Summary of XP Questioning Flashcards
(115 cards)
1
Q
What are the key components of company accounts?
A
- Chairman’s statement
- Independent auditors report
- Profit and loss statement
- Balance sheet
- Corporate governance report
- Remuneration report
- Other statutory information
2
Q
Purpose of a profit and loss statement?
A
Illustrates the business’s income and expenditure, usually prepared annually
3
Q
Purpose of a cash flow statement?
A
Financial statement that summarises the amount of cash and cash equivalents entering and leaving a company
4
Q
What does a balance sheet illustrate?
A
Financial statement that reports a company’s assets, liabilities and shareholders equity at a specific point in time
5
Q
What is the purpose of a Dun and Bradsheet report?
A
Illustrates the potential risk of a business failing. Can be used for potential tenants for office, retail and industrial properties (failure score, delinquency score, age of business and no. employees)
6
Q
What is IFRS?
A
International Financial Reporting Standards. They set common rules so financial statements can be consistent, transparent and comparable around the world.
7
Q
What was included within your business plan / land strategy document?
A
- Target locations, lot size requirements for both open market sale and build to rent opportunities.
- The required KPI’s for each opportunity was set out, POC, Equity IRR and ROCE.
8
Q
What are included in you pre-purchase board packs?
A
- Intro
- Exec summary
- Location
- Proposal
- Financial Returns
- Key Risks
- Key opportunities
- Conclusion
9
Q
What are your internal complaints handling procedures?
A
- Despite not being an RICS registered firm, McLaren has a complaints handling procedure in place.
- Complaints should be recorded, setting out the details, reasoning and date / time.
- Acknowledged within 7 days and investigated in 28 days. Complaint registered with CHO
10
Q
Key elements of the RICS Complaints Handling 1st Edition, July 2016?
A
- Firms CHP must be approved by RICS
- Must inform PII insurers of any claim ASAP
- Complaints log must be kept up to date
- Firm must include RIC approved Alternative Dispute Resolution in CHP.
Stage 1: In house
Stage 2: Alternative dispute resolution
11
Q
RICS Rules of conduct for members?
A
The current rules of conduct for members are:
- Ethical behaviour
- Competence
- Service
- CPD
- Solvency
- Information to the RICS
- Co-operation with RICS
12
Q
I am aware of the new Ethical Principles and Rules of conduct which are due to be adopted in October 2021.
A
- Integrity, Honesty and compliance
- Professional competence
- Service
- Respect
- Responsibility
13
Q
RICS Rules of conduct for firms?
A
- Professional behaviour
- Competence
- Service
- CPD
- Clients Money
- Complaints handling
- Indemnity insurance
- Advertising
- Solvency
- Incapacity
- Designations
- Information to RICS
- Co-operation with RICS
14
Q
What key elements do you include in an offer letter?
A
- Date
- Address of property
- Title information
- Proposed offer
- Purchase price
- Timescales
- Funding information
- Conditions
- Next steps
15
Q
What do you include in your negotiation strategy?
A
- Understanding what are negotiable and non-negotiable points
- Enhancing relationship with landowner
- What the key drivers for the landowner are
- The Board’s drivers and desires
16
Q
What are the three most common forms of dispute resolution?
A
- Negotiation
- Mediation (doesn’t bind parties but helps)
- Adjudicative process (determined by third party, such as litigation or arbitration)
17
Q
What are the three forms of alternative dispute resolutions?
A
Mediation
- Neutral mediator who facilitates discussion and explores if solution between parties can be made
- Confidential and informal process
- RICS Guidance Note: Mediation 2014
Arbitration
- Parties can be bound by decision
- Specialist knowledge on area of dispute
- Decision can be over-ruled by court of appeal
- Fast, cost effective and confidential
- PACT (Professional Arbitration on Court Terms). Used for lease renewal disputes
Independent Expert Determination
- Appointed by two parties in dispute
- Expert has expert knowledge of subject area
- Parties bound by decision
- IE appointed to investigate dispute and receive evidence from both parties
- Offers speed and specialist knowledge
18
Q
What are the three types of conflict of interest?
A
- Party
- Own interest
- Confidential information
19
Q
What is the RICS Global Professional Statement for confidential interest 2017?
A
A member must not advise or represent a client where doing so would involve a conflict of interest, other than where all those involved have provided informed consent’.
20
Q
What data sources do you use on a day to day basis?
A
- Land registry
- Rightmove
- CoStar
- Land insight
- EGi
- National agents database
- EPC
21
Q
Principles of GDPR (EU) 2016 and Data Protection Act 2018?
A
Data Protection Act is the UK’s implementation of GDPR. It governs personal data and aims to create a single data protection scheme for anyone doing business in the EU.
It aims to empower individuals to take control of how their data is used by third parties.
Fines now increased to upto 4% of global turnover, or 20 million Euros, which ever is more.
GDPR, 8 individual rights:
- Right to be informed
- Right to have access
- Right to be rectified
- Right to erasure
- Right to restrict processing
- Right to data protability
- Right to object
22
Q
How can you ensure your data is secured safely?
A
- Secure and encrypted network
- Anti virus
- Password protected files / folders
- Fire wall
- Data is backed up regularly
23
Q
NDA’s?
A
- One way
- Mutual
Legally binding document so confidential information does not get released.
24
Q
5 core values of the RICS?
A
- Integrity
- Service
- Trust
- Respect
- Responsibility
25
How do you instil ethics into decision making process?
- Always consider the five core values and remember that my primary duty of care is to the general public
- If I am making a difficult decision, I reference the RICS Ethical Decision Tree. Would I be happy with my decision being made public?
26
6 principles of Bribery Act 2010?
- Proportionality
- Top Level Commitment
- Risk assessment
- Due Diligence
- Communication
- Monitoring
27
4 main offences of Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign official
- Failing to prevent a bribery
Max penalty is 10 years imprisonment and unlimited fine
28
What would you do if a client invited you to a hospitality event?
- I would review the details of the invitation and review if the invitation was proportionate to work carried out
- I would decline the invitation; in case this would be deemed as passive bribery
- I would discuss this with my line manager.
29
What are the forms of PPE?
- Protective helmet
- High vis jacket
- Goggles
- Gloves
- Steel toe tapped and soled shoes
30
What would a risk assessment include?
- Potential hazards on the site and potential risks
- Contamination or flood risk?
- Discuss site visit with site / property manager
- Contact details
- PPE required
- Update diary to inform of whereabouts
31
Key principles of RICS Surveying Safely 2018?
- Personal responsibilities
- Assessing hazards and risks
- Workplace H&S
- Occupational hygiene and health
- Visiting premises and sites
- Fire safety
- Resi property and surveying
32
Health and safety at work act 1974?
Duty to every employer to ensure, so far as reasonably practiceable, the health, safety and welfare of all employees.
33
What did you cover in your Health and safety at work ?
How to treat the following injuries:
- Cuts
- Burns
- Grazes
- Choking (CPR)
34
What are the 9 protected characteristics of the Equality Act 2010?
- Gender reassignment
- Sex
- Sex orientation
- Marriage
- Pregnancy
- Race
- Age
- Religion
- Disability
35
Importance of inclusive environments?
Ensuring that the build environment is suitable and safe for people with ranging forms of disabilities, both mental and physical.
36
What is an unconscious bias?
Prejudice in favour for or against a certain thing or characteristic.
37
How can this be tackled?
Training and workshops on how to overcome. Adopt cultural change, challenge your own opinion, recognise and manage biases
38
What is BREEAM?
Building Research Establishment Environmental Assessment Method.
An assessment method that grades the building’s sustainability and environmental credentials. Compulsory for new build / refurbed resi and commercial
Outstanding, Excellent, very good, good, pass
39
Did your proposal of Ebor Court include BREEAM?
Yes, early engagement with BREEAM and M&E advisors suggested that the building would be a ‘good’ rating
40
What is the purpose of an EPC?
To measure and rate a buildings energy efficiency rating. An EPC is required for any building over 50 sqm, when newly built, sold or let for a greater term than 6 months and less than 99 years.
41
EPC requirements for marketing?
- Must be commissioned within 7 days of commencement of marketing
- Agents responsible for procuring
- Only energy rating is required to be displayed
42
What does front page of EPC show?
- Address and floor area
- EPC certificate
- Info on energy use / provision
- Estimation of running costs
- Energy performance rating of A+ to G
- Benchmarking info
43
Maximum penalty
12.5% or RV (minimum £500 and max £5,000)
44
Requirements of MEES?
Requirement of a minimum EPC rating of Level E to let a building from 1st April 2018, onwards for resi and commercial properties. From 2020, this applies to all use types.
In 2023, all existing leases will have to have minimum ratings as well.
45
Five different types of valuation?
- Comparative
- Investment
- Residual
- Profits
- Depreciated replacement cost
46
Before undertaking a valuation, what should you consider
- Competence
- Independence
- TOE
47
Tell me some of the statutory due diligence you would carry out for a valuation?
- Asbestos register
- Business rates / council tax
- Contamination
- Equality Act 2010 compliance
- EPC rating
- Flooding
- Fire safety
- Health and safety compliance
- Legal title and tenure
- Public rights of way
- Planning history and compliance
48
Tell me which valuation methods you have experience in using
- Residual
- Development appraisals
- Comparative
- Investment
49
What is a yield?
A measure of investment return, expressed as a percentage of capital invested.
50
What effects the yield?
- Risk
- Use type
- Location
- Lease terms
- Prospects for rental and capital growth
51
What is an internal rate of return?
- Rate at which all future cashflows must be discounted to produce an NPV of zero.
- Used to assess the total return of an investment opportunity making some assumptions regarding the rental growth, re-letting and exit assumptions.
52
When would you use the Investment Method of valuation?
- Used when valuing an income stream
- Rental income is capitalised to produce a capital value
Various forms include:
- Conventional investment method
- Term and reversion
- Layer / hardcore
53
When is a profits method of valuation appropriate to use?
```
- When valuing trade related properties. When the value of the property depends upon the profitability of the business and its trading potential. (pubs, petrol stations, hotels, etc)
Methodology:
Annul turnover
Less costs
= Gross profit
Less reasonable expenses
= unadjusted net profit
Less operators renumeration
= adjusted net profit
```
54
What is a development appraisal?
What is a development appraisal? A tool used to measure the financial viability of a development scheme.
One can be used to establish the residual site value
55
What is the difference between a development appraisal and a residual valuation?
Development appraisal uses the clients inputs to value a site or proposed scheme
A residual valuation is using market inputs.
56
What development finance do you usually assume?
Depends on use type. For resi open market sale or commercial scheme, usually have 60% senior debt and 40% equity. We speak to the finance director, at the moment interest rates for senior debt are around 5.5%.
Finance fees are included such as arrangement fees, fund monitor, fund legal fees and exit fees.
I also have experience with appraising forward fund appraisals. This can be for significant office development appraisals or BTR schemes.
57
Why is the use of sensitivity analysis important?
Illustrates potential profitability of the scheme if market dynamics change, this is important as market fluctuations are common.
58
Methodology for comparable method of valuation?
1. Search and select comparables
2. Confirm / verify details and analyse headline rent to give net effective rent as appropriate
3. Assemble comps in table
4. Adjust to hierarchy of evidence
5. Analyse comps to form opinion of value
6. Report value
59
What are the general principles of a DRC valuation?
- Used where there is very limited comparable evidence and on assets where they are very infrequently sold
- You would establish the value of the land in its existing use (assuming planning permission exists)
- Then, adjust for depreciation and obsolescence
60
You say you are familiar with the RICS Valuation: Global Standards 2020, what are the key elements of the book?
Known as RED BOOK GLOBAL
1. Intro
2. Glossary
3. Professional standards (PS)
4. Valuation technical and performance standards (VPS)
5. Valuation applications (VPGA)
6. International valuation standards (IVS)
61
What are some of the International Valuation Standards?
Key changes:
- IVS102: valuers who cannot evaluate inputs and assumptions due to limitations in their investigations cannot report in compliance with IVS
- IVS 410: when valuing development property, apply a minimum of 2 appropriate and recognised methods for each valuation project.
62
4 considerations for inspection
- Consider personal safety
- Consider local area and amenities
- External inspection
- Internal inspection
63
3 different inspection methods?
- Valuation
- Agency
- Management
64
What do you take with you on an inspection?
- Phone
- Camera
- Brochure & floor plans
- Legal title
- PPE
- Pen and paper
- Measuring apparatus
65
What factors can effect a property’s value?
- Defects (latent or inherent)
- Damage to property
- Flooding / contamination
- Hazardous materials
- Lease terms
- Restrictive covenants
- Public rights of way
- Onerous covenants
66
What are the three major causes for defects?
- Movement
- Damp
- Defective / deterioration of materials
67
What is difference between latent and inherent defect?
Inherenct defect is a defect in design / material and has always been present.
Latent defect is a defect that can only be picked up by a thorough inspection
68
What steps do you take if you discover a defect?
- Photograph
- Establish cause
- Inform client
- Recommend specialist report
69
Types of movement?
- Subsidence
- Heave
- Horizonal cracking
- Shrinkage cracking
- Thermal Expansion
70
Types of foundations?
- Trench
- Pad
- Pile
- Raft
71
Types of brickwork?
- Solid wall
- Cavity wall
- Stretcher
- Header
- Efflourescense
- Spalling
72
3 recommended phases for contamination studies?
- Review site history
- Investigate
- Remediation report
73
Key principles of IPMS?
Aims to avoid inconsistent definitions of measurements in different countries.
Members are however encouraged to report on dual basis until IMPS is embedded into the market place.
74
IPMS1 key info?
Measures what is generally known as the GEA.
- Measurements included but stated separately:
o Covered galleries
o Balconies
o Generally accessible roof terraces
- Exclusions include:
o Upper void levels of atrium
o Open external stairwells
o Patios, refuse areas, external parking at ground level.
75
IPMS2 key info?
Measures what is generally known as the GIA. Used for measuring the interior all areas available for direct use, measured to the internal dominant face of the wall on a floor by floor basis in component areas.
IDF: defined as the ‘inside finished surface comprising more than 50% of the floor to ceiling height for each IDF wall section’.
- Measurements included but stated separately:
o Covered galleries
o Balconies
o Generally accessible roof terraces
- Exclusions include:
o Upper void levels of atrium and open light wells
o Patios, refuse areas, external parking at ground level
76
IPMS3 key info?
Measures what is generally known as the NIA.
Used for measuring the occupation of floor areas in exclusive use using same assumptions as IPM2. Measured to IDF on a floor by floor bases. FLOOR AREA THAT IS AVAILABLE ON AN EXCLUSIVE BASES TO AN OCCUPIER
- Measurements included but stated separately:
o Covered galleries and balconies
o Generally accessible roof terraces
- Exclusions include:
o WC’s, cleaners cupboards, plant rooms, etc
o Patios, refuse areas, external parking at ground level
77
What is the main difference between IPMS3 and NIA?
- Perimeter measurements are taken to IDF
- No exclusions for restricted heights of less than 1.5m
- Columns included
- On floors with multiple occupiers, area is taken to midpoint of partition wall between tenancies
78
What are the potential negatives of measuring on Promap?
Human error, digital errors
79
How do you re-calibrate a laser measurer?
Measure a known distance and cross reference.
80
You say in your measurement of 34 LS that you advised your director that some area shouldn’t be included, why?
I am aware that floor space under 1.5m in height can be included within IPMS 3. This area was however very unusable and I believed that this should either have a different rent applied to it or be excluded from the NIA.
81
What is GDPR?
```
Global Data Protection Regulations 2016. It aims to give people more rights to be informed of how their personal data is being used. Data security breaches must be reported within 72 hours where there is a losee of personal data and risl of harm to individuals.
6 key principles:
- Lawfulness, fairness & transparency
- Purpose limitation
- Data minimisation
- Accuracy
- Storage
- Integrity and confidentiality
- Accountability
```
82
Individual rights under GDPR?
- Informed
- Access
- Rectify
- Erase
- Restrict processing
- Portability
- Object
- Automated decision making and profiling
83
Tell me the key principles of the Data Protection Act 2018?
- UK’s implementation of GDPR 2016
| - Complete data protection system
84
What are the potential concerns and limitations for Wetransfer?
Sharing systems can in some instances be less secure. There is a data limit of how large the files can be, not everyone has WeTransfer Plus so cannot transfer large quantum of files.
85
What filing system did you proposed to your director?
```
I succinctly set out a folder system that included sub folders of:
- Financial documents
- Legal DD
- Agents information / marketing
- Drawings
- Planning
- Other
Password protected files and folders included the financial appraisals, fee proposals, abortive budgets.
```
86
How did you present the data for historic resi rental trends in Manchester and Birmingham?
I collated data from a range of sources such as rightmove and mot importantly speaking to a range of agents.
I then created an excel spreadsheet with each cities transactions being registered by unit types in individual tabulations.
I then created a front summary sheet that was linked to the relevant data and created a graph.
This presented a visual aide to illustrate the common trends between the cities.
87
Limitations of Argus software?
Expensive to use and makes an initial assumption of 100% debt. This however, can be changed.
88
How can construction inflation impact the profitability of a scheme?
It increases TDC of a project and therefore impacts the potential profit of a project.
89
What can impact IRR?
Cash flowing of projects. The timing of expenditure and revenue impacts IRR significantly as this is a time based measure.
90
What is CIL?
Community Infrastructure Levy, it is a local based tariff system which is determined by the local authority. The contributions from developers help the authority make infrastructure improvements within the local area.
91
When does profit on cost change?
Level of risk, planning status, use type.
92
What is a forward funded basis?
When a project is 100% debt. These funds are provided by a prospective funder.
93
Catford, what were the potential construction costs?
£220 psf on the GIA
94
Catford, what were the planning aspects?
Site not located within tall buildings zone. Blocks must respect the potential future site to the south. Stepped building heights
95
Leeds appraisal, what DD did you carry out?
Site history, enviro hazards, flood risk, planning, etc.
96
How did you ensure that no confidential info was given to the agent.
Ensured that no confidential information was discussed.
97
What hurdle rates were not met?
POC was below 15% by some distance.
98
Tell me about the process of private treaty?
- When a willing buyer and seller negotiate potential sale of a site / property
- Benefits are confidential, can be time efficient and a bid is not legally binding
- Negatives are potential abortive budgets. Gazumping gazundering
99
Informal tender?
Otherwise known as best offers / bids.
- Used when good levels of interest
- Bids opened in front of land owner
- Name and address of purchaser
- Finance arrangements
- Vendor does not have to accept highest bid
100
Formal tender?
- Suitable for plc’s and large firms
- Full marketing and legal pack provided
- Sealed bids
- No amendment in bids
- Vendor does not have to accept highest bid
101
Watkin Road, why do you think that the offer was declined by the landowner?
We did not meet the aspirations of the landowner
102
Why not?
We believed there were significant costs associated with the project, in particular potential ROL compensation?
103
What is ROL?
The prescribed right to enjoy a right to light. Can come after 20 years on uninterrupted enjoyment of light
104
Lisbon Street, your offer was accepted. Why were rents and costs such an important aspect of the appraisal?
Presented the key revenue for the site and key costs. Conditionality of offer was well received by the board as it de-risks the opportunity.
105
Brighton bid submission. What was the important bit of dd that you discovered?
Only 94 years left on the leashold so it was required for McLaren to discuss the option and potential costs of extending the lease. This additional cost had to be included within our appraisal
106
Bridge House, how did you discover there were gas pipes?
I worked in conjunction with an M&E advisor and was provided with utility mapping. Indicated the low pressure (2,5m easement) and intermediate pressure (5m easement) gas pipes to the North of the site. I advised that the offer letter should be conditional on an intrusive study being carried out.
107
Purpose of the planning system?
Control the use of land and encourage sustainable development, all of which is in the publics interest.
108
Differing forms of decision process for local authorities?
Planning committee, determined by committee members, that have received recommendation by planning officers.
Delegated powers by the planning officer.
109
What is S106?
A form of agreement between a local authority and developer that outlines key elements of development. Can include affordable housing, conditions and infrastructure improvements.
110
Brighton proposed development. Why did you come to your conclusion?
Review of local planning policy and site allocations. Proposal was very unrealistic and I acted with integrity, advising my director of the key planning risks associated with the proposal.
111
Key risks for client or funder for developments?
- Planning
- Funding
- Statutory regulation
- Abortive costs
- Contamination
112
Types of KPI’s?
- POC
- ROCE
- IRR
- EQUITY MULTIPLE
113
Why is cash flowing important?
Reflects the true development costs and when costs and revenue will be incurred. Impacts KPI’s significantly.
114
What is development contingency?
Allowance in appraisal that allows for unforeseen circumstances or market fluctuations. De-risks project somewhat.
115
What did you include in your design brief to the architects?
Design
- Focus on spatial planning. (desk layout)
- Communal space (loos, kitchens and breakout space)
- Meeting rooms
- Lighting
- Carpeting & Furniture
Energy / tech
- IT infrastructure improvements (power points, floor boxes, data points)
- Energy retention / insulation
- Improvement of energy use efficiency
Statutory regulations
- Fire standards
- DDA
- BREEAM
- EPC
