Level 3 - Office Unit, Bristol

Question 1

Tell me about the Property?

Answer 1

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

Question 2

How old is the building? When was it updated?

Answer 2

1875 original construction
Turned to offices in 1999
Extended in 2007
Refurb in 2020

Question 3

What does BREEAM Stand for?

Answer 3

Building Research Establishment Environmental Assessment Method

Question 4

What did they refurbish?

Answer 4

Upgrades to reception & end of journey facilities
Upper offices - new flooring, ceiling, LED lighting
EV charging points
M&E upgrades - VRV

Question 5

What are the void costs?

Answer 5

Empty Rates
L&L fees
Service Charge Shortfall

Question 6

What % of void costs are there?

Answer 6

Empty rates - 50% of MR
L&L - 15% of MR
Service Charge is subject to facilities

Question 7

How did you gather comparables?

Answer 7

CoStar
Recent lettings in the building (post-refurb)
Discussion with agents

Question 8

What characteristics did comparables have? MR

Answer 8

Between 3,000 - 7,000 sq ft
Between 10,000 - 20,000 sq ft
Grade A or refurbished
Good sustainability features
City Centre location

Question 9

What adjustments did you make?

Answer 9

Quantum - differing size of suites
Top floor balcony
Refurbished nature
Location
Amenities

Question 10

What yield did you apply?

Answer 10

6.75% equivalent
6.9% reversion

Question 11

What was MR?

Answer 11

£37.00 psf

Question 12

Grade II impact on value

Answer 12

Maintenance cost
Reduced ability to repurpose
Planning restrictions

Question 13

What was the Market Value?

Answer 13

£24,000,000

Question 14

What was the marketing period?

Answer 14

3 - 9 months
Glut on the market

Question 15

Was it a Red Book Valuation?

Answer 15

Yes it was for internal reporting purposes

Question 16

How did I form my market period figure?

Answer 16

Discussed with office agents to understand how long this asset would take to let

Question 17

How did you form your yield profile for MV?

Answer 17

Assessed comparable investment sales and made adjustments.
I confirmed this by capitalising against a income stream of MR.

Question 18

Why would quantum yield a discount?

Answer 18

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

Question 19

How did you reflect the Grade II nature in your yield?

Answer 19

I adopted a more conservative yield implicitly, as investors may deem it more risky due to maintenance costs

Question 20

What evidence did you place most weight on for MV?

Answer 20

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.

Question 21

What evidence did you place most weight on for MR?

Answer 21

Recent Lettings in the building as direct comparable
Post-refurb transactions within the property.
Good quality second-hand space
new build prime properties.

Question 22

What was the WAULT?

Answer 22

8.94 years to expiry
4.52 years to break

4 tenants

Question 23

How do you calculate WAULT?

Answer 23

1. Calculate weighted lease terms = unexpired lease term in years x rental income
2. Sun total rental income
3. WAULT = total weighted lease term / total rental income

Question 24

Tell me about your Valuation of an office unit in Bristol?

Answer 24

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.