1 Define the Years Purchase and show how it is used in the capitalization method of valuation.

2 How can the term multiplier be used instead of years purchase? What advantages are derived from the use of this term?

3 The market value of an investment property is the value of all future income and………… ?

4 Which of the following properties are investment properties?

5 Discuss the following statement:

With the increase in strata (unit) title, commercial and industrial properties there is less need for the capitalization method of valuation.

6 What is meant by primary and secondary methods of valuation? Why is a secondary method necessary?

Give examples.

7 Comment on the following values for a district shopping centre. What conclusions may be drawn from the two valuations?

Valuation with the capitalization method:$5m.

Valuation with the summation method:$7m

Which value should be adopted?

8 Determine the initial yield of the following sale of a district shopping centre:

Sale price: $5m
Net annual income: $600000

9 It is determined that the net annual income for the above property is well below the market rental value. This would result in a ….. .. in the capitalization rate
compared to an equivalent property enjoying market rents.

10 Would your answer to 9 be different if the above property was vacant?

11 The systems approach as used in this part uses the physical, economic and legal environments to evaluate the subject investment property. What other environments might be used that affect the value of such property?

12 The expected return on investment for an industrial warehouse over the next 5 years is 12% per annum including expected capital gains. How would you advise a client who wishes to invest in the property? What are the other factors should be considered?

13 Energy efficiency is the most important single criteria of the worth of large investment properties today and the valuer's report should basically be an analysis of energy efficiency.

Is the above quotation correct? Should the valuer become an expert in assessing
the energy efficiency of buildings?

14 As more and more tenants become aware that the cost of their lease is a factor of energy efficiency, they are more likely to question the landlord's expenditure and management on plant and equipment.

Why are tenants concerned about the energy efficiency of certain buildings? How would this affect the value of such buildings?

15 Landlords are not particularly concerned about energy efficiency because of the recoverables and profit on the sale of power."

Is this statement true? Discuss how it could affect the value` of investment properties.

16 Discuss the problems that incentives (particularly "secret" incentives) cause the valuer of commercial market rents.

17 Discuss the problems in the construction of a suitable rent review clause that is fair for both the lessor and lessee of commercial premises. What is meant by a plain English clause?

18 What do the words annual rent mean under the rule in Woolworths case (1988) The Valuer, January 1989, p232.

How was inflation taken into account in the
rental determination? Is this a correct approach?

19 Discuss the phrase "final and binding” in a typical rent review clause. Under the rule in the Horwitz case (1990) The Valuer, November 1990, p281 when can a wrong rental determination be upset by the courts?

Why wasn't it upset in this case?

20 What did the Burns Philp case (1987) 8 NSWLR 642 decide on the correct method for the determination of market rent in a commercial lease rent review clause?

20 What was the reasoning in the Bestwood Pine case (1990) The Valuer, February 1991, p361, that bound the parties to the valuer's determination?

Were these the same as in the Horwitz case?

22 Under the rule in Bestwood Pine should the financial strength of the tenant be taken into account when determining a new rent under the rent review clause?
Discuss your answer.

23 What is meant by the term; "error in the discretionary judgment of the valuer"
McHugh J in Legal General Life (1985)1 NSWLR 31 at p336.

24 In the NMLAA case (1991) The Valuer, August 1991, p512, what were the opposing arguments concerning the use of confidentiality clauses in lease agreements?

How was the case decided and why?

Would the same result be likely in your state or territory?

25 Compare the decision in the NMLAA case with Ropart's case (1991) The Valuer August 1991, p515. Are they at odds or are the facts sufficiently different that they should be distinguished?

26 In Holman's case (1992) The Valuer August 1992, p220, how should the "current annual market rental" be determined?

Is it really just a question of construction?

27 How is the willing buyer willing seller theory applied in the determination of current annual market rental value in Holman's case?

How is it distinguished from the Barton Chambers case (1986) 6 NSWLR 322?

28 What was the decision in Dickinson's case (1991) The Valuer, November 1992, p305, concerning an arbitrator's subpoena of evidence subject to a confidentiality clause?

Would the judgment apply to arbitration proceedings in your state or territory?

29 What are the differences between a gross lease and net rent lease ?

What are the advantages and disadvantages of each type?
How does each affect the value of commercial buildings?

30 How have national standards affected the valuer's assessment of a commercial building?

What area of law affecting tenant comfort and safety have the standards evolved from?