Flashcards in Val L3 - Retail Unit, North Street, Sudbury Deck (18)
What was the purpose of the valuation?
Secured lending purposes
What was the interest to be valued?
Freehold, subject to 3rd party occupation
What was the basis of valuation?
Market Rent & Market Value
What were the tenants lease terms?
15 year lease, contracted out from 2010
Circa 5 years unexpired
No breaks or reviews outstanding
Passing Rent = £57,500 pax
Full repairing and insuring
What was the position of the property?
Prominent position on the main retail parades within Sudbury
How did you measure the property?
I measured in accordance with the RICS Code of Measuring Practise and measured on a net internal basis.
What was the areas of the property?
Retail - 1,343
Stock Room - 228 sq ft
First Floor Stock/Anc - 962 sq ft
Total = 2,533 sq ft
How did you analyse the rent?
I adopted Zoning method to equate the Zone A rent which equate to £69.50 psf
What your main valuation considerations?
Tenant Covenant: 100/100
Location: Strong trading location and prominent property
Lease terms: 5 years unexpired
What letting evidence did you obtain?
9 North Street, Sudbury
OML | Neighbouring property | ZA = £40
96 North Street, Sudbury - 2019
LR | ZA = £50
3 Old Market Place, Sudbury - May 19
OML | 1,240 sq ft | ZA = £57
Notes - better location, smaller unit @1,200 sq ft
How did you calculate the Market Rent?
Using the comparables, I adopted a rent of £45 ZA on the retail space. £4 psf on the stock room and £3 psf on the first floor
= £38,500 per annum
What sales evidence did you manage to obtain?
16 North Street, Sudbury
Let to Subway - 15 year lease from 2013
Sold in Dec 19 for £215,000
Equating to 7.72% net initial yield
18a Market Hill, Sudbury
Prime pitch, 20 years from 2004
6 years unexpired
Sold in July 2018 for £370,000
Equating to 7.15% net initial yield
3 Old Market Place
On the market, 4 years unexpired & undoubted covenant
Guide Price: £610,000
Equating to 7% net initial yield
What method of valuation did you chose?
Due to their being an income stream, I opted to adopt the investment method of valuation and used the hardcore and topslice to do so as the property was over rented
What was your approach to the over rented valuation?
I opted to place a 7.5% yield on the market rent (hardcore = £35,000 pax) which was based off the comparables I had obtained and then 8% (£19,000) on the topslice to allow for uncertainty.
I opted to retain a smaller difference in the yield as I was confident the tenant would meet their obligations
What did the total sp equate to?
Just shy of £590,000
What did you decide as to the market value?
I deducted professional fees @ 1.5% and SDLT which equated to £560,000
What advice did you give to your client?
I advised the client that the property was currently over rented based on the evidence and I advised the asset was safe to lend on but only at the value I had adopted