
- Advertising, website and promotions

Capital ex:
- Sinking fund provision
- Total capital expenditure

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21
Q

Please explain the comparable method of valuation?

A

The comparable method can be used where there is a good body of recent, reliable comparable rental, yield or sales evidence

  1. Find comps
  2. Find headline rent to give a net effective rent (as appropriate)
  3. Assemble in schedule
  4. Adjust using hierarchy of evidence
  5. Opinion of value
  6. Report value and prepare file note
22
Q

Please explain the hierarchy of evidence?

A

A - Direct comps (completed transactions / asking)
B - Market data (commercial databases/indices/historic evidence/market demand)
C - Other sources (locations/assets)

23
Q

Why did you discount option 1? Achieved rents within 2 miles

A
  • Royal Wharf - 2020, comparable location, but more premium offer, higher rents due to premium amenity offer
  • Fizzy East 16 - 2022, less comparable location, limited amenity offer, higher rents due to location

Negatives:
- Insufficient to base market rents on two sources with different amenity offerings

24
Q

Why did you discount option 3? Expand search area and utilise achieved rents within 5 miles

A

Negatives:
- Discounted due to less comparable locations

25
Q

Why did you advise to proceed with option 2? Utilise achieved and asking rents within 2 miles

A
  • Millet Place - 2002, comparable in terms of location, inferior amenity offer, inferior rents to project

Positives:
- Achieved rents in Option 1
- Asking rents from additional scheme

26
Q

What were the projects rents in the end?

A

Studio: £1,670

3b6p: £3,350

27
Q

What were the projects rents per sq ft?

A

Studio: £40psqft

3b6p: £32

28
Q

Have these rents increased from the time of instruction?

A

By about £100pcm (£6/7 more psqft)

Studio: £1,772 (£47)

3b6P: £3,481 (£38)

29
Q

What yield did you apply?

30
Q

What void period did you apply?

31
Q

What purchaser’s costs did you apply?

32
Q

What inflation did you apply?

A

2.2% at the time

33
Q

What was the GDV of the scheme?

34
Q

What was the value of the BTR?

35
Q

What were the total development costs?

36
Q

What was the profit of the scheme?

37
Q

What was the MoC of the scheme?

38
Q

What is a planning risk?

A

Potential issue or uncertainty that can arise during the planning / implementation stage.

  • Unrealistic programme / budget
  • Lack of stakeholder buy in (insufficient engagement or agreement)
  • Regulatory / legal issues (changes in regulation / unforeseen legal challenges)
  • Other challenges include misunderstandings, misinterpretations, incomplete applications, payment of fees, timing of committee meetings
39
Q

What is compliance?

A

Alignment to legal and regulatory standards

40
Q

Why does your client use MoC, what else could they use?

41
Q

Talk me through Option 1 - Increase massing

A
  • Add storeys to increase number of apartments to improve GDV
  • Reviewed max building heights plan, dictated by safeguarding of LCY, to establish project already at its max height
  • Breaching consented parameter plan is failure to comply with S171A of T&P
42
Q

What does the Town and Country Planning Act (1990) set out?

A

Act of Parliament that regulates land development in England and Wales - it is planning law

43
Q

What does Section 171A of the Town and Country Planning Act (1990) set out?

A

“carrying out development without the required planning permission, or failing to comply with any condition or limitation subject to which planning permission has been granted constitutes a breach of planning control”

44
Q

Talk me through Option 2 - Switch tenure

A
  • Switching affordable to private to improve GDV
  • Reviewed MA with the RP to understand commitment
  • Certain number of AH have to be delivered in Phase 1
  • Not delivering this would breach MA
45
Q

How many homes have to be delivered in Phase 1?

A

721

Actually stipulates how many per plot

46
Q

Talk me through Option 3 - Value engineering

A
  • Work with quantity surveyor to undertake VE
  • Identified:
  1. Switching to aluminium to composite windows
  2. Switching from bespoke to standardised balconies
  3. Cheaper façade treatment
  • Reviewed RPs design spec to check these were acceptable, which they were
  • Engaged with DP9 to check if they posed a planning risk, which they did not
  • Reduced CC which increased MOC to 14.19%, threshold is 14%
47
Q

What is included in a Cost Plan?

48
Q

How did you adhere to the Rules of Conduct?

A

Seeking advice from:
- Residential agents
- Quantity Surveyor
- Planning Consultant

49
Q

What does the PS: Comparable Evidence in Real Estate Valuation (1st Edition, 2019) set out?

A
  • Principles of comparable evidence
  • Sources of comparable evidence
  • Recording of comparable evidence
  • Recording comparable evidence
  • Analysis of comparable evidence
  • Dealing with a shortage of comparable evidence
50
Q

What else would you have considered in the sensitivity analysis?

A

Other development costs:

Reviewed:
- Marketing fees
- Planning fees