Valuation Level 3 Flashcards
What example is PBSA Acquisition
Bristol (Gas Lane)
How was it in line with Red Book Global?
What is a special assumption?
A special assumption is a supposition that is taken to be true and accepted as fact even though it is not true
What is an assumption?
-Assumptions are made where it is reasonable for the valuer to accept that something is true without the need for specific investigation
If reporting a SA what must you do before the instruction?
Must be agreed with the client at the commencement of the instruction
How was the area not proven?
No other schemes and not close to a University
How did you decide on a £10-£15 discount?
- Comparables of schemes not in proven locations had similar discounts
- considered the specification and amenity too
What demographic advise did you give?
- Strong demand
- High rental growth
- Limited supply
- Tight planning = minimal development
- High unmet demand
What follow up advise would you give?
Once campus built rental tone would improve = proximity to campus
What yield did you use? How did that compare to BIC?
5.00%
BIC for super prime was 4.75%
Can you describe the residual method?
GDV - (development costs + profit)
What was the site value
£16.8m
Accounts Valuation PBSA, Nottingham
Guildhall
what is fair value?
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
What is Fair Value in accordance with?
IFRS 13 “Fair Value” of International Financial Reporting Standards
What makes a prime macro location?
- Good supply and demand dynamics
- Relatively tight planning
- 1 or 2 Universities
What makes a prime micro location?
Proximity to:
- unis (ideally both)
- amenities
- public transport
- city centre
Why were you at a discount to BIC?
- 100% studio led
- High operating costs
- some schemes even better micro location
What yield did you adopt?
5.25%
Why did you advise 100% studio would be softer yield?
- Wider mix = increased occupancy
- Mixed-use is preferable
- In a downturn they are likely to be harder to fill
- Increased operating costs
What was the Accounts Valuation Dublin?
Montrose
What value did you state?
Fair Value
What was the accounts valuation?
Quarterly valuation
Why was it in conjunction with Dublin?
They work in the local statue, we provide specialist PBSA knowledge.
Ensured we were competent
Why had capitalization rates softened?
Due to the rental cap in Ireland (capped at the lower of 2% per annum or inflation)
Deters investors
Rising interest rates
Is there any other statute to be aware of in Dublin?
Primarily governed by the Society of Chartered Surveyors Ireland (SCSI)
KNOW MORE!!!!
What is the removal of 51 weeks tenancies?
- Schemes only offering 51-weeks contracts
- makes it very expensive
- plan ban 51-weeks only (term weeks with the option of 51 weeks)
- not in place at the time of valuation
When did the law pass and when will it come into effect?
July 19th 2024
Applies to any new bookings after 20th July 2024
How would the ban on 51-week tenancies impact value?
- potentially reduced rental income during the summer
- reduced summer occupancy = increased operating costs
- potential deterrent to investment = yield softening
How did the softening of yield impact value?
Still increased due to increased NOI
(reduced utilities and increased term income)
What were you provided with for the acquisition of Bristol by the client?
purchase price
Were you competent to value an asset in Dublin?
Yes
- In conjunction with the local team in Dublin
- No, PBSA expert in Dublin
- We provide expertise on PBSA valuation
- We value a number of Dublin assets for accounts purposes so we know the market well
Did you account for the 51 week ban in your valuation?
No because there was no evidence of market perception doing so
No evidence in the market
Why does student not use the profits method?
It is market practise to use the investment method
