REPORTS
– API NOTE
Reproduced
with permission
1.0
Introduction
1.1
Purpose
The
purpose of this Business Focus element is to provide Members with an
indication of some of the types of reports which can be produced for
clients, what they could contain and how they might be compiled.
1.2
Scope
This
Business Focus element applies to Members providing an array of
reports to clients on a wide range of property types and issues, and
for numerous purposes.
1.3
Definition
For
the purpose of this Business Focus element, a report is any written
or oral communication of a property assessment, analysis, consulting
service that is forwarded, conveyed or transmitted to the client upon
completion of an assignment.
1.4
Oral Report
Where
a report is conveyed to a client in an oral communication, it is
recommended that the advice be confirmed in a hard copy or other
electronic or digital format capable of producing a text version. If
instructed not to provide anything in writing, it is important to
ensure this is noted in the file along with a written record of the
oral advice provided.
2.0
Report Purpose
2.1
Purpose dictates Report Type, Format and Content
Reports
can have many names, but most, if not all, property reports are
basically aimed at providing solutions to property problems to meet
clients’ needs and purposes.
The
problem may be as simple as not knowing some information about a
property, it may involve a client’s need to know what would be the
best use to which to put the property, whether it is suitable
security (what are the risks and Market Value) for a mortgage
advance, or as complex as establishing the feasibility of a mixed
category, multi-stage development proposed for a rapidly expanding
area where the site needs rezoning and remediation of contamination.
The
purpose for which the client needs the report and the nature of the
problem to be solved will both tend to dictate the:
•
type of report,
•
format of the report;
and
•
content of the
report.
3.0
Types of Reports
3.1
Three Main Categories
Most
report styles tend to fall into one of the following three
categories:
•
self-contained or
comprehensive style
•
summary or short form
style
•
restricted or
proforma style.
The
substantive content of a report and not the size of the document
alone influences which category a report fits into. Each item in each
type of report should be addressed in the depth and detail as
appropriate for the item, the type of report and purpose.
3.2
Self-contained or Comprehensive
A
self-contained or comprehensive style report generally ‘describes’
its information at a comprehensive level of detail. It should contain
all information significant to the solution of the property problem.
It will often involve indepth detail on each of many points under
numerous headings in sections containing like information.
3.3
Summary or Short Form
A
summary or short form style report generally ‘summarises’ its
information in a more concise form. It should contain a summary of
all information significant to the solution of the property problem.
It will often involve one or several paragraphs summarising in
abbreviated narrative or tabular format, the main points under a
major heading or section.
3.4
Restricted or Proforma
A
restricted or proforma style report ‘states’ much its information
in a minimal presentation. The headings are often decided by the
client (who tends to be a volume user of Members reports) who
requires information briefly stated. It will often involve a
combination of brief narrative
statements
and simple fact statements or bulleted points.
3.5
Deciding type or style
In
deciding the type or style of report appropriate in any instance, the
following should be considered:
• the
client’s requirements;
• the
client’s level of understanding of the particular type of property
and its market;
• the
purpose of the assignment or task.
4.0
Report Formats
4.1
Institute does not Dictate Format
While
the Institute does not dictate the form, format or style of reports,
it may assist Members by indicating what could be provided or it may
produce formats for particular client groups to enable the benefits
of uniformity to be gained.
4.2
Word Processor Report Templates and other Useful Features
Modern
word processing programs often provide report templates. They also
include many features enabling very professional reports to be
produced readily. These include:
•
page headers and
footers;
•
automatic page
numbering;
•
automatic table of
contents;
•
great variety of font
types, sizes and enhancements such as bolding and italics;
•
table format control;
•
spell and grammar
checks;
•
import data and
graphs;
• and
many others.
New
features are continually being added to these programs. Even if you
have an existing program which appears to still be doing the job
after three or four years, the advances are well worth the cost of
upgrading. Many packages are offered today which include word
processing, spreadsheet, database, graphics, organisers and
presentation assistants. The package cost is often less than the cost
of a single program just a few years ago and there are many more
features. Databases can also be used to produce a report while
capturing data to add to the database or using information already in
it. Making the move can also be an ideal opportunity to upgrade
hardware as well.
Often,
all a client sees of you is the reports you send in.
Don’t
sell yourself short by submitting poorly presented and formatted
reports. The annexure to this Business Focus element will also give
an indication of how your report could be formatted.
4.3
E-commerce Era
The
electronic commerce era is gathering pace. In the US and Canada it is
already having significant impact on our profession in the
residential mortgage reporting market.
e-commerce
for our profession is not about e-mailing files as many of us at
first thought. Reports are generated out of a database and the
content transmitted to the client as data fields.
A
significant number of Australian lenders are already well advanced in
their plans in this area. e-commerce
will
have a significant impact on our professional lives. Our quick uptake
in this area will be necessary if we are to remain relevant to our
clients in their new ways of doing business. Initial indications are
that it will best suit shorter form reports which will need to be
consistent in format.
5.0
Report Content
5.1
Deciding on Content
The
content of reports will vary greatly. With comprehensive and summary
style reports the content can be decided by focussing on the subject,
the purpose and the client’s needs or problems and objectives.
5.2
Comment on Extent of Process
It
is recommended that in each type of report that you comment on the
extent of the process of collecting, confirming and reporting data.
However this description should not be out of proportion to the
length of the report.
With
a comprehensive report the full extent of the process should be
apparent to the report reader so such comment can be briefly stated.
With
a summary report the full extent of the process may not be apparent
to the reader, so to protect yourself, summarise the process.
With
a Pro-forma report the full extent of the process will not be
apparent to the reader so either the pro-forma or a supporting
memorandum referenced in the report should describe the process.
5.3
Reference to File Material
It
is also recommended with the summary and pro-forma reports that
reference be made to the existence of appropriately detailed file
material in support of the conclusions and that from these a
comprehensive
report
can be compiled by further arrangement.
5.4
Caution any Limitation on Content
Where
a client requests less content than is considered appropriate for the
purpose, it would be prudent to include a covering comment on this
limitation in the report noting that the detail is held on file and
can be
provided
by further arrangement, (while also cautioning if the omission of
that content could mislead or not adequately inform the client or any
party authorised to rely on the report). If any restriction or
limitation is imposed by the client on ‘normal processes’, great
care should be taken.
5.5
Clearly and Logically Presented and Adequately Detailed
It
is important for the content of a report to be clearly and logically
presented and adequately detailed for the purpose. This applies
especially to self-contained or comprehensive style reports. These
will tend to
comprise
the following main parts:
•
summary - of the
report and its findings or recommendations;
•
body of the report
comprising;
•
property and/or
Project - adequately described for the purpose;
•
market - relevant
dynamics and data;
•
assessments,
Consideration of Issues and Risk Analysis (if relevant);
•
solutions if
relevant;
•
annexures (addenda,
appendices etc.) which are generally support material providing
additional detail which has often been gathered from other sources.
6.0
Report Balance
6.1
Focus on the Problem and Solution not the Subject
It
is important to keep reports in balance. The description of the
subject should not out-weigh your focus on the market and the
development of your solution to the property problem. In the past
there has been client comment that some reports provide lots of
detail about the property but very little about the market or the
solution to the ‘property problem’, and that the position should
be reversed.
As
a Member and a property professional, your point of difference is
your ability to provide solutions to property problems, not just
describing property, - which is sometimes well known to the client
anyway.
The
key is in ‘value adding’ - putting content in your report which
adds to your client’s knowledge, not putting in lots of content
which the client already knows or is not relevant to the current
problem. The information which you have is not knowledge until it is
in the hands of a client who can turn it into value. You can turn it
into value for your client by solving his property problems with it.
6.2
Sufficiently Detailed Summary
Balance
is also achieved by understanding the client’s requirements and
situation. While a client may require a comprehensive report (or in
cases where such is warranted and provided), it is becoming
increasingly obvious that busy clients do not have time to fully read
the whole
document.
Though many reports provide an ‘Executive Summary’, often these
do little more than indicate that the property has been inspected,
that it contains certain improvements and a brief note of the
particular property
solution.
Some clients then have to go through the whole report to prepare
their own summary.
Balanced
reporting at the ‘stand alone’ or ‘comprehensive’ level
should provide a summary sufficiently detailed that it could almost
pass as a Summary or Short form Report.
The
reader should be able to gain an adequate understanding of the
subject of the report, the relevant market, the main considerations
and the solution to the property problem. Any aspect of concern can
be explored further in the body of the report, the reader can come
back to the balance of the report as time permits, or the report can
be referred to someone else to follow up.
The
‘Summary’, which could be 2-7 pages long, should touch on the
main points of the report so that the reader will gain an overview of
the purpose and subject of the report, the relevant market, the main
considerations and the solution to the property problem.
6.3
Balance in Issues and Language
Balance
in report content also requires a balance in the issues addressed and
the language used.The report should:
•
objectively address
upside and downside potential;
• not
be over-glowing in the positive aspects or unduly critical in
negative aspects;
• not
infer things which should be detailed or explained;
• not
avoid or be silent on important issues;
• not
use jargon, abbreviations or unexplained technical terms unless
suited to the client;
•
lead to a conclusion
clearly supported by the report content.
6.4
Balance in Short-form Reports
Balance
is also important in summary or short-form reports. While many
practices use standard descriptions of a town or city, it looks
obvious and out of balance when one suitable for a comprehensive
report is inserted into a short-form report. It too should be scaled
down to a summary version only.
6.5
Challenge of Pro-forma Reports
Pro-forma
reports sometimes pose a challenge in deciding just what and how much
information needs to be provided.
Pro-formas
are often designed or utilised by the client to meet a need (usually
to gather just the important information in ‘stated’ or point
form covering key aspects only). However, if a particular key aspect
of the subject property is so important that the client should be
informed beyond the space provided on a fixed field pro-forma, it is
appropriate to provide an addenda to the pro-forma.
7.0
Report Content Prompters
There
are many ways/combinations of techniques to produce a report. With
the benefit of word processors, some people save a duplicate copy of
a similar property report and change it as necessary. There are
several inherent dangers with this method. Firstly, some detail that
should be changed or deleted might not be, and secondly, some points
that may not have been relevant in the first might be overlooked in
the second. Perhaps a safer method is a report layout template
containing any standard content with prompters built in.
Annexed
to this Business Focus element is a Report Compilation Prompter which
you can be use to select major section headings for your report and
points under a range of sub-section headings from which to choose
appropriate content. Out of this you can build a report template or
shell with your standard content into which you insert the variables
based on a selection of the prompters as relevant. While the headings
and points are comprehensive, they are not exhaustive.
Whatever
system you use you will probably find it handy in building your
reports. Add to it as necessary.
Annexure
1 – Comprehensive Report
(Nature
of Problem Addressed)
Type
of Property/Market Segment
Address
of Property
Under
Instructions From:
For
the Use and Benefit Of:
Your
Ref. / Order No:
Our
Ref:
Photo
if appropriate
1.0
Summary
1.1
Summary of Report
• Brief
summary of client details and objectives
• Note
any special conditions, assumptions or limitations required
• Brief
summary of the subject of the report
• If
includes a project, describe briefly
• Summarise
market analysis
• Outline
main issues
• Outline
main findings
1.2
Recommendations
• List
Recommendations (or alternatives)
• Report
Date
• Signature
of Member
• Name,
Qualifications etc
• Draw
attention to assumptions and limitations contained in report (or
list)
• ‘Report
is for the use only of .........’
• ‘No
extract from this report may be included ..............’
1.3
Assessments
• State
the extent of the process of collecting,
confirming
and reporting data
• What
interest has been assessed and for what purpose
• Date
of assessment
• Market
Value definition
• If
a project, define ‘as if complete’ or ‘on completion’
• Assessment
in words and figures
• Note
any special inclusions or exclusions which are not real property
2.0
Client
2.1
Client Details, Purpose and objectives
• Client
name (if an organisation, include name
of
instructing representative)
• Purpose
for which the report is required
• Statement
of understanding of Client requirements and objectives
2.2
Required Assumptions and Limitations
• State
any assumptions required by client or limitations
imposed
3.0
Property
In
this Section, choose headings as appropriate and re-number
3.1
Title and Property Detail
• Known
As/Situated
• Legal
Description
• Area
• Dimensions
• Title
and Reference
• Restrictions,
Encumbrances, leases etc. noted therein
• Recorded
Ownership
• Nature
of interest in the property
• Rating
and taxing information
3.2
Planning Control
• Zoning
and Scheme Reference
• Objectives
of the zoning
• Allowable
uses without consent
• Allowable
uses with consent
• Prohibited
uses
• Existing
approvals and prior approvals and reference
• Any
Heritage implications
• Planning
requirements affecting any proposed uses
or
development
• Community
and political environment
• Any
Approvals for nearby properties
• Other
broad Council policies which could affect
the
property eg. buffer zones, height restrictions,
heritage
areas etc.
• Any
particularly important State Environmental
Planning
Policies
• Any
proposed changes of zoning or draft plans
• Statutory
Charges applicable
• Landscaping
requirements
• Carparking
requirements
• Sunset
clauses
• Subdivision
requirements
• Floor
Space Ratios
• Site
setbacks
• Permitted
densities
• Planning
Certificates sighted
3.3
City or Town (or nearby main town)
– by
name
• Profile
as relevant to the task and client
• Provide
extra detail for non-local clients and indicate
relative
position to main centres
3.4
Location and Locality
• Side
of street and nearest cross street (distance
&
direction)
• Nature
of street (highway, main arterial, local
through
street, cul-de-sac)
• Number
of lanes, median strip
• Traffic
flow
• Locality
or suburb name
• Km
to CBD
• Nearby
development
• Trend
- redevelopment
• Changes
- traffic flow pattern, population,
demographics,
new developments, existing traffic
generators
ceasing or changing operations
• Proximity
to beneficial features
• Any
particularly adverse features
3.5
The Land
• The
site has been identified by reference to
(DP,
Survey Plan etc.)
• Shape
• Size
• Inside/corner
• Elevation
in relation to street level
• Slope
• Soil
type
• Fill
• Landslip
• Erosion
risk
• Drainage
• Flooding
or watercourse
• Easements,
(or service conduits without easements)
• Suitability
for building - geo-technical report required?
• Possible
encroachments, setbacks from apparent
boundaries
• Impact
of adjacent properties
• Aspect
• Views
• Buffer
zones
• Other
environmental hazards eg. wind, fire, salt air,
urban
salinity
• Hazardous
or offensive development
• Legal
access
• Physical
ingress/egress for vehicles and pedestrians & ease of use.
• Passing
trade
• Noise
Nuisance including flight paths and road noise
• Comment
on history of site as a lead in on contamination
• Any
apparent cause for contamination concern
• Is
any proposed use likely to cause contamination
• Air
pollution
• Mine
subsidence proclamation area
• Conservation
orders or Heritage issues
• Native
Title – claim or prospects thereof
Rural
- (additional to any relevant from above list)
• Altitude
(range?)
• Rock
• Millable
timber
• Carrying
capacity
• Rainfall
incidence and variation
• Land
slip
• Salting
• Access
to & within the property
• Topography
• Original
timber
• Average
yields crops
• Versatility
of land use
• Flooding
• Weeds
• Erosion
• Soil
compaction
• Views
• Soil
types/areas
• Timber
remaining
• Crop
types typical and actual
• Drought
• Pests
• Acid
soils
• Frost
or hail prone
• Home
site
• Various
SEPP’s (NSW) including
• SEPP
14 (Coastal Wetlands)
• SEPP
30 (Feedlots & Piggeries)
• SEPP
37 (Continued Mines & Extractive Industries)
• SEPP
46 (Clearing - Flora & Fauna)
Farm
Improvements (other than main buildings)
• Internal
roads
• Erosion
/ landslip control measures
• Fencing
- boundary & subdivision
• Water
- natural, catchment, storage & reticulation, domestic supply
• Irrigation
- licences and details, controlling authority,
water
supply source & cost, reliability & current
availability,
delivery system & cost, layout, drainage.
• Pasture
- types, condition and fertiliser history
• Plantations
- type, number/area, age, condition, yields.
• Timber
regeneration areas / woodlots
3.6
Services
• Electricity
• Gas
• Kerb
& gutter
• Schools
m/km
• Services
adequate
• Water
• Phone
• Footpath
• Shops
m/km
• Distance
to silos
• Sewer/septic
• Road
surface
• Transport
m/km
• Parking
• Distance
to Markets
• Where
relevant, provide location of services
3.7
Improvements
Main
Structure
• Present
use
• Building
Type
• Built
circa/exact year
• If
strata, being one? of x units in the development
3.8
Construction
• External
walls
• Floors
• Roof
covering
• Wall
frame
• Footings
• Roof
frame
• Internal
linings
• Windows
• Ceiling
linings
• Shop
front
• Ceiling
height
• Awning
Accommodation
/ Use Areas
• List
main rooms / use areas (in a bulleted list
or
run-on style)
Approximate
Areas
• List
each main part of a building and show areas offset to the right.
As
applicable:
Living
areas m2
Patio
& Verandah m2
Garages
m2
Commercial
Building m2 GBA/m2 NLA
Lockup
Shop m2 NLA
Warehouse
m2 GBA
• Functional
plan
• Correct
design criteria
• If
purpose built - adaptable? /alt. uses?
• Adequacy
of areas
• Suit
current use
• Obsolescence
• Loading
areas
• Design
aesthetics
• Any
obvious non-compliance
Features
and Standard
• Built-in
features
• Floor
coverings
• Air
conditioning
• P.C.
Items list/quality
• Window
coverings
• Tenant
improvements/fit-out
• Light
fittings
Building
Services (mainly commercial & industrial)
• Aircond./ventilation
• Special
Electrical
• Elevators
& escalators
• Sprinklers
• Lighting
• Goods
lift
• Hydrants/fire
hoses
• Security
system
• Special
Technology
Y2000
(Y2K) Compliance CGT Issues Impacting
• Effect
on property/business
• Effect
on value/security risk
• Market
sentiment on issue
Structural
Condition
• List
any significant problems or state if none
readily
apparent.
• Note
if engineer’s certificate required
Repairs
and Maintenance
• List
any significant items/state if no readily apparent
major
items outstanding
• List
major refurbishment or upgrading required and estimated cost.
Pests
• Note
any apparent problems/state if no termites
or
pests evident.
• Recommend
inspection by reputable pest control
company
if warranted
Occupational
Health & Safety
• Asbestos
• Trade
Waste
• Un-healthy
building
Farm
Buildings and Structures
• Brief
description of use, size/capacity of each
in
bulleted form.
Ancillary
Improvements
• List
these in bulleted form broadly classified, (eg.
fencing,
paving, landscaping, detached minor buildings,
carparking,
service areas, signage, yard lights etc.)
• If
strata, general description of shared amenities,
facilities,
common property.
3.9
Occupancy and Outgoings
Epitome
of leases - following detail as available or appropriate
• Premises
identification
• Lessee
• Commenced
• Expiry
• Term
• Commencing
rent
• Current
(passing) rent
• Total
occupancy cost
• Area
occupied
• Car
spaces if included
• Lessee
outgoings
• Review
method & frequency
• Next
review
• Option(s)
• Use
permitted by lease
• Unusual
provisions
• Option
to purchase
• Original
or copy
• Sighted
• Signed/Stamped
Comments
• Occupancy
status - vacant/owner-occupied/tenanted
• Note
areas unable to inspect and give reason
• Sight
rent review documents (comment if not available)
• Terms
certain remaining
• Total
Passing Rent
• Naming
rights rental
• Face
rents/effective rents
• Overage
rent
• Rack
rents
• Reversions
• Characteristics
of the income stream
• Security
of rental income
• Arrears
or non-payment
• Arms
length dealing
• Deposits
or guarantees held
• Tenant
fitouts
• Incentives
given
• Highlight
leases expiring, options being exercised or new leases pending.
• Tenancy
mix
• Vacancy
factor
• Vacancy
history
• Standing
of major tenants
• Any
retail leases legislation compliance
• If
a project, asking rents and any pre-commitments
• Incentives
offered or required by the market to maintain or attract tenants
• Is
the property managed & if so does it appear effective
• Is
there any excess land for which no effective rent is paid
• If
the property is owner-occupied, what would be
reasonable
market terms and conditions for a lease
• Term
• Options
• Initial
Rent
• Review
method
• Review
frequency
• Outgoings
responsibility
• If
the property is not leased at present, allowance for loss of rent and
leasing up?
Outgoings
(actual or estimated) and Recoveries (actual)
Outgoings
Recoveries
Rates
$ $
Land
Tax $ $
Insurance
$ $
Repairs
and Maintenance $
Cleaning
$ $
Air
Conditioning $ $
Electricity
$ $
Lift
Maintenance $ $
Management
$ $
Fire
Protection $ $
Pest
Control $ $
Security
$ $
Body
Corporate Fees $ $
TOTALS
$ $
• Outgoings
equate to approximately $per m2 of net/ gross lettable area
• Is
major expenditure above normal R&M required to maintain rental
levels? Comparison with normal building maintenance costs.
Rental
Income Summary
Rental
Income $
Plus
Recoveries $
Gross
Rental Income $
Less
Outgoings $
Net
Rental Income $
3.10
Trading
If
a specialised trading property and goodwill is included,
consider
the following:
• Nature
of trade and management
• Comments
about trade - past, present and trend.
• Outline/summarise
trading figures as supplied and/or adjusted
• Adequacy
of business records/financial returns kept
if
inadequate or not available, what effect on capitalisation rate and
marketability.
• Business
systems adequacy including Y2K compliance
• Explain
any adjustments
• Treatment
of chattels, plant and equipment
4.0
Project
4.1
Project Details
• Describe
project/renovation program
• Building
approval detail and conditions
• Extent
of plans and documentation prepared
• Fees,
levies and charges paid to date
• Builder
• Plans
& Specifications
• Estimated
Cost
• Licence
No.
• Engineer’s
Details
• Work
by owner
• Quote/Contract
Price
• Construction
Period
• Progress
Inspections
• Development
Program
• If
work in progress, indicate:
• stage
of construction
• Estimated
cost of work carried out in relation to contract price
• Estimated
cost to complete the project under
the
current contract
• Estimated
completion period
5.0
Market Analysis
5.1
Marketability
• SWOT
analysis - Strengths,Weaknesses, Opportunities & Threats - go
through sections on property and project
to
address significant aspects especially location, and if a project,
timing.
• Overall
market appeal and/or status of the property
• Any
subdivision potential - position of any structures
• Any
onerous encumbrances on title
• If
any contamination, is stigma likely after remediation
• Economic/functional
obsolescence, costs and merits of remedying.
• Code
non-compliance - cost and allowable time
frame
to meet requirements
• Purpose
built building - suitability for conversion
and
cost
• Year
2000 compliance - anything affected e.g. lifts, air conditioning.
• CGT
Impact on marketability, value and replacement
insurance
• Alternative
uses
• Is
existing use Highest and Best Use otherwise what is
• Physical
capacity of site
• If
a redevelopment site, demolition, site access problems or cramped
site conditions.
• Under/overcapitalisation
• Any
land surplus to current requirements or for which no rental return
achieved
• Native
Title issues
• Heritage/National
Trust issues
• Strength
of tenancies
• Any
significant reversionary income
• Upcoming
vacancies
• Likely
tenant profile
• Buyer
motivation and requirements
• Vendor
motivation
• How
good is the total package
• Comparative
position in the market place - market segment
• Any
measures which would improve the property’s
market
position and advantage
• Is
there any ‘marriage value’ potential
• Is
there any potential to fragment or disaggregate the property
• Any
inherent factors which could impact favourably or adversely on value
• Any
other special factors bearing in mind the purpose
of
the Report
• Marketing
method alternatives
• Marketing
strategy
• Any
adverse impact of legislation e.g. Disability Discrimination Act
5.2
Condition of the Market
• Supply
- sales/leasing listings level, private offerings
• Supply
trend - new product being
constructed/developed,
approved
• Asking
prices trend
• Demand
level - sales/leasing rate, enquiry level, pent up demand
• Demand
trend
• Rates
of Return (yield) trend
• Buyer’s/Seller’s
market
• Current
position in the property cycle
• Prospect
of market turning
• Ease
of sale/leasing - likely marketing/letting up period
• Vacancy
rate and trend
• Rental
value trend
• Current
marketing/leasing period and trend (if extended, give reasons)
• Incentives
being offered/demanded
• Finance
availability and cost
• Building
cost trend
• Timing
of project - anticipated market conditions
on
completion
• Existing
competition - prospects of increased competition
• Prospects
of change in Council or Govt. policy or regulations
• General
economic indicators - CPI, interest rate climate, bond rate.
• Prospect
of market rising and/or falling in the short and medium term - local,
national or international factors likely to /which might impact on
market.
• If
rural enterprise, price trend for produce -
local
& global factors affecting
• Current
seasonal conditions
5.3
Market Dynamics
• Profile
of sellers/buyers in this market segment
• Most
likely type of buyer
• Profile
of lessors/lessees in this market segment
• Most
likely type of lessee
• Main
market drivers
• Considerations
made by typical buyers/sellers, lessors/lessees
• Investor
activity
• Mortgagee
sales activity
• Motivation
of vendors and purchasers/lessors/lessees
• Historical
market volatility
• Influence
of marketing agents
• Predominate
sales/leasing method
• Market
sentiment - consumer & business confidence levels & trends,
unemployment
• Market
price range and typical market segments
5.4
Market Data / Market Indicators
5.4.1
Property Sales
• Sources
of information
• Sales
details and analyses
– Address/Name
of property
– Legal
description
– Date
of Contract
– Price
– Land
Area
– Zoning
– Improvements
– Lessee
– Term
of lease
– Net
lettable area (NLA) - GBA for industrial
– Net
rent
– Net
Profit
– Indicates
- yield or appropriate unit of value
– Comments
(including any special conditions or circumstances)
• Current/Most
recent sale of the subject property - movement since
• Asking
prices (including subject property)
• Offers
(including for subject)
• Evidence
of market movement - recent and long term trend line.
5.4.2
Property Rentals
• General
summary of rental levels, or
• When
detail readily available and public knowledge:
• Premises
• Area
occupied
• Use
permitted
• Car
spaces if included
• Lessee/occupant
• Term
• Commenced
• Expiry
• Option(s)
• Review
method & frequency
• Next
review
• Commencing
rent
• Current
rent
• Lessee
outgoings
• Total
cost of occupancy
• State
if actual rents on subject are in line with the market
• Any
reversionary income for subject property
• If
a vacancy exists or occurs at present, could the area be leased at a
similar rental and how long could it take to find a new tenant.
• If
a development project, are the asking rentals
achievable
and sustainable
• What
is level of competition from existing developments and other
proposals or developments which could come on-line in a similar
marketing period.
5.4.3
Rates of Return
• Discuss
the relevance and application of each sale which indicates a cap.
Rate.
• Considered
range applicable to this property
5.4.4
Developer’s Profit
• Where
available, provide analysed market evidence
of
developer’s profit.
• Where
analysed evidence is not available, provide indication of profit
expectation
5.4.5
Vacancy Rates
• Historical
and current vacancy rate for the subject property
• Historical
and current vacancy rate in this market segment
• Vacancy
rate trend.
6.0
Assessments
6.1
Valuation Approaches
Indicate
which methods of valuation adopted and why
6.1.1
Sales Comparison Approach
• Brief
explanation of what the approach does
• Compare
sales with subject property making appropriate adjustments for
differences in the property itself and for such factors as movement
in the market and in circumstances of sale, or alternatively
• Deduce
rates per unit of comparison (m2, unit/flat,
hectare
etc) and apply to the subject property.
• Indicate
value or value range indicated
6.1.2
Capitalisation Approach
• Brief
explanation of what the approach does
• Set
out the approach, which could be along the following lines (adjusted
as necessary) and include reference to section of report the figure
used was derived from Rental Income (section 6.1.2) $
Plus
Recoveries (section 6.1.2) $
Gross
Rental $
Less
Vacancy (section 6.1.2) $
Outgoings
(section x.x.x) $
Net
Rental $
Capitalised
(section x.x.x) @ % = $
@
% = $
@
% = $
Adjustments
Where
no effective rent paid for ‘excess land’
Plus
Excess land (section 6.1.2) $
Where
major expenditure required to achieve adopted rental level
Less
Significant
R
& M (section 6.1.2) $
Cost
to Convert (section 6.1.2) $
Where
vacant or valued on vacant possession basis
Less
Loss of Rent (section6.1.2) $
Leasing
Fees (section 6.1.2) $
Indicated
Value Range $
6.1.3
Summation Approach
• Brief
explanation of what the approach does
• Set
out the approach, which could be along the
following
lines (adjusted as necessary) and include
reference
to section of report the figure used was
derived
from
As
applicable:
Land
$
Main
Structure $
Other
Improvements $
Holding
Costs & Entrepreneurial Profit $
Goodwill
$
Licence
$
Indicated
Value $
6.1.4
Hypothetical Development/Residual Value Analysis
• Brief
explanation of what the approach does
• Set
out the approach as appropriate to the particular exercise
6.1.5
Financial Modelling/Discounted Cash Flow
• Brief
explanation of what the approach does
• Set
out the approach as appropriate
6.2
Assessment(s)
• Explain
market sensitivity - value is most probable selling price within a
range
• Insert
value definition as appropriate:
• Market
Value
• Alternate
use value
• Value
as if complete/Value on completion
• Rental
value etc
• Reconcile
the approaches adopted
• Indicate
why any of the usual methods may not have been used.
• Set
out the value(s) adopted
7.0
Project Feasibility (Evaluation)
7.1
Feasibility Study (Project Evaluation)
• Refer
Real Property Guidance Note 7 [ANZRPGN 7]
7.2
Sensitivity Analysis
• Refer
Real Property Guidance Note 7 [ANZRPGN 7]
8.0
Issues
In
this Section, identify and explain the relevance of the issues (under
the following headings as relevant) that impact on the needs and
objectives of the client or the purpose of the report.
8.1
Subject Property
8.2
Project
8.3
Neighbouring Properties and Neighbourhood
8.4
Market
8.5
Assessments
8.6
Feasibility
9.0
Risk Analysis
9.1
The Property/Project,The Market
and
Trends
10.0
Strategy (if relevant)
10.1
Alternatives
• List
11.0
Recommendations(if relevant)
• List
ANNEXURES
• Include
as necessary to support and enhance report.