Subs: Level 3 Examples

Question 1

Please talk me through your inspection at the Industrial unit at Camberwell?

Answer 1

• I inspected this unit for an upcoming lease expiry.
• Read lease and identified it was FRI
• During inspection, policed the lease covenants.
• Noticed damp staining on the walls.
• Reminded tenant of the lease obligations.
• Instructed building surveyor to identify the cause.
• Confirmed it was leaking plumbing.
• Reiterated obligation to address all defects and repair the wall.
• Once this was resolved and remaining arrears cleared recommended to proceed with lease expiry.

Question 2

Can you talk me through your inspection at Greenwich please?

Answer 2

• I inspected this unit prior to a potential lease renewal.
• Read the lease.
• Notified the licence to alter.
• Objective of inspection was to police the lease whilst also taking measurements and noting condition of the property.
• Recommended that the tenant was in compliance with their lease.
• Additionally noting that the only alteration present was appropriately documented through their licence to alter.

Question 3

For your L&T example at Camberwell, please can you talk me through the process you undertook.

Answer 3

• Following receipt of a tenants break notice, I instructed solicitors to verify.
• Once confirmed, read the lease.
• Arrange inspection to police the lease.
• Recommended a building surveyor commission a dilapidations schedule.
• This identified some internal defect to the unit. Damage to wall and floor slab.
• Quote was obtained from a reputable building contractor to remedy the damages.
• Advised and received approval to agree a surrender on the basis the tenant agreed a dilapidations settlement.
• Enabled the LL to refurb the unit prior to reletting.

Question 4

For your L&T example at Park Royal, please can you talk me through the process you undertook.

Answer 4

• I assisted my director in a lease renewal at Park Royal.
• I reviewed the lease prior to evaluating comps in the market.
• The valuation included market rent and scope of negotiation.
• Recommended that we offer same lease terms at a higher rent.
• Produced lease proposal and gained approval to serve on tenant.
• Tenant countered at £2 psf lower.
• Instructed a covenant check noting that they also had a good payment history.
• Revisited comps and advised could offer 1.50 if reduced rent free.
• This was accepted and I instructed solicitors to draft lease engrossments.

Question 5

Please talk me though your development appraisal at Greenwich.

Answer 5

• Residual land value.
• The objective was to demolish three industrial units and develop a multi-let industrial estate.
• Architects were instructed to draw up a initial sight plan which comprised if 35,000 sqft.
• I undertook a market analysis by using comparable evidence to establish market rent and appropriate cap rate.
• Verified finishings with agents and director.
• From this i was able to estimate the GDV.
• Considered factors such as professional fees, construction costs, contingency, planning costs.
• These were adjusted from GDV to derive the residual value.
• Presented to my director who instructed me to prepare a Board Paper with a proposed buy price.
• Approved and bid made

Question 6

Please talk me though your development appraisal in Edmonton.

Answer 6

• Residual development appraisal.
• Objective was to achieve the highest possible value for the site.
• Architects produced 2 indicative site plans.
• One with 5 units the other with 8.
• Gathered rental data from various sources and then verified this with agents.
• Established build costs via BICS and Quantity surveyors.
• 10% contingency to account for risk.
• Inputted the data into our internal model.
• Both schemes yielded similar returns.
• Advised to proceed with the 5 unit scheme due to rental demand and buildability.

Question 7

Please can you explain your valuation example at Sydenham?

Answer 7

• This was for internal purposes to determine if we could achieve the asking price.
• Read the lease and prepared a residual cashflow factoring in growth assumptions.
• Factored in our desired target rate of return and applied a suitable exit yield.
• Done by analysing comparable evidence in the market having regard to the subject property.
• Also formed an opinion on market rent.
• Noted the property at the marketed price had reversionary potential.

Question 8

How did you value your Bermondsey example?

Answer 8

• This was for internal reporting purposes.
• Noted I would value the property based on market rent and market value.
• I employed the Comparative method and gathered market data and verified.
• Once I had analysed the list, I was able to conclude property’s value.
• Using the investment method, and appropriate assumptions I cross-verified my valuation.
• Prepared a detailed report / file note and submitted to my director.