Level 3 - Office Unit, Bristol Flashcards
Tell me about the Property?
Bristol City Centre location
Period building - Grade II listed facade
Terraced office recently refurbished to a good standard
Grade A
EPC B / BREEAM Very Good
46,800 sq ft
12 parking spaces
How old is the building? When was it updated?
1875 original construction
Turned to offices in 1999
Extended in 2007
Refurb in 2020
What does BREEAM Stand for?
Building Research Establishment Environmental Assessment Method
What did they refurbish?
Upgrades to reception & end of journey facilities
Upper offices - new flooring, ceiling, LED lighting
EV charging points
M&E upgrades - VRV
What are the void costs?
Empty Rates
L&L fees
Service Charge Shortfall
What % of void costs are there?
Empty rates - 50% of MR
L&L - 15% of MR
Service Charge is subject to facilities
How did you gather comparables?
CoStar
Recent lettings in the building (post-refurb)
Discussion with agents
What characteristics did comparables have? MR
Between 3,000 - 7,000 sq ft
Between 10,000 - 20,000 sq ft
Grade A or refurbished
Good sustainability features
City Centre location
What adjustments did you make?
Quantum - differing size of suites
Top floor balcony
Refurbished nature
Location
Amenities
What yield did you apply?
6.75% equivalent
6.9% reversion
What was MR?
£37.00 psf
Grade II impact on value
Maintenance cost
Reduced ability to repurpose
Planning restrictions
What was the Market Value?
£24,000,000
What was the marketing period?
3 - 9 months
Glut on the market
Was it a Red Book Valuation?
Yes it was for internal reporting purposes
How did I form my market period figure?
Discussed with office agents to understand how long this asset would take to let
How did you form your yield profile for MV?
Assessed comparable investment sales and made adjustments.
I confirmed this by capitalising against a income stream of MR.
Why would quantum yield a discount?
It would be assumed that a occupier taking on more space, would require a discount as the landlord would be offloading more space. The inverse is true for small space = higher
How did you reflect the Grade II nature in your yield?
I adopted a more conservative yield implicitly, as investors may deem it more risky due to maintenance costs
What evidence did you place most weight on for MV?
Recent sales of multi-let buildings were smaller and deemed more risky due to lower quality.
I had regard to a new build, ESG-focus building which was deemed lower risk.
What evidence did you place most weight on for MR?
Recent Lettings in the building as direct comparable
Post-refurb transactions within the property.
Good quality second-hand space
new build prime properties.
What was the WAULT?
8.94 years to expiry
4.52 years to break
4 tenants
How do you calculate WAULT?
- Calculate weighted lease terms = unexpired lease term in years x rental income
- Sun total rental income
- WAULT = total weighted lease term / total rental income
Tell me about your Valuation of an office unit in Bristol?
Point 1 - I valued a recently refurbished 47,000 sq ft office in Bristol City Centre to assess MR and MV
Point 2 – I considered comparable OML and made adjustments to reflect quantum, refurbishment for MR
Point 3 – I considered the void periods to secure tenants, glut on the market, and also the Grade II listed nature when reflecting MV and yield.
