[SOLVED] PLAN60331 PROPERTY VALUATION 2024-25

PLAN60331 PROPERTY VALUATION 2024-25

Property Valuation: Briefing for Assignment Two

There are two assignments for this course unit. For Assignment Two, students will prepare an individual RICS-Red-Book-compliant valuation report.

Assignment Two is worth 75% of the final mark for the unit.

ASSIGNMENT 2

This is an individual report which must be submitted through Turn-it-in on Blackboard by 2pm on Monday 6th January 2025. The maximum word count is 2,500 words.

The property at 11 Portland Street (Westminster House), Manchester, M1 3HU has recently come on the market. A snapshot of the key features extracted from one of the property platforms available to us and a brochure describing the available space to let are provided as part of this assignment package.

You are to prepare a valuation for your client, Bridgeford Street Enterprises Ltd. (fictitious company). They wish to purchase the property as an investment with an intended holding period of 10 years and have instructed an assignment due (valuation) date of 16/11/2024. The valuation has been requested because they wish you to assess the property’sinvestment worth via a discounted cash flow (DCF) model taking account of all existing and future tenancies including (possible) lease renewals and/or new leases. Following valuation (your opinion of value), you should provide advice to your client whether to accept the asking price.

NO PERSON OR ORGANISATION ASSOCIATED WITH THE ABOVE PROPERTY CAN BE CONTACTED FOR THE PURPOSE OF THIS ASSIGNMENT. ANY QUESTIONS SHOULD BE DIRECTED TO THE UNIT TUTOR ([email protected].uk).

You are expected to build your own excel template for calculation purposes as no template will be provided for the DCF models. The subject property comprises of ground floor retail and office suites in the upper floors which requires analysis of market rents for both sectors. You need to do a market and tenant research to make informed decisions about DCF inputs, lease renewals / new tenancies based on tenant covenants, (sub)market performance, etc. Given the potential lack of negotiation/contract details regarding some of the reported rents in the subject property (effective or asking), you are to consider all passing rents as effective. However, when analysing comps, you should consider only effective rents and, if no adequate comps information is available, follow the RICS guidance about the hierarchy of evidence.

You are free to consider various scenarios and estimate the corresponding asset values however, only one template screengrab is allowed in the assignment (Appendix with 2 screengrabs in total for calculations and formulas) . If additional values have been calculated based on different scenarios (e.g. worst-case scenario all tenants leave at the end of their leases  or best-case all tenants renew their leases and max 3 months void period with 1 month rent free for the new tenant(s) of the available spaces) these can be reported in the Conclusions part.

For the required content of valuation reports (indicative section headings) refer to RICS  Valuation Global Standards (Red Book) 2021, (VPS3). For details of the required report  content refer to part 4 of the Red Book (VPS 1-5) and for additional guidance to VPGA 6.

Your marking criteria areas follows:

1. Adherence to RICS valuation and reporting standards. In addition to these you should include references as relevant to your work. These should follow the UoM Library suggested format

(Harvard style) and are excluded from the word count.

2. Critically examine the relevant commercial real estate investment markets in Manchester City Centre and the implications for the subject property and your valuation

3. Critically analyse the factors affecting the input parameters in the DCF model and list these parameters’ values to be used in your models. This includes, among others, market rent estimates and forecasts for both retail and office properties coming from your analysis of comps.

4. Discuss the various new tenancy decisions etc. with respective rationales related to lease renewals, new leases, void periods, concessions, etc. Assumptions that are not supported by rationale coming from market evidence/ desk research etc. will be marked down.

5. Calculate the investment worth of the property clearly showing your work in an appendix, (equivalent to 200 words). The elements allowed in the appendix are

a)   Screengrab showing your DCF model template (in excel) with calculations and valuation annotations. The word limit above is mostly to restrict annotations as the DCF templates will be relatively standard. Hence, the annotations should not be part of the screengrab   but presented as word text as footnotes to the template in the appendix – method 3 of annotating calculations.

b)   Screengrab showing the formulas used in your DCF model template. It is your responsibility to ensure that images are high quality and legible.

The rubric document provides guidance for each criterion and details of the expectations for each level of mark.

GENERAL INFORMATION

1. Feedback

Feedback will be available within 15 working days (this is excluding weekends, exam periods and university holidays). Marks and feedback will be available electronically via Blackboard.

2. Word Count and Late Submission

Refer to your Programme Handbook for further information on what is included in the word count and the consequences of exceeding the maximum word count or of submitting work late.