Level 2 - Example 1

Question 1

What was the EPC rating and flood risk?

Answer 1

EPC Rating- D and valid until 6th August 2030

Flood risk- very low

Question 2

Please can you describe the property?

Answer 2

The property is situated on Newbury street in Noho, compromising 17,932 sq ft of office space over 5 floors. The property was constructed in late 1900’s with a flat roof and double glazing. Concierge, two passenger lifts, toilets, showers and bike storage.

Question 3

What were the lease terms of the tenant in occupation?

Answer 3

Let to Overbury Plc on a 10 year lease from 2020 with upwards only rent reviews at year 5. Let at £65psf

Question 4

Where in the RBG would you find the basis for secured lending?

Answer 4

VPGA2 - Market Value is the basis of value widely used for valuation or appraisals undertaken for secured lending

Question 5

Other than EPC, what other due diligence checks should you undertake?

Answer 5

Asbestos, fire safety compliance, legal title, business rates/ council tax, Equality Act 2010 compliance

Question 6

Please could you explain how you used the term and revision method in Noho?

Answer 6

Under rented property- adopted T&R investment method

Capitalised the term until rent review at an initial yield of 5% to find MV

Capitalised revision to MR into perpetuity at a reversionary yield of 6% to find MR after allowance for suitable void period and rent free assumptions

Sum of T&R after accounting for standard purchasers costs equals MV