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    Task 1: Case Study
    ASSIGNMENT BRIEF TASK 1: 20% of Total Module Mark
    Each part carries equal marks. You should take the valuation date for this
    assignment as February 3 2017.
    Billy Button (Landlord) owns a mixed use commercial property in Bournemouth. It
    comprises 2 shops on the ground floor and 2 upper floors of offices.
    Lease and Property Information
    Shop A
    Shop A is let to a rug selling company trading as Alibaba Rugs Ltd for a term of 10
    years from 3 February 2014 at an initial passing rent of 40000 pa subject to a 5
    yearly upwards only review. The lease is on effective FRI terms with the tenant
    liability for a proportionate share of repairing maintaining and decorating the external
    and common parts together with insurance provision. The rent review clause has
    the usual tenants assumptions and disregards with the rent to be determined on net
    effective terms.
    The following measurements are available (assuming that all welfare facilities are
    separate to the retail trading space given below):
    Net frontage: 6.75 metres
    Shop depth: 42.95 metres
    Shop B
    Shop B is let to a local pharmacy trading as Pills R Us Ltd for a term of 15 years from
    3 August 2015 at an initial passing rent of 48700 pa subject to a 5 yearly upwards
    only review and a tenants break at the end of years 5 and 10. The lease is on
    effective FRI terms with the tenant liability for a proportionate share of repairing
    maintaining and decorating the external and common parts together with insurance
    provision. The rent review clause has the usual tenants assumptions and
    disregards with the rent to be determined on net effective terms.
    The following measurements are available (assuming that all welfare facilities are
    separate to the retail trading space given below):
    Net frontage: 7.21 metres
    Shop depth: 42.95 metres
    Comparison
    You may for this assignment rely on the single comparison detailed below as being
    indicative of market rental levels as the valuation date. Retail premises in very close
    proximity have been let from 3 February 2017 for a 10 year term on FRI terms
    subject to an upwards only review at the fifth anniversary of the term. The rent has
    been agreed at 45500 pa subject to 9 months initial rent free.
    The following measurements are available (assuming that all welfare facilities are
    separate to the retail trading space given below):
    Net frontage: 5.43 metres
    Shop depth: 26.50 metres
    Investment evidence in the area shows that the all risks (market) yield for rack rent
    retail premises selling in the area is 7.25% (net basis) for average tenant covenant
    risk.
    There are two questions to answer:
    A. Billy Button has been approached by a national convenience store outlet (At
    Your Convenience) to take both premises on a single tenancy (with attendant
    opening up works to trade as a single outlet). He has approached Alibaba
    Rugs Ltd and Pills R Us Ltd and even though they have only been in the units
    for relatively short terms both are struggling to pay their rents and have
    signalled that if they are given a sensible premium they will vacate without
    any dilapidations liability.
    Evidence suggests that with an improved covenant the market yield is likely to
    strengthen by 50 bps. However the prospective tenant has requested that the
    Landlord pays for all the opening up works with a new lease for 25 years
    being agreed with 12 months rent free at market rent (the comparison noted
    above should be used to determine this). Rent reviews will be 5-yearly based
    on CPI uplifts.
    Stating all reasonable assumptions calculate the premiums that each of the
    tenants could expect to receive if the Landlord can make the surrender and
    re-grant work. You should explain what your results mean.
    B. Using the above information and stating any reasonable assumptions should
    the Landlord be approached by At Your Convenience where it wishes to
    contract on the same terms but leaves open the amount of rent free which
    could be offered (in place of the 12 months noted above) by the Landlord
    calculate and explain how much rent free the Landlord could reasonably offer
    with the deal still being affordable. Both existing tenants have demanded a
    premium each of 35000 to vacate.
    MAXIMUM MODULE MARK: 20 MARKS (equal to Parts A and B)
    Suggested word limit: circa 1000 (excluding references)
    Assessment Criteria
    Assessment of your submission will be based on the weighted criteria as given
    below. These relate to your module learning outcomes.
    Assessment Criteria Mark (%)
    CASE STUDY (40% of this Assignment):
    20 Module Marks
    Communication: Presentation & Structure (beginning to reach a
    professional standard). Accurate Spelling; Good grammar and
    sentence and paragraph construction; evidence of editing and proof
    reading; Writing style appropriate to task (report; essay; etc.); work
    well structured; understanding of both legal and academic referencing.
    5%
    Research: evidence of wider reading round the subject; list of
    references quite substantial; use of books and professional literature
    and beginning to use academic literature through search engines;
    developing appreciation of the quality of literature. Appropriate use of
    recognised academic and legal referencing systems.
    5%
    Surrender calculations: Understanding of the concept of surrender
    and re-grant calculations appropriate analysis of evidence full
    statement of valuation assumptions and carrying out of relevant
    calculations to determine tenant compensation. Demonstration of a
    level of knowledge and understanding to present a fully argued and
    supported outcome based on the material circumstances given.
    30%

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