Market Appraisals Level 2 - Pharmacy in Nottingham

Question 1

Talk me through this appraisal

Answer 1

I was received a request to appraise a freehold pharmacy investment for a potential auction disposal

the property was let to a popular covenant on a 5 year term on a IRI lease.

I requested the relevant details from the client and arranged a call to discuss reasons for sale.

I researched into the local area, compiled comparable evidence and established a yield.

I drafted a market appraisal with guide price and reserve.

Question 1

Describe the property

Answer 1

End of terrace property over ground and first floors
solid brick construction
casement windows
pitched roof

Question 2

What is an IRI lease?

Answer 2

Internal repairing and insuring lease, tenants have narrower repair and insurance liabilities which are confined to the internal demise.

Question 3

How did you factor the IRI lease into the appraisal?

Answer 3

I spoke with the client and asked what he had spent on the property in the last 5 years, I then took an average for that and discounted it from the income before capitalising.

Question 4

what did you notice about the local area?

Answer 4

pharmacy served the local residential community tenant had been in there for 15 years and was trading well.

Question 5

What guide price did you recommend?

Answer 5

£200,000

Question 6

what did you recommend in terms of letting / sale?

Answer 6

as the property was located in a predominately residential area the re letting prospects were limited

however the tenant had been in occupation for 15 years and let to a national retailer trading as a pharmacy.

pharmacies are a very popular sector which has been reflected in Allsop sales over 50 boots in the UK

Question 7

What are yields like in retail?

Answer 7

Prime - 6.75-7.00%
Auction UK retail average - 9%