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Project Aims 项目旨在
The aims of the project are to introduce you to the complex operation of the investment, use and development markets by applying the techniques and methods associated with valuations and appraisals to solve a real life problem.
Output Objectives 输出目标
When you successfully complete the project you should be able to: 当你成功地完成项目，你应该能够：
系统地研究和比较在爱丁堡和伦敦写字楼市场条件;
• systematically examine and compare conditions in the Edinburgh and London office market; •了解房地产市场的表现如何连接到更广泛的经济趋势
在城市，区域，国家和国际层面;
•精通从各种不同来源收集，分析，综合和准备材料;
•分析和评估市场数据;
•付诸实践的收入，直接比较估值和利润的方法;
•使用DCF模型进行投资和发展评估。项目详情
• understand how the performance of real estate markets is connected to broader economic trends
at the urban, regional, national and international levels;
• be proficient in the collection, interpretation, synthesis and preparation of material from a variety of diverse sources;
• analysis and evaluation market data;
• put into practice the income, direct comparison and profit methods of valuation; and
• undertake investment and development appraisals using a DCF model. Project Details
You have been appointed by Property Investment Ltd. This is a London based private property investment company looking for advice and guidance in the management of their portfolio. They have asked you to undertake dcf appraisals on the following two investment opportunities. 你被任命由物业投资有限公司，这是一个总部设在伦敦的私人物业投资公司寻找在他们的投资组合管理的建议和指导。他们问你以下两个投资机会进行DCF评估。
地点1 ，森普尔街，爱丁堡五层令人惊叹的建筑是位于爱丁堡的中心摆在突出位置。它包含11220平方米（ 120767平方英尺）优质写字楼及零售或餐厅空间584平方米（6,288平方英尺）的同意。最近一直在一楼的办公空间（ 840平方米）
让谁谈判支付每平方米165英镑（每年）为前5年的租户。据了解，约定的租金低于目前的市场租金，并在检讨租金将恢复到充分的市场租金。零售/餐饮空间，让我们对2012年1月到埃文斯周期每年124986英镑的拖欠。友谊赛租赁是15年三个年租评论。可比的证据已经找到以前的搜索市场租金没有移动自2012年1月，所订的租金在租赁与埃文斯周期等于当前的市场租金。有9796平方米（ NIA ）的办公空间，可在1至5层的开发人员目前正在谈判，让金融机构。当交易结束开发商，正在寻求出售在绯闻30,000,000英镑的要价。
Exchange Place 1, Semple Street, Edinburgh The five storey stunning building is located in a prominent position in the centre of Edinburgh. It contains 11,220 m2 (120,767 ft2) of high quality office space and 584m2 (6,288ft2) of space with consent for a retailing or a restaurant. The office space on the ground floor (840m2) has recently been
let to a tenant who has negotiated to pay £165 per square metre (per annum) for the first 5 years. It is understood that the agreed rent is below the current market rent and that at review the rent will revert to the full market rent. The retailing/restaurant space was let on January 2012 to Evans Cycle at £124,986 per annum, in arrears. The FRI lease is for 15 years with three yearly rent reviews. Previous searches for comparable evidence have found that market rents have not moved since January 2012 and that the rent set in the lease with Evans Cycle is equal to the current market rent. There is 9,796 m2(NIA) of office space available on floors 1 to 5 which the developer is currently negotiating to let to a financial institution. When the deal is closed the developer, is seeking to sell at a rumoured asking price of £30,000,000.
You estimate a current gross initial yield of 6.5% and an implied growth rate of 1.87% per annum assuming a suitable target rate of return of 8.5%.
The marketing brief for this prospective investment is available on Moodle. 44-46 Whitfield Street, London, W1T 2RJ
The property comprises a five-storey building, located in London’s West End office market. The total property contains 983m
2 (10,577ft 2) of office space. The tenants are as follows: Real Estate Valuation and Appraisal
1. First Floor – 212m
2(2,281ft 2) is currently occupied by Harold Everett Wretford but the organisation has given notice to terminate the lease in six months. The net rent currently paid is £65,009 per annum and in advance.
2. Ground, second and third floors were taken by Ark Therapeutics Group Plc on 4 th
November
2011 until 3 rd November 2015. This space represents 603m
2(6,496ft 2). The FRI lease set in
4th November 2011 was set at £183,750 per annual in arrears with annual rent reviews.
3. Fourth Floor – 167m
2 (1,800ft 2) was recently let by Llewelyn Davies at £57,222 per annum and in arrears. The FRI lease is for five years with annual rent reviews.
You estimate a current gross initial yield of 7.25% and an implied growth rate of 2.58% per annum assuming a suitable target rate of return of 9.5%. You also reckon it will take at least 6 months after an existing lease ends to find a new tenant under current market conditions, and you are required to explicitly allow for rental income voids. The seller is asking for offers over £6,500,000.
Your client has asked you critical appraise the market rents for the office space in these two markets, the investment quality of these assets, their investment potential and likelihood of achieving the implied rental growth rate. In addition, you are required to recommend how much your client should offer to purchase these assets. In addition to the investment appraisal of these two prime offices, your client has also asked you to undertaken the valuation of a series of investments in Glasgow. They would like to know the market value of the following interests:
These are:
71 Brunswick Street; 51
Wilson Street, Glasgow
This 7-storey office known as Brunswick House which is B listed. The building and adjoining car park, formerly occupied by the Clydesdale Bank, are now leased by Scottish Council for Voluntary organisation. The total 3,080m
(NIA) contained in the property was let on 22 nd April 2012 on a 15 year lease with five yearly rentreviews. The FRI rent negotiated was £295,550 per annum. Your client is interested in buying both the heritable and leasehold interests.
2/6 Sheriff Court, 149
Ingram Street , Glasgow
This luxury 6th floor apartment in a B listed structure contains living space which incorporates the lounge, dining area and kitchen (5.7m x 4.47m), two double bedrooms with the master being en-suite. The flat is in excellent condition, currently vacant and available for sale.
44-46, West George
Street, Glasgow This property, situated in the heart of Glasgow City Centre, comprises a seven storey hotel accommodating 64 bedrooms and public house on the ground floor and basement. The property is owned by your client but managed by a management team. After allowing for staff and management costs, you estimate that annual earnings before, interest, taxation, depreciation and amortisation of £1,836,000 are fair and maintainable for a reasonably competent operator in this property. You also estimate that 8% a suitable capitalisation rate for the owner’s interest.
20/24, Queen Elizabeth
Avenue, Hillington,
Near Glasgow.
The property represents 947m of industrial space, comprising two adjoining warehouses of traditional construction with a two storey extension. This is a small office contained in the unit, which also incorporates a Real Estate Valuation and Appraisal
large yard fronting onto Queen Elizabeth Avenue. Hillington Park is one of Glasgow’s prime industrial locations. The park is conveniently located south of Junction 26 of the M8 Motorway approximately 6 miles west of Glasgow City Centre and 3 miles east of Glasgow International Airport. Your client previously used this space for storage but it is now surplus to requirement.
You are required to present a profession report. However, this differs from professional valuation reports as you are required to present annotated valuations that explain your assumption, and contain a critical analysis of comparables and reflective discussion of the methods and principles you are applying. The report should contain #p#分页标题#e#
a. A very brief description of the properties you are required to value.
b. DCF investment appraisals for the Edinburgh and London properties assuming that the investor plans to buy the property and sell after a holding period of 20 years. Your appraisal must also account for 5.725% purchase costs to buy each property, and a further 2.5% for disposal costs at the end of the holding period. Forecasts predict that suitable exit yields, post refurbishment, will be around 6.5% for the Edinburgh office and 5.5% for London. You should also allow 2.5% for management costs on FRI leases at every rent review. c. A major refurbishment of each property during year 21 of the holding period which a building surveyor has estimated at a cost of £725,000 for Exchange Place and £1,500,000 for 44-46 Whitfield Street in London. Please note that the space will be unusable from the end of year 20 until the property is sold so you cannot collect rent during this last year. d. Valuation of the market values, as at 21st
November 2013, for the property interests your client has asked you to value, accompanied by a critical discussion of your comparable evidence, assumptions and methods employed. When valuing the leasehold interest at 71 Brunswick Street, your client has asked you to use a suitable Year’s Purchase formula that makes adjustment for a 2.5% sinking fund and 20% rate of taxation for the small occupier holding the existing leaseholds. Remember, current practice tends to use a single Year’s Purchase formula to value leaseholds but your client has expressly requested a dual rate Year’s Purchase and allowance for taxation.
Information
Part of this exercise involves you undertaking your own data collection and interpretation of market evidence. Electronic copies of appropriate local market reports will be placed in the Real Estate Valuation and Appraisal Moodle pages. You should also undertake your own information searches. This should include using searching for recent transactions on Costar Suite, which should be accessed using the password emailed direct to you. You will be shown how to use the SPN database to search for comparable transactions at an SPN demonstration at the tutorial on Thursday 7th November 2013.Submission Arrangements
Two copies of your valuation report should be posted, no later than 09.30hrs on Thursday 21st
November 2013, into the marked coursework box marked in the lobby outside Room 208C which is on the ground floor of the Adam Smith Building.
Students should ensure that their plagiarism statement and course coversheet are completed and attached to the front of both copies. Note, you should run your coursework through Turnitin, as draft and final versions, before the submission date and write the Turnitin ID Number for the final version in the box near the bottom of the coversheet. The plagiarism statement, course coversheet and guidance on using Turnitin can be found in the SPS Common Room (Enrolment Key=’SPS’).
The late submission of coursework will be penalised. Assignments not submitted by the required deadline will be subject to a 2 mark deduction for each working day overdue, subject to a maximum Real Estate Valuation and Appraisal of five working days. If an assignment has not been submitted within five working days of the deadline, the student will be awarded zero (grade H). Marking Criteria:
Your submission will be marked on the following criteria:
• Completion of the valuation and appraisal tasks. Remember, this is a valuation and appraisal exercise testing your ability to apply the principles and methods developed in class so the majority of the marks will be allocated to how well you perform these tasks (55%).
• The quality and quantity of market evidence you present to determine the market rents and yields you apply in your valuations, and the logic you apply when critically evaluating the suitability of these transactions as comparables (10%).
• The structure of your report, the clarity of writing and expression and the depth with which you critically discuss the methods you are applying. You are also expected to make use of academic and professional practice sources to support your arguments (30%).
• The level of professionalism demonstrated by the presentation of your report (5%).
Marks will be awarded for the assignment’s contents, conciseness, clarity and coherence of arguments and the overall presentation. The valuation report will contribute to 100% of your overall mark for the course, and should be approximately 2,500 words, excluding calculations and data analysis in the appendices. The valuations in the main body of the report should follow the standard format used in the course notes and be typed. It is recommended that you include your workings in the appendices, which may be hand written, so the markers can follow you calculations.
Every attempt will be made to have your submissions marked and returned to you by Friday 20th
December.
N.B. On no account should you approach any tenants, owners or surveyors for information regarding your site investigations. Any requests for material must be channelled through Allison Orr.
Further, there are mock real life scenarios in this brief. If you find information that contradicts the details in the brief then always assume the brief is correct.
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