Specialist Valuations

Question 1

What are the main considerations for valuing a hotel?

Answer 1

Design and structure, profitability, location/competition, gross profit attributable to bottle/meals/accommodation/liquor, profit and loss of last 3 years

Question 2

What is the freehold going concern in relation to hotels?

Answer 2

The freehold going concern relates to the land, buildings and business value

Question 3

What is the leasehold going concern in relation to hotels?

Answer 3

The leasehold going concern value is the market price a tenant would be willing to pay in order to have the right to occupy the premises for the unexpired term of the lease, operate the premises and pay the rental

Question 4

What is freehold investment in relation to hotels?

Answer 4

Refers to owning the land and buildings, so therefore it is the right to receive the rental for the unexpired term of the lease

Question 5

What are the methods of valuation for hotels?

Answer 5

Freehold Going Concern - Capitalisation of NOP
Leasehold Going Concern - Capitalise NOP less rental
Freehold Investment - Capitalisation of Net Market Rental - (normal valuation)

NOP = EBIT (Earnings Before Interest and Taxes)

Question 6

What are some purchaser considerations for shopping centres?

Answer 6

Stability of income
Sustainability of existing rental levels
Length of leases and expiry dates
Types and frequency of rent reviews
Tenancy mix
Proportion of majors to specialties
Planning restrictions
condition of centre

Question 7

What are some planning considerations for shopping centres?

Answer 7

Minimum site area
Floor space ratio
Maximum site coverage ratio
Building setbacks
Height restrictions
Car parking requirements
Traffic management

Question 8

What is some market analysis to consider with shopping centres?

Answer 8

Economic trends (interest rates, growth, consumer confidence)
Demographic trends
Competition
Site characteristics (location, access, size, planning)
Improvements

Question 9

What are the 3 main methods of valuation for shopping centre?

Answer 9

Capitalisation of net income
Discount cash flow
Direct comparison (check method)

Question 10

How are motels valued?

Answer 10

Same method as hotel

Question 11

How are petrol stations valued?

Answer 11

Capitalisation of net income less any amounts for contamination/site clean up
Have regard to fuel volume sales, site details, access, location
Contamination is an issue

Question 12

How are silos valued?

Answer 12

Direct comparison on a price per tonne derived from sales

Question 13

How are vineyards valued?

Answer 13

Convert the total yield of the vineyard to a tonne/hectare for each grape type
Apply a $/tonne for each variety
Work out net income $/ha
Capitalise net income
Product value per hectare

Question 14

Hierarchy of Shopping Centres?

Answer 14

Super Regional - 60,000+ sqm (2+ supermarket, 150+ speciality)
Regional Shopping Centre - 35,000 - 70,000 sqm (1+ supermarket, 60+ specialty)
Sub-Regional Shopping Centre - 25,000 sqm + (1+ supermarket, 60+ specialty)
District or Community Centre - 10,000 - 25,000 sqm (1+ supermarket, 30-60 specialty)
Neighbourhood - 2,500 - 6,000 sqm (supermarket and 5-30 specialty)
City Centre - 1000 sqm + (dominated by specialty)

Question 15

What are common types of quarries in Victoria?

Answer 15

Stone, sand, clay

Question 16

What are important considerations for valuing a quarry?

Answer 16

Planning permit, what materials are being gathered, useful life of the quarry, filling in the hole at the end (sometimes can put landfill in them), overall profitability, diminishing value, make good clauses

Question 17

What are important considerations for valuing a childcare centre?

Answer 17

Planning permit for child places, lease or owner occupied, comparable sales with similar amount of child places

Question 18

How would you value a pub owned by an AFL star?

Answer 18

Would depend on ownership. freehold going concern, freehold investment, leasehold going concern. Would have to assume ‘good average management’ and take away the influence the AFL star may have. Could capitalise the NOP for freehold going concern, capitalise the market rent if invesment and capitalise NOP for leasehold minus rent.

Question 19

How do you value a pub? Whats important to look at?

Answer 19

Identify that they are complex and something i wouldnt undertake alone. Im aware there is a few different interests that can be valued (freehold GC, leasehold GC and freehold investment). Am also aware its likely based off income and capitalising that. its also important to look at its licenses and planning permits. NOP