VIVA Questions Flashcards
What are some signs of site contamination?
Smells, the current use, discoloured soil, stains on concrete, chemical containers, underground tanks
What is the valuation procedure?
Obtain letter of instructions (purpose, client, parties involved, fee, address, conflict of interest for me and firm)
Request information (any further information, leases details, plans, permits etc)
Undertake preliminary searches (title search, planning - HBU, PSP if inglobo, contamination, heritage, comparable sales)
Inspect (external and internal, take photos, measure, ask questions, look for contamination or other defects)
Analyse/inspect comparable sales
Valuation approaches - choose appropriate and apply it
If your property was underlet and had 2 years left on the term how would you treat this?
We would adopt a market rent and get to a market income. We would cap this market income. This would give us a total figure. We would then have to make below the line adjustments to account for the present value of the LOSS of income for the 2 remaining years.
What are the major drivers for industrial properties?
Access (to the property, but also general access to major roads), location (proximity to hubs and city), clearance height, overall size, warehouse to office ratio), roller door - all relates to utility of the property
Your warehouse is C2Z is you other evidence the same? Do you think this difference in zoning changes the value?
I have a mixture of zonings, one is C2Z (same development), 2 are INZ3, 1 is Activity Centre and the rest are INZ1. Overall with the exception of the ACZ - they are all largely comparable. If they were vacant land it may be different, but because these are all at their highest and best use currently as strata warehouses i believe it wouldnt affect value too much.
INZ1 is the least permitting and INZ3 is meant to provide a buffer zone. However, specifically for these properties in ringwood, a lot of the INZ1 neighbour residential areas and therefore would not be allowed to be detrimental uses to the community. Again supporting that it is overall similar.
What are the major drivers of retail?
It all relates to exposure and foot/vehicle exposure. Therefore being located near other good tenants, near railway stations or on main roads
How has the industrial market been last 2 years since COVID? What about ringwood
Overall it has been good, seen substantial growth. Two major drivers are likely that COVID made a lot more people WFH, some companies and business may have realised they no longer need to be in city office and instead a smaller office with warehouse could be more suitable. Secondly, e-commerce and online sales have created a higher demand for storage and warehousing, also driving demand.
Ringwood more specifically is tightly held, evidence from talking to agents and lack of incentives in the market.
What is a prime industrial property?
Discussions with valuer and managers have led me to believe these represent more modern industrial properties in good locations with all the specs and appropriate clearance heights etc.
Talk me through your experience and how you got here today?
- Studied Commerce - covid hit - wanted something else - studied property
- Became a graduate at opteon
- Became RPV there and did it for 6 months
- Wanted to be a CPV and learn more
- Went to VGV to become CPV and get more experience
- Have been in Resi Team helping others when can
Take me through your valuation start-to-finish from receiving instructions?
Check the instructions - looking for purpose, address/title details, any COI (me and firm), can i do this?, fee
Title Search/POS - caveats, covenants, easements, owners corp, land size and shape etc
Planning research - zoning and overlays, checking for heritage stuff too
Contamination Research - partly to do with overlays, victoria unearthed, EPA, nearby uses, googling address of property
Lease details - for commercial
Sales research - getting an idea of subject details and looking for likely sales to use and methods of valuation
Arrive at property - ensure correct property (connecting distance), take notes of the area as driving in, talk about HBUA somewhere
Inspect property (external) - look at topography, nearby uses, overall utility, streetscape, condition, take photos, notes and measurements
Inspect property (internal) - more notes and photos, taking not of condition, fixtures/fittings, any problems, floor plan
Inspect Comparable sales - when applicable and accessible can drive by similar sales
Collate all data into report and complete report, peer review, sign and submit
What is the spencer case?
Spencer vs Commonwealth - defined market value
If you are completing val for strata office, there is a car park on title but not in lease. How does this affect value? How would you measure the value?
could add a nominal amount
or potentially could find car park rates and potentially cap that amount and put it together that way?
Or could determine market rent with the carpark and cap this?
Rear laneway behind house council wants to sell. How do you value?
Determine the highest and best use and with that the market for the parcel
Most likely neighbours that will want it. Could give a land rate per sqm, or potentially look a before and after approach.
Someone purchases standard block in mernda and spent $4,000,000 on building. How do you value it?
In the area this is clearly an overcapitalisation. No comparable sales so probaly summate the value with land value. Have to keep in mind cost doesnt equal value and the $4m spent may not equal that value in the market. There is a ceiling.
Valuing ballarat public hospital. How would you do it?
Wouldnt undertake alone
Summation approach, get a land value and determine replacement cost minus any depreciation
How do you value a quarry? What information would you need? What documents?
I wouldnt do it alone.
Need to know planning permit, geotechnical report, budgeted EBIT?
Useful life, what resources are being extracted, what is the $/tonne, costs to operate
Remediation costs
Land value at end of useful life
Can income capitalise the forecasted EBIT, or direct comparison on $/tonne for the available reserves
How do you value a carwash with a cafe?
Wouldnt do it. Always depends on HBU. Have to recognise there is two seperate incomes and the cafe could add value or nothing at all. Cant use the same yield for that, would want to look for sales of something similar if possible. If looking at yield individually may want to adopt a higher cap rate for the risk.
Why does the purpose of the report matter?
Sets out the overall template (short term vs long form, compensation vs mortgage - lots of differences)
Can change value (retrospective, rent vs value)
Fee
Making sure you have experience with what they are asking
Turnaround time
Your residential report has two different zonings? Did you adopt different rates for these?
Comprehensive development zone vs Urban growth - after looking at HBU of both noticed there wasnt a difference and also the sales represent that there was no premium paid for either
If you have a covenant and the property doesnt comply what are you doing?
Firstly im going to make enquiries to investigate it futher - often with council. Very next step is going back to the instructing party and letting them know what ive found before proceeding.
You used direct comparison method, what was your unit of comparison?
Like to look at it as a whole, sum of money, but also broke it down into a all-in land rate - adopted a figure around $1900 per sqm for my proeprty based off evidence with adjustments made
Looking at insurance value vs your improvements i can see that your alfresco and actual building rate are higher for your proeprty than the cost price? Why is that
It’s what the evidence showed, at least for building rate. And the cost was based off actual building contracts in craigieburn. A part from that, my property was only built a few years ago so some times the market is happy to pay for something that is a lot newer and ready to move in compared to go through a builder and do it compeltely new. Especially in the current market.
Can a tenant (commercial) object to rates notice?
Yes they can. Owner can be notified, but if the tenant is the one paying then yes they have the right to object.
Why is your yield high for your retail property?
First and foremost its a strata property, they always have higher yields.
Secondly its a small property and the evidence of similar properties represented this yield so thats what i have used.
I have an office leasing for $300/sqm and 2 carparks. What is the first question you are going to ask about this lease?
Does the $300/sqm include the 2 carparks?
Under PCA guidelines what things are not included in GLAR?
Stairs, toilets, lifts, lobbies, tea rooms etc.
However things like toilets that have exclusive access can be measured and added on with a note that it has included amenities in the GLAR as this is how they are measured/presented by agents leasing or selling properties the majority of the time.
