Df Flashcards
CS Planning use impact on valuation
B2/B8 Planning use, so didn’t impact valuation
if restricted planning uses applied then yes
How did you determine an EY on your asset
Reviewed NIY schedule
Reviewed current prime yields
Approached investment agents to discuss likely EY or rack rented Yields
How did you establish your profit level ?
Profit levels are linked to risk and the market generally reflects this risk.
Aware of the higher risk environment I spoke to land agents/ development agency team about site they are selling and the discussions they have had regarding targeted profit levels.
Comparable scheme would be 17.5% given the high risk of current environment.
Staircase or columns when zoning?
Masked areas and potential area taken out of ZA
How did you consider the age of the building CS
1980s construction and so had outdated specification
Basis of value
MR
MV
FV
IV
Marriage Value
Additional value from combining 2 or more real estate interests
example of marriage value
2 neighbouring properties - provides a greater development plot
combining freehold and leasehold interests
How did you determine your break for unit A CS
Assessed substitutability, affordability and cost.
Affordability:
Let at rent reflective of 5 years ago i.e. similar to unit B, good rental growth due to rr at break date they would be paying a rent reflective of this high MR, poor covenant would they be willing to pay this?
Substitutability
Low availability, however could argue that they had too much building for their requirements, easily 2m clearance height they weren’t using, floor area wasn’t intensively used excess capacity. And so they could easily find a unit which was smaller and more readily met their requirements.
Cost element
Low sunk costs, not much investment (shelving not fit out to the offices) they could move in a moments notice
Evidence built a narrative that they would vacate.
Vacation at lease expiry CS?
Would need categoric evidence of them staying, reversionary lease or lease renewal.
Suggesting that the secured income would extend from 3 years to say 8 would significantly impact valuation to a point that it could be misleading.
Why did you instigate CAPEX CS
Well received a capex figure of £15 psf from the client.
they did not provide an exact break down of what they were hoping to expend however they were hoping to improve the office space with a refurb and improve the EPC rating.
The property is good condition and had full reinstatement provisions why capex ?
When valuing a property I always consider the target market of the asset and how prospective investor would perceive the asset.
Yes property would be re instated and it was in good condition commensurate with age and use. However was also 40 years old with a short UXT of around 3 years. I considered this property to be a value add investment where the investor seeks to burden the risk of reletting the demise and invest in the property to enhance the value.
