Question You are working as a real estate consultant for Drysdale Ltd, an international property advisory...

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Question You are working as a real estate consultant for Drysdale Ltd, an international property advisory firm. A client is considering the purchase of a vacant site on the edge of a newly established office park, to develop an office, which will be held for investment on completion. The site has planning consent for offices, arranged over ground and upper floors. The completed building will have a net lettable to gross floorspace ratio of 85%. Other development details are: Asking Price for Land Total built area as allowed under planning consents Build Cost Planning conditions S106 & CIL Rental Value of completed scheme 6,800,000 50,000 sqft 205/sqft 150,000 Investment Yield for similar properties Professional Fees charged on construction works Environmental Study 40/sqft 6.75% 13.00% 20,000 Sales Agent Fee 2.00% Letting Fees (% of annual rent) 15.00% Marketing Budget 55,000 Contingency (% of build cost) 5.00% Developer's total cost of debt finance for 18 month development period 992,174 Construction Timing: Site preparation & planning period 3 Months Construction period 12 Months Letting void 3 Months a) Prepare a residual appraisal to determine the development profit, given the above information, making any other relevant and reasonable assumptions, but ignore purchasers' costs on acquisition & disposal. (30 Marks) b) Your client normally requires a profit on cost of 20% to proceed with a development, based on your answer to part a) what would your advice be to your client in this instance? (5 Marks) c) Calculate the development yield & investment yield mark up and explain how these metrics can be used to advise your client on the feasibility of developing and holding the completed building for investment purposes. (5 Marks) d) When applying for a development loan, what financial and project information would you need to provide to the lender? (10 Marks) Clearly set out all your calculations and workings and cite all references you have relied on in producing your solution. Question You are working as a real estate consultant for Drysdale Ltd, an international property advisory firm. A client is considering the purchase of a vacant site on the edge of a newly established office park, to develop an office, which will be held for investment on completion. The site has planning consent for offices, arranged over ground and upper floors. The completed building will have a net lettable to gross floorspace ratio of 85%. Other development details are: Asking Price for Land Total built area as allowed under planning consents Build Cost Planning conditions S106 & CIL Rental Value of completed scheme 6,800,000 50,000 sqft 205/sqft 150,000 Investment Yield for similar properties Professional Fees charged on construction works Environmental Study 40/sqft 6.75% 13.00% 20,000 Sales Agent Fee 2.00% Letting Fees (% of annual rent) 15.00% Marketing Budget 55,000 Contingency (% of build cost) 5.00% Developer's total cost of debt finance for 18 month development period 992,174 Construction Timing: Site preparation & planning period 3 Months Construction period 12 Months Letting void 3 Months a) Prepare a residual appraisal to determine the development profit, given the above information, making any other relevant and reasonable assumptions, but ignore purchasers' costs on acquisition & disposal. (30 Marks) b) Your client normally requires a profit on cost of 20% to proceed with a development, based on your answer to part a) what would your advice be to your client in this instance? (5 Marks) c) Calculate the development yield & investment yield mark up and explain how these metrics can be used to advise your client on the feasibility of developing and holding the completed building for investment purposes. (5 Marks) d) When applying for a development loan, what financial and project information would you need to provide to the lender? (10 Marks) Clearly set out all your calculations and workings and cite all references you have relied on in producing your solution.