How would you adjust for a premium
Capitalise rental value for the term, then add on the premium to this capital value, then decapitalise over the period of the term
How would you adjust for a rent free period
Capitalise payable period up until review and then discount this sum by the YP for the total term of the lease.
How would you adjust for stepped rents
Capitalise each rent up until review then decapitalise this over the period until review
Why are premiums and reverse premiums given and how is this relflected in the rent?
A premium is given by the tenant in order to secure occupation of a site. It is typically reflected through a lower passing rent.
Reverse premium is given by the landlord in order to incentivise a tenant to occupy the premises. It is reflected by the landlord increasing the passing rent in order to recoupe the initial sum
Why are some rents capitalised to review and others into perpetuity?
Rents may be capitalised into perpetuity where a long rent free period is given or incentive that could skew the capital value
