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ETHICS
Talk me through the Sale of the Supermarket in Birmingham.
I was instructed to sell the Freehold interest of a supermarket in Birmingham.
- After receiving strong levels of interest, the sales process was concluded through informal tender, with each party being notified of a bids deadline date.
- I was asked by a number of parties what price the client would accept along and at what level had bids been received.
- I informed these parties that I was unable to disclose this information as bids were confidential and therefore this would be unethical behaviour. I advised that they should only submit an offer at a level they were happy with after completing full due diligence.
- 8,000 sft supermarket
- Let to Iceland for a term for 25 years until 2030
- Passing rent £80,000 pa reflecting £10 psf
- Five yearly fixed uplifts
- Steel portal frame construction
- 28 parking spaces
- Sold 5% NIY
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ETHICS
Tell me about your post auction sales negotiation for the house in Chelsea
- I negotiated the post auction sale of a residential property in Chelsea.
- Despite good levels of pre-auction interest, the property failed to sell at the auction.
- I spoke to my client and who informed me that they would accept a post auction bid at reserve level.
- I contacted each party that expressed an interest in the property and notified them that the property hadn’t sold.
- I received a bid from a party however this was still below the reserve price.
- I was able to build a rapport with this party and through persuasive discussion and assertive communication, I was able to negotiate a bid at the reserve price level which my client accepted.
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- Freehold
- Mid terrace house arranged as 5 bedroom HMO
- Guide £850,000
- Income - £42,9000
- 1,440 sft
- Concrete frame construction, pitched tiled roof
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HEALTH AND SAFETY
Talk me through your inspection of a Manufacturing Industrial Warehouse – Milton Keynes
- Whilst working in the valuation team, I was required to inspect an industrial building in Milton Keynes used for light industrial and manufacturing purposes.
- Prior to inspecting, I arranged access with the building manager and enquired about required personal protection equipment (PPE). Following my arrival onsite, I signed in with the building manager and collected the required PPE which was provided.
- During my inspection I was accompanied by the building manager and ensured to stay within permitted walk ways.
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- 20,000 sft
- Steel portal frame
- 1m clear eaves height
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INSPECTION
What step did you carry out when inspecting the Clapham retail unit?
- I undertook an inspection of a retail unit in Clapham for valuation purposes.
- I contacted the property manager who arranged access with the tenant of the retail unit. I recorded the time and date of the inspection in my work diary, notified my colleagues and appointed a ‘buddy’.
- Prior to inspecting, I printed all necessary documents including floor plans provided by the client, a title plan and a GOAD plan of the high street. I also obtained a calibrated laser distometer and a camera.
- I inspected the property externally and internally, examining the condition whilst noting any defects. I measured the property, checking the floor plans and site boundary against the plans. I also walked the high street, updating the GOAD plan if any tenants had changed and noted down vacant units and marketing boards.
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- £80psf ZA
- Concrete frame construction
- Built in cupboards (included in NIA)
- Asked for asbestos register and risk assessment
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INSPECTION
Mixed Use Building - Richmond Upon Thames
- Whilst inspecting the basement of the retail unit which was unused by the tenant, I noticed water ingress from the basement ceiling level with the pavement. I noted down this defect and took photos.
- I contacted the client who unaware of this water ingress and advised that whilst the leak was inside the retail tenant’s demise, it appeared the source may be from pavement level. As such I advised that the borrower instruct a building surveyor to assess the source of the defect. I also recommended the appropriate flooding insurance was in place.
- In the valuation report I stated details on the area of water ingress and included photos.
- 4,000 sft
- Period building of traditional brick construction built in 1890
- Arranged over basement, ground and three upper floors under a pitched tiled roof.
- The fenestration comprises primarily single glazed timber framed sash windows.
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INSPECTION
Storage Yard - Mitcham
- I inspected a storage yard in Mitcham for loan security purposes.
- During my inspection I walked around the boundary of the property to confirm the demise against a title plan. I noticed that there was an area of suspected Japanese Knotweed in a corner of the site.
- I notified my client about the suspected Japanese Knotweed and advised that a specialist was instructed to examine the site.
- It was later confirmed by a specialist that there was Japanese Knotweed onsite and costs were provided for the control/removal works.
- I advised my client on the Market Value of the property, reflecting the cost of works to appropriately treat the Japanese Knotweed. As the valuation was based on the Special Assumption of vacant possession, I adjusted the capital value per sft to reflect the risk of the Japanese Knotweed.
- Vacant
- 1.051 acres (0.425 hectares)
- Market rent of £5.50 psf as a storage site
- Remedial works - £5,500 psf
- Adjustment for risk of knotweed – 5%
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MEASUREMENT
Retail Unit - Catford
- I measured a vacant ground floor retail unit in Catford for loan security valuation.
- I printed out floor plans provided by the borrower and took a laser distometer to assist with my measurement.
- I first walked around the property without measuring, ensuring I fully understood the floor plans and the landlord’s demise. I measured the retail unit on a NIA basis, ensuring that I measured to the internal faces of external walls, excluding any columns and toilets.
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- Measured to NIA
- 600 sft unit
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MEASUREMENT
London Office - EC4
- I measured an office building in London’s Midtown as part of a valuation for loan security purposes.
- The client had requested that NIA measurements were taken for the valuation as this is the method that the client frequently uses when dealing with office premises
- In order to comply with the International Property Measurement Standards, I measured the office to both NIA and IPMS 3 and explained the difference in each method to the client. I then provided analysis on each measurement method within the valuation report. I measured to IPMS 3 as this is a mandatory method that provides a standardised global method of measurement.
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- 25,000 sq ft
- Steel frame construction
- VAV air-con
- IPMS measurement was a couple of % larger
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VALUATION
Mixed-use Retail and Residential – Crouch End, London
- I undertook a loan security valuation of a mixed-use building in Crouch End, London. The property comprised a ground floor retail unit and two residential units on the upper floors.
- I carried out a conflicts check and confirmed I was competent to value the property before sending out the Terms of Engagement and inspecting the property.
- The retail unit was measured on a Net Internal Area basis and was zoned and the residential units were measured on a GIA basis.
- As the property comprised both commercial and residential use classes, I adopted two different approaches to the valuation. I used the Comparable Method for the residential and the Investment Method for the commercial, adopting the term and reversion method as this was slightly under rented.
- I completed the report in accordance with the RICS Valuation Global Standards (2020).
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- 2,200 sft
- £44,000 pa total income
- Commercial lease expiry 2021 (2 years unexpired)
- Used term and reversion – Applied 7% on the term and 6% on the reversion
- Applied 6 month void and 3 months’ rent free
- Residential 1 year UXP on each flat
- Applied 10% discount to the VP value of the flats to reflect getting VP
- Cross checked the blended yield against sales comparables
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VALUATION
Convenience Store - Mile End
- I valued a convenience store in Mile End which was arranged over ground floor only and extended to approximately 4,250 sq ft NIA.
- The property was let to a national retailer with 9 years to lease expiry and 4 years to a break option.
- I carried out extensive due diligence before I inspected the property internally and externally.
- I took measurements and made records on the condition, layout and specification. I walked the surrounding area and took notes on any factors that may impact the valuation.
- I valued the property using the investment method.
- I conducted a comparable search for rental transactions of similar assets in the area which established that the property was currently rack rented.
- I searched for recent investment comparables for convenience stores in the area, taking into consideration the strong covenant strength of the tenant, the unexpired lease term and the characteristics of the subject property. I was then able to form my opinion of the capitalisation rate.
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- Recently let and therefore rack rented
- Passing rent £90,000 (£21.18 psf)
- 5% capitalisation rate to reflect long UXP and strong covenant strength
- Queen Mary University of London close by – lots of student resi being built
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VALUATION
Office Building, Vauxhall
- I carried out a valuation for loan security purposes of an owner occupied office in Vauxhall.
- I valued the property on the basis of vacant possession as it was owner occupied.
- From speaking to local agents and internal London office agency teams, I established that there was good demand for vacant offices of this size in the area.
- As a result, I valued the property using a capital rate psf and analysed recent vacant office sales in the area.
- I advised my client on factors impacting the property’s value using a SWOT analysis table which was included in the valuation report. I also advised my client on void periods, rent free periods and current market rental levels for the subject property.
- I advised my client on the Market Value for the property and although it was not income producing it was appropriate for loan security.
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- 10,000 sft
- MR £40 psf
- £780psf cap rate
- £7.8M
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VALUATION
Former Healthcare Building – Park Royal
- I was instructed to provide advice on the development potential of a former Healthcare building in Park Royal which was arranged over ground floor and part first floor ‘mezzanine level’.
- The client was seeking planning permission for the removal of the mezzanine level and the provision of refurbished B1 accommodation over the ground floor only.
- I established the Gross Development Value (GDV) using the comparable method by analysing evidence using Radius EGI and Property Link and also by speaking to local agents. This enabled me to arrive a capital rate for the property.
- Using Argus Developer, I inputted variables such as build costs, professional fees, agent’s fees, finance rate, time scales and developers profit. These costs were then deducted from the GDV in order to arrive at a residual valuation figure.
- I advised my client on how any changes in the GDV and associated costs could impact the residual value by using a sensitivity analysis.
- I provided my advice in the form of a written report.
- Our valuation assumes that the property has been refurbished and provides good quality open plan office / D1 accommodation.
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- Attractive period detached two storey building of brick construction set beneath a hipped slate roof.
- Built in the early 20th century and was used as a workhouse dining hall. It has been used as offices in recent years.
- The site area extends to approximately 0.136 acres.
- £65 psf for the works
- MR £20 psf for office accodation
- £260 psf cap rate post works
- 50% used for affordable office space as is let at 80% rate - £16psf
- Valuation - £1.1m on special assumption that it is fully refurbed with mezz excluded
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AUCTIONEERING
Sale of a Flat in Putney
- I was contacted by an individual who was interested in selling their property at auction.
- I requested all relevant information before appraising the property using the comparable method as the property was vacant. This involved speaking to local agents who had sold similar properties in the area and conducting a search on Rightmove Plus.
- I recommended a guide price and a reserve price.
- I inspected the property, taking detailed notes on the accommodation and taking photos.
- Using the information from my inspection I produced detailed particulars that were sent to the client and client’s solicitor for approval.
- The client agreed that two block viewings a week would be sufficient during the three week marketing period. I provided an update to the client following each viewing, providing information on the number of viewing attendees and any feedback.
- The property sold in the auction room and I collected all necessary buyer information and identification to complete the AML checks. I also ensured a 10% deposit was received.
- 2 bedroom flat
- Guide price - £500,000
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AUCTIONEERING
Retail and Residential Building – Twickenham, London
- I advised my client on the sale of their mixed-use property via auction.
- The property comprised a retail unit and a studio flat on the ground floor and a 2 bedroom split level maisonette over the first and second floors.
- I advised that two viewings a week during the 3 week marketing period would provide sufficient opportunities for interested parties to view the property. I also ensured that the name and contact details of each person viewing was recorded.
- Following each viewing I contacted the client in order to provide an update on the number of attendees and level of interest
- I received an offer from a party prior to the auction however due to the level of interest I advised that the property should be sold at the auction.
- The property sold at auction at a level above the pre-auction offer.
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AUCTIONEERING
Sale of a Flat in Clapham
- I received a phone call from an individual who wanted to sell their flat in Clapham within a short timeframe.
- I advised the individual that auction would be a suitable method of sale and informed the perspective client of the advantages and disadvantages of selling in auction.
- I carried out an appraisal and spoke to local agents who advised that there was strong owner occupational and buy-to-let demand in the area and the property was likely to attract interest from investors and owner occupiers.
- The client was happy with my recommended guide and reserve prices. We agreed the fee and I requested that Terms of Engagement were sent out.
- The property received minimal interest in the first two viewings during the marketing period and therefore I advised the client to reduce the guide and reserve price.
- The client agreed to reduce the guide and reserve price and as a result a number of parties that attended the remaining viewings.
- The property received a number of bids at the auction and sold above the reduced guide price.
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- Two bed first floor flat
- £450,000 Guide
- Sold £500,000
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PURCHASE AND SALE
Purchase of a Retail Warehouse – Basingstoke
- I assisted with the acquisition of a retail warehouse in Basingstoke.
- I measured and inspected the unit.
- I spoke to local agents to establish the rental tone for the subject estate and achieved yields for similar transacted properties.
- I advised the client to have their solicitors review the legal pack.
- I produced a purchase report for the client using similar principals to the Red Book, which included salient details about the investment opportunity including; location, description, accommodation, tenancy, tenure, covenant analysis, estimated rental value, asset management potential and SWOT analysis.
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- 35,000 sft GIA
- Passing rent - £692,250 (£19.50 psf)
- 14 years UXP until 2035
- 5 yearly upwards only rent review
- Bought for £12.50M 5.4% NIY in March 2019
- 40% site coverage
- 5A1 Covenant strength
- Strengths/Opportunities – Long income, strong covenant, rental uplift, divide unit and increase rent
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PURCHASE AND SALE
Sale of a Freehold Gym Unit – Stockton
- I assisted with the sale of a gym unit in Stockton
- I obtained market rent and investment comparables using Co-Star, Property Data and speaking to local agents.
- I provided my opinion of likely realisation taking account of comparable evidence and market sentiment.
- During the marketing process I organised inspections and kept an interest schedule and updated the client regularly.
- After a month of marketing I assisted with a bids process and brought the marketing process to an end using informal tender.
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- Freehold
- 18,000 sft
- Let to A1 Stockton Limited (t/a Trugym Limited) with a long unexpired term of 20.6 years (10.6 years to break)
- Low passing rent of £134,250 per annum (£7.40 psf) subject to 5 yearly reviews (next review in 2019)
- MR £10 psf
- On-site parking for a 120 cars providing an attractive ratio of 1:151 sq ft
- 6% site cover
- Sold - £1.6m 7.8%
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PURCHASE AND SALE
Sale of an office building London Midtown, WC1
- I advised my client on the sale of an office situated in London’s Midtown.
- The property comprises a 2,539 sft long leasehold office arranged over ground and basement floors.
- The property was let until 2028 with a break clause in 2020, providing a WAULT of 9 years to expiry and 1 year to break.
- Before accepting the instruction I carried out a conflicts check to ensure there were no conflicts of interest and also a competence check.
- I sent Terms of Engagement to my client and completed the relevant Money Laundering checks.
- I inspected the property, created and agreed marketing particulars with my client.
- I arranged and carried out viewings, providing a weekly update to my client on the interest levels and feedback from each viewing.
- I advised my client that the informal tender method would be the most suitable method to conclude the sale.
- I sent out a request for offers email and ensured that all interested parties were made aware of the deadline.
- I created a spreadsheet displaying details of all offers I received and sent this to my client in accordance with the Estate Agency Act (1979).
- The two highest offers received were at a very similar level however one was a cash offer with a more attractive timeframe to completion. In addition to being a cash offer with quicker timescales, this buyer was also known to Allsop and had previously abided by the terms in their offers. Thus I advised my client to this offer.
- My client agreed with my advice and I drafted Heads of Terms which were approved and signed my client and the purchaser.
- During the sale I kept in close contact with the solicitors through to exchange and completion.
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- Passing rent - £85,000 psf (£33.48psf)
- Rack rented from 2018 RR
- Sold £1.58M 5.20% NIY
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DEVELOPMENT APPRAISALS
Warehouse Building, Wimbledon
- I was instructed to undertake a residual valuation for loan security purposes of a warehouse building in Wimbledon.
- The building had planning permission to construct an extension providing an additional 10,000 sq ft of industrial accommodation.
- I carried out a comparable search for recently sold similar sized industrial buildings in order to understand the capital value and to arrive at a Gross Development Value (GDV).
- From the GDV I deducted all relevant costs such as build costs, professional fees, finance costs, profit and stamp duty.
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- GDV £2,000,000
- £85 psf
- 15% profit
- 5%
- Contingency 5%
- Professional fees – 6%
- Residual value £757,000
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DEVELOPMENT APPRAISALS
Office Building - Highams Park
- I was instructed by my client to provide sales advice on an office building in Highams Park, which had Permitted Development Rights for a residential scheme.
- The building comprised a 5000 sft office building arranged over ground and first floors. The prior approval reflected 9 flats comprising 4 x two bedroom flats and 5 x one bedroom flats arranged over ground and first floor.
- My client was considering purchasing the property and required guidance on the viability of the scheme based on a specific purchase price and a 20% profit on cost requirement.
- I used the comparable method of valuation to establish the value of both one and two bedroom flats within the area that had sold within recently completed permitted development schemes. With these values, I provided advice on the Gross Development Value (GDV) of the scheme.
- From the GDV, I deducted costs including build costs, finance costs, professional fees and deducted the cost of the land.
- I used Argus Developer to run a development appraisal of the scheme, this enabled me to provide advice to the client on whether their targeted profit on cost was viable.
- I advised my client on how changes to inputs in the appraisal such as build costs and GDV can impact the appraisal and profit viability of the scheme.
- In order to reflect the impact of these changes, I ran a sensitivity analysis.
- Following my research and running the development appraisal, I advised my client that the stated purchase price would enable a 20% profit margin to be achieved and that the scheme was viable.
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- GDV - £2,450,000 (9 flats – 4 x 2 bedrooms (£300,000 per unit), 5 x 1 bedrooms (£250,000 per unit)
- Size – 5,000 sft Gross
- Built Costs - £110 psf
- Contingency – 5%
- Profit – 20%
- Finance Rate – 6% (50/50% LTV)
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