SREC - KT Qs Flashcards

Question

What is the difference between OpEx and CapEx?

Answer 1

Capital Costs (CapEx) = The one-time expense of relocating to another premises - e.g. fit out costs, move & IT costs, dilapidations (on current space), refresh/refurb works (if they are to stay. Operational Expenditure (OpEx) = The operations expenditure, usually paid in regular instalments e.g. rent, utilities, business rates.

Answer 2

I did apply a discount rate (aka IRR to reflect the levels of risk). I selected an appropriate discount rate of 4% to produce a Net Present Value (NPV). The NPV = the sum of the DCF. (I discounted the cash flow to produce an NPV to determine if the lease will be worthwile in the long run). (If the NPV is positive, the investment has exceeded the target IRR / discount rate).

Answer 3

Pick an appropriate discount rate equal to the minmum acceptable rate of return.

Answer 4

13 wide ranging recommendations that will be implemented in due course. These include: - DCF as a main model when using investment valuations - Developing a time specific, rotation process for valuers - Establishing a valuation regulatory quality assurance panel - Valuation Compliance Officer within firms

Answer 5

I advised the client undertake a Workplace Study to confirm the suitability of their current space from an operational perspective. I advised they review alternative office options to see if there were better alternatives from a financial perspective. I prepared a schedule for Senior Management Team and recommended physical viewings to assist with decision making. I advised they could meet with similar charity clients who have re-located post-Covid to hear of their experience. I advised there was an alternative option 5-minutes from their current office that was not VAT elected, which represented a big cost saving on rent and service charge.

Answer 6

Because their lease was not protected (Outside the Landlord & Tenant Act 1954). (Their LEX was not until 2025 but as it was 'Outside' the act is was imperative addresses a renewal while they still have enough time before expiry to move to new premises).

Answer 7

They are not protected and have no rights to remain in occupation at the end of the lease. The tenant will need to vacate the property or have completed a new lease by the end of the term. A new lease can still be negotiated if both parties are willing, but recommend these negotiations take place well in advance of the lease expiry date.

Answer 8

If the Head Lease requires any subletting to be outside of the act. If the Landlord wants to reoccupy the property in due course. If the Landlord wishes to redevelop the property at the end of the lease. If the Landlord wants future flexibility.

Answer 9

Section 38 - HEALTH WARNING. Section 38A of the Act sets out the procedure that MUST be followed to contract Outside of the act. 1. The Landlord MUST serve a HEALTH WARNING notice on the prospective tenant, explaining that the lease will not be protected. This is known as a health warning (advises tenant to seek professional advice). 2. The proposed tenant must then make a DECLARATION in response, confirming they have recieved the notice and understand the consequences of contracting out. The type of declaration depends on the timing: 1) SIMPLE DECLARATION = Given when the parties have recieved the warning notice at least 14 days or more prior to committing to the lease. 2) STATUTORY DECLARATION = Given when the parties have recieved the warning notice less than 14 days prior to committing to the lease. Statutory declaration MUST be obtained + requires an independent solicitor for oath.

Answer 10

I provided strategic advice to the long leseholder of an old town hall in Hampstead. Firstly, I met with the Strategy Director to establish their objectives and key drivers. The building was unique, configured into various recording studio halls and office rooms. The client's main objective was to secure short term income, whilst retaining flexibility to expand and contract when they need. With multiple small suites available, I advised it would be beneficial to advertise these on short-term licences. To do this, I recommended bespoke marketing targeting the educational, music and arts sectors. The result was a win-win for the client who achieved their objective of generating income, whilst crucially retaining the flexibility to expand and contract as required by their busienss needs.

Answer 11

As set out in the famous case of Street vs Mountford (1985): As lease provides 3 key things: Exclusive Occupation Payment of Rent Duration for a specified term certain A lease cannot be terminated until the next lease event. A lease can be terminated at any time. A lease can be assigned, whereas a licence cannot. Street vs. Mountford (1985) "If it looks like a lease then it probably is..."

Answer 12

A personal arrangement between licensor and licensee. There is no legal interest in the property - it is merely a personal right to occupy that can be terminted by either party.

Answer 13

Because they regularly host rehersals for West End theatre shows and need flexibility to use the rooms depending on this.

Answer 14

A form of licence created by written agreement for an unspecified time in which the Landlord may evict the tenant at any time. No legal interest in the property. A Tenancy at Will is even more flexible than licences as they may be terminated at any time by either party. Whereas licences generally require a short notice period.

Answer 15

Limited Liability Partnership = Where Partners have limited liability. Each partner's liabilities are limited to the amount they put into the business. If means that if the partnership fails, the partners personal assets are protected as they are only liable for what they put in. (In contrast, with a Partnership structure all partners have unlimited liability). Benefits: Flexible, ease to incorporate new members, incentive for equity partners. Cons: Profits are taxed as income, regular disclosure.