My Reports Flashcards
How have you reached an equivalent yield with regard to your VP sales used?
We derive a market rent, take away any non recoverable outgoings to reach a market income. We then make adjustments to the sale price of the property adjusting for any vacancy and letting, agents fees and any incentives. This will give us an adjusted sale price and we would divide the market income by this amount to reach our equivalent market yield.
What is the section 173 agreement in your retail property in relation to?
It relates to a planning permit for a nightclub within the parent development and talks about the need for carparking. The nightclub is no longer in use so this section 173 agreement no longer applies.
Talk me through your rental evidence used for your retail reports and the comparison of these to the subject property retail strip?
All are smaller properties on Glenferrie road. Some are spread north and south in what would be secondary location. The most comparable bit of evidence is one within the same shopping centre. The upper end is set by a shop opposite the entrance/exit to glenferrie station.
What are retail properties measured with?
API adopts IPMS but does not have one for GLAR retail so we use PCA
What are the major drivers for retail property?
Foot/vehicle traffic + vehicle exposure - location close to hubs like railway stations
What are the major drivers of industrial properties?
All about utility - clearance height, office to warehouse ratio, access, location relative to hubs and city
With your industrial how did you approach your income with your property being done on vacant possession?
Adopted market income and capped this. Made deductions for vacancy and letting up allowances
How have you derived an equivalent yield for your VP sales in your reports?
Derived market income, minus any non-recoverable outgoings. This gives us our market income. Take sale price and make adjustments to the price to allow for vacancy, letting up, agency fees and incentives (these are added to the price). This adjusted sale price is then divided by the market income to give equivalent market yield.
If your property was underlet for 2 years how would you treat this?
Get market income (market rent minus non-recoverables) and cap this with appropriate cap rate. We then find the NPV of the loss of income. This is then deducted in a below the line adjustment to give us our value.
Are all of your sales for industrial the same zoning? Does this make a difference to the value?
No they are not. There is a mixture (1x C2Z, 1x ACZ, 2x INZ3, rest are INZ1). As vacant land this may make a difference in value when assessing highest and best use. But for the majority of these the highest and best use is their current use as strata industrial premises. Similarly they all border residential zonings and therefore would be unlikely that the council allows any heavy manufacturing or uses as this may be detrimental to the nearby community.
How has Industrial market been since covid?
Has been strong - covid increased WFH - less need for larger offices in the city, probably pushed more demand towards warehouses that have sufficient office space. SImilarly, online stores and ecommerce have increased demand for warehousing for storage purposes.
What is a prime industrial warehouse?
Managers and valuers have told me its to do with being a good quality warehouse that is well located. This will mean it has appropriate fire safety equipment, good clearance height, roller door, access, good quality office and fitout etc.
How did you determine your letting up cost in your industrial?
Agents fees, usually with marketing a standard 15% of the first year of lease
A vacancy period where the property is on the market - depends on the market but usually about 3 months
Incentive - if there is any - industrial market very little
There is a covenant on Residential report, what is this in regards to?
Building conditions and envelope being in accordance with small lot housing code and approval from responsible authority.
There is an agreement section 173 on your retail report, what is this in regards to?
This section 173 agreement included a planning permit for the use of the land as a nightclub with some provisions from council. The Agreement has been stated to end when the subject lands use as a place of assembly (night club) ends. Was originally Room 680, no longer there
Your retail report has a heritage overlay. What does this
It relates to controls on solar energy systems on the property. It does not include anything like external paintwork or internal alterations.
What land rate and building rate did you adopt for your resi report?
$1,100 sqm land
$1,700 sqm building
What rent did you adopt for industrial and what per sqm land rate?
$160/sqm rent based on dated rental of old rental in development
$3,250 land
What rent did you adopt for retail and what per sqm rate?
Market rent was at $800 so we adopted the passing rent - which is equal to about $815 psqm
Land rate adopted was $13,250 per sqm based on burke road sale
Talk me through your sales for your retail property?
All sales were strata units. Was hard to find something of similar size and strata unit of comparable nature.
Burke Road - fairly comparable, better frontage, smaller strata, no carpark opposite, not as good anchor tenants (higher yield than this, but similar rate per sqm direct comparison)
1414 Toorak Road, Camberwell - larger GLAR, better frontage but inferior exposure and traffic overall (lower yield expected, higher per sqm)
769F Glenferrie Road - larger GLAR, less exposure and traffic but superior frontage, superior condition, higher yield expected. Slightly larger rate per sqm.
The rest are considered fairly secondary locations with lower yields expected for the subject.
What are your outgoings for your retail property and are they inline with market evidence?
My outgoings for my retail are about $8000 or closer to $10,000 if you include land tax. This works out to be $154 per sqm. Which is quite high but compared to something of a similar size we have considered it to be within market parameters. But we do acknowledge it is quite high.
What are your outgoings for your industrial property and are they in line with market evidence?
Our outgoings total close to $8000 for the industrial unit. This works out to be about roughly $30/sqm which we did consider to be within market parameters.
What is your residential property zoned? How does this compare tot he zonings of your evidence?
My property is zoned urban growth zone. This is often used for these fringe metros areas and is to manage the transition from non-urban land into urban land. The highest and best use for these sites is for residential use. All sales have the same zoning or are a comprehensive development zone. The comprehensive development zones do allow for slightly different uses but only for specific properties. The properties i have used in my sales are at their highest and best use currently and therefore we consider them similar.
What zoning is your retail property?
Commercial 1 Zone