Your client is a life insurance company that owns a large portfolio of private real estate investments. The client is considering expanding the investment portfolio in London. You work for an advisory firm that undertakes regular property portfolio valuations for this company. In addition to the regular valuation, the company has asked your firm to produce investment appraisals for selected buildings to support their investment decisions. You have been instructed to value and appraise the following property: 47- 53 Kensington High Street. This building comprises 63,788 sq ft of office and retail accommodation and is fully leased. The total income is currently 3,988,779 per annum. The asking price of the whole building is 98,000,000. The first lease expiration will come in 2025. For details, you may refer to the accommodation schedule and tenancy schedule in the sales brochure. In the sales brochure, a 4% yield and 1.8% purchasing costs are suggested together with a few comparable properties. However, these suggestions might be biased. Being an independent advisor, you are expected to conduct your own comparable analysis and make justified assumptions to support your valuation.
Required tasks Task 1: Estimate the Market Value of the office space of five floors (2nd to 6th floors) as at a valuation date of 30 September 2022. You must use Market Valuation techniques as taught within the module. The task involves analysing current leases, assessing market rent and selecting an appropriate capitalisation rate based on comparable evidence (such evidence to be tabled and discussed in the report).
Task 2: Estimate the Investment Value of the office space of five floors (2nd to 6th floors) as at a valuation date of 30 September 2022 using the DCF method. Your client would like to hold the property for a further five years, i.e. to 30 September 2027, and the required rate of return is 10%. Model the expected cash flow on a quarterly basis and present a quarterly cash flow in your report together with a discussion of the main inputs and assumptions used in its preparation. Then compare the Investment Value to the Market Value, and discuss whether the office space within this building meets the investment aspirations of your client.
REQUIRED
Valuations calculations in TASK 1 in MS WORD and Cash flow model calculations in TASK 2 must be done in spreadsheet
The images are the Sales brochure for additional information for the appraisal
4+0 4+0 1. What is the purpose of this assessment? Module Learning Outcomes Being Assessed 2. What is required of this assessment? whole building is 98,000,000. The first lease expiration will come in 2025 . For details, you may refer to the accommodation schedule and tenancy schedule in the sales brochure. In the sales brochure, a 4% yield and 1.8% purchasing costs are suggested together with a few comparable properties. However, these suggestions might be biased. Being an independent advisor, you are expected to conduct your own comparable analysis and make justified assumptions to support your valuation. It is not surprising if you find the market rent and yield different to the ones in the sales brochure. Required tasks Task 1: Estimate the Market Value of the office space of five floors ( 2add to 6th floors) as at a valuation date of 30 September 2022 . You must use Market Valuation techniques as taught within the module. The task involves analysing current leases, assessing market rent and selecting an appropriate capitalisation rate based on comparable evidence (such evidence to be tabled and discussed in the report). Task 2: Estimate the Investment Value of the office space of five floors (2ad to th floors) as at a valuation date of 30 September 2022 using the DCF method. Your client would like to hold the property for a further five years, ie. to 30 September 2027 , and the required rate of return is 10%. Model the expected eash flow on a quarterly basis and present a quarterly cash flow in your report together with a discussion of the main inputs and assumptions used in its preparation. Then compare the Investment Value to the Market Value, and discuss whether the office space within this building meets the investment aspirations of your client. 3. What is required of me in this assessment? \begin{tabular}{|l|l|} \hline Guidelines/details of how to prepare your submission & Your submission should be in the form of a report for which a recommended structure will be uploaded to Blackboard. It will not mirror the structure of a formal valuation report as set out in RICS valuation standards because some headings and entries are not required to assess your understanding of the subject area. It does NOT need to include the following - Lengthy description of the building or location - General discussion of economic and real estate market conditions - Description of techniques used to value the asset - Definitions of the inputs - Definitions of the outputs These exclusions are to ensure that you focus on analysis rather than the description of the asset and market. You can assume that the client is familiar already with the location and with current market conditions. You should also assume that the client is knowledgeable about appraisal techniques. You do not need to describe how the techiniques work, but you do need to show that you can apply them sticcessfully. \\ \hline \end{tabular} 1. What is the purpose of this assessment? Module Learning Outcomes Being Assessed 2. What is required of this assessment? whole building is 98,000,000. The first lease expiration will come in 2025 . For details, you may refer to the accommodation schedule and tenancy schedule in the sales brochure. In the sales brochure, a 4% yield and 1.8% purchasing costs are suggested together with a few comparable properties. However, these suggestions might be biased. Being an independent advisor, you are expected to conduct your own comparable analysis and make justified assumptions to support your valuation. It is not surprising if you find the market rent and yield different to the ones in the sales brochure. Required tasks Task 1: Estimate the Market Value of the office space of five floors ( 2add to 6th floors) as at a valuation date of 30 September 2022 . You must use Market Valuation techniques as taught within the module. The task involves analysing current leases, assessing market rent and selecting an appropriate capitalisation rate based on comparable evidence (such evidence to be tabled and discussed in the report). Task 2: Estimate the Investment Value of the office space of five floors (2ad to th floors) as at a valuation date of 30 September 2022 using the DCF method. Your client would like to hold the property for a further five years, ie. to 30 September 2027 , and the required rate of return is 10%. Model the expected eash flow on a quarterly basis and present a quarterly cash flow in your report together with a discussion of the main inputs and assumptions used in its preparation. Then compare the Investment Value to the Market Value, and discuss whether the office space within this building meets the investment aspirations of your client. 3. What is required of me in this assessment? \begin{tabular}{|l|l|} \hline Guidelines/details of how to prepare your submission & Your submission should be in the form of a report for which a recommended structure will be uploaded to Blackboard. It will not mirror the structure of a formal valuation report as set out in RICS valuation standards because some headings and entries are not required to assess your understanding of the subject area. It does NOT need to include the following - Lengthy description of the building or location - General discussion of economic and real estate market conditions - Description of techniques used to value the asset - Definitions of the inputs - Definitions of the outputs These exclusions are to ensure that you focus on analysis rather than the description of the asset and market. You can assume that the client is familiar already with the location and with current market conditions. You should also assume that the client is knowledgeable about appraisal techniques. You do not need to describe how the techiniques work, but you do need to show that you can apply them sticcessfully. \\ \hline \end{tabular} 4+0 4+0 1. What is the purpose of this assessment? Module Learning Outcomes Being Assessed 2. What is required of this assessment? whole building is 98,000,000. The first lease expiration will come in 2025 . For details, you may refer to the accommodation schedule and tenancy schedule in the sales brochure. In the sales brochure, a 4% yield and 1.8% purchasing costs are suggested together with a few comparable properties. However, these suggestions might be biased. Being an independent advisor, you are expected to conduct your own comparable analysis and make justified assumptions to support your valuation. It is not surprising if you find the market rent and yield different to the ones in the sales brochure. Required tasks Task 1: Estimate the Market Value of the office space of five floors ( 2add to 6th floors) as at a valuation date of 30 September 2022 . You must use Market Valuation techniques as taught within the module. The task involves analysing current leases, assessing market rent and selecting an appropriate capitalisation rate based on comparable evidence (such evidence to be tabled and discussed in the report). Task 2: Estimate the Investment Value of the office space of five floors (2ad to th floors) as at a valuation date of 30 September 2022 using the DCF method. Your client would like to hold the property for a further five years, ie. to 30 September 2027 , and the required rate of return is 10%. Model the expected eash flow on a quarterly basis and present a quarterly cash flow in your report together with a discussion of the main inputs and assumptions used in its preparation. Then compare the Investment Value to the Market Value, and discuss whether the office space within this building meets the investment aspirations of your client. 3. What is required of me in this assessment? \begin{tabular}{|l|l|} \hline Guidelines/details of how to prepare your submission & Your submission should be in the form of a report for which a recommended structure will be uploaded to Blackboard. It will not mirror the structure of a formal valuation report as set out in RICS valuation standards because some headings and entries are not required to assess your understanding of the subject area. It does NOT need to include the following - Lengthy description of the building or location - General discussion of economic and real estate market conditions - Description of techniques used to value the asset - Definitions of the inputs - Definitions of the outputs These exclusions are to ensure that you focus on analysis rather than the description of the asset and market. You can assume that the client is familiar already with the location and with current market conditions. You should also assume that the client is knowledgeable about appraisal techniques. You do not need to describe how the techiniques work, but you do need to show that you can apply them sticcessfully. \\ \hline \end{tabular} 1. What is the purpose of this assessment? Module Learning Outcomes Being Assessed 2. What is required of this assessment? whole building is 98,000,000. The first lease expiration will come in 2025 . For details, you may refer to the accommodation schedule and tenancy schedule in the sales brochure. In the sales brochure, a 4% yield and 1.8% purchasing costs are suggested together with a few comparable properties. However, these suggestions might be biased. Being an independent advisor, you are expected to conduct your own comparable analysis and make justified assumptions to support your valuation. It is not surprising if you find the market rent and yield different to the ones in the sales brochure. Required tasks Task 1: Estimate the Market Value of the office space of five floors ( 2add to 6th floors) as at a valuation date of 30 September 2022 . You must use Market Valuation techniques as taught within the module. The task involves analysing current leases, assessing market rent and selecting an appropriate capitalisation rate based on comparable evidence (such evidence to be tabled and discussed in the report). Task 2: Estimate the Investment Value of the office space of five floors (2ad to th floors) as at a valuation date of 30 September 2022 using the DCF method. Your client would like to hold the property for a further five years, ie. to 30 September 2027 , and the required rate of return is 10%. Model the expected eash flow on a quarterly basis and present a quarterly cash flow in your report together with a discussion of the main inputs and assumptions used in its preparation. Then compare the Investment Value to the Market Value, and discuss whether the office space within this building meets the investment aspirations of your client. 3. What is required of me in this assessment? \begin{tabular}{|l|l|} \hline Guidelines/details of how to prepare your submission & Your submission should be in the form of a report for which a recommended structure will be uploaded to Blackboard. It will not mirror the structure of a formal valuation report as set out in RICS valuation standards because some headings and entries are not required to assess your understanding of the subject area. It does NOT need to include the following - Lengthy description of the building or location - General discussion of economic and real estate market conditions - Description of techniques used to value the asset - Definitions of the inputs - Definitions of the outputs These exclusions are to ensure that you focus on analysis rather than the description of the asset and market. You can assume that the client is familiar already with the location and with current market conditions. You should also assume that the client is knowledgeable about appraisal techniques. You do not need to describe how the techiniques work, but you do need to show that you can apply them sticcessfully. \\ \hline \end{tabular}
