BFG

Question 1

Caldy valley

Answer 1

-Direct capitalisation approach
capitalised rent at ARY into perp
-Capitalised into perpituity (for rest of lifecyle)

Question 2

Whats an ARY

Answer 2

-yield with all risks implicitly implied

Question 3

Under let

Answer 3

1. capitalise rent passing at NIY
2. capitalise MR @ ARY perp, you need to reflect time value of money and aply Present Value multiplier for a term of years

Question 4

Over rented

Answer 4

Hard core layer
over paying - higher chance of tenant defaulting
Start with bottom slice in which you are capitalising MR
-Bottom slice = MR @ NIA into perp and use PV formula for term to reflect time value of money
-also need to capitalise Top slice = capitalising the difference RP-MR @ARY

Question 5

DCF

Answer 5

I havent had experience
-I know RICS has guidance note

Question 6

Developments

Answer 6

GDV
Less TDC
-acquisitions costs, SDLT,Agent Legal
-Constuction-contigency 5%
-Planning
-Professinal fees (consultants) 10% (architects, QS, engineer)
-Marketing fees
-Disposal fees
-Finance - based off SONYA (base rate and applying risk premium) e.g 6%
-You are then left with developers profit