Valuation Flashcards
Talk me through how you valued Unit 24 Bourne Industrial
- Used investment method and comparable method. Comparables to ascertain market rent and yield.
- Then as the unit was rack rented, I simply capitalized the passing rent into perpetuity at the all risks yield.
- This produced the market value
What was the MR of Unit 24 Bourne Industrial
£33,000 pa
What was the market value of Unit 24 Bourne Industrial
£660,000
What was the yield of 24 Bourne Industrial
5%
Did you amend the yield at all at Unit 24 Bourne Industrial
I increased slightly due to location and condition (i.e increased risk. Market yield was 4.5%)
Talk me through the valuation at Prospect House
- Used comparative method to ascertain the market rent and yield. Capitalised the market rent into perpetuity at all risks yield to produce the gross development value
- I deducted disposal costs, developers costs and developers profit to produce Gross Residual Value
- I used the PV of £1 formula on GRV and deducted purchasers costs to produce site value
What was the Gross Development Value at Prospect House
£7,500,000
What were disposal costs at prospect house
Letting fees 10% of MR and sale fees 1.5% of MR
What was developers costs at Prospect house and what was included
£4,000,000
Demolition costs, building costs, general professional costs, interest and contingency
What was developers profit at prospect house and what was included
£1,125,000 – 15% of GDV
What was the residual land value at prospect house
£1,600,000
What was the market rent at prospect house
£12.55 psf -> £375,000
What was the yield at prospect house and did you adjust this at all?
5.5% - increased slightly to adjust for condition and location
What finance costs did you select at Prospect house?
Senior debt – 6% (accounts for risk of project). BoE rate was 0.5%
What were general professional fees at Prospect House?
Architect, QS, Site engineers, Building Surveyor, Project manager
10% of building costs
