Proposal Financial Appraisal

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SCHEME NOTES

Scheme Notes
Site Area: 14,537 sq m (1.4537 hectares OR 3.59 acres)
EXISTING USES
BUILDINGS AND SITE COVERAGE
Building 1 Site Area: 14,537 sq m
Old factory in very poor state of repair. 3 storeys, total floorspace 10,000 m2 gross. Area (sq m) by Level
1000m2 of ground floor occupied by car body shop on short lease. Land Use 0 1 2 3 All Levels
Hardstanding 3830 3,830
Building 2 Footpaths 532 532
Old works in very poor state of repair. 2 storeys, total floorspace 2180 m2 gross. Roads 605 605
Occupied by accountant. Grassed Areas 1915 1,915
Planted Areas 57 57
DEVELOPMENT PROPOSALS Multi Story Carpark 457 457 914
Apartments 1 Undercroft parking 957 957
Demolish Building 1 and redevelop site for offices, apartments, hotel and retail Apartments 1 957 957 957 2,871
Retain and refurbish Building 2 for workshops of 2,180 m2 gross; 2 floors @ 1090 m2 per floor Offices 1 957 957 487 487 2,888
Offices 2 1915 1915 1436 718 5,984
Hotel 1265 1265 1265 3,795
1 standard office building of 2888 m2 gross; 4 floors @ 957 m2 (floors 1 & 2) and 487 m2 (floors 3 & 4) Retail (shops, convenience & high street) 957 957 1,914
1 standard office building of 5,984 m2 gross; 4 floors @ 1915 m2 (floors 1 &2), 1436 m2 (floor 3) and 718 m2 (floor 4) Refurbished Workshops 1090 1090 2,180
1 apartment building of 2,871 m2 gross; 4 floors @ 957 m2 per floor (floor 1 as undercroft parking) 0
1 multi story carpark of 914 m2 gross; 2 floors @ 457 m2 per floor 0
1 hotel of 3,795 m2 gross; 3 floors @ 1,265 m2 per floor AND retail space (shops, convenience and high street) of 1,914 m2 gross; 2 floors @ 957 m2 Totals 14,537 7,598 4,145 2,162 28,442
Courtyards consisting of 3,830 m2; roads and footpaths of 1,137 m2; grassed areas of 1,915 m2 and planted areas of 57 m2
Mid point costs and values used for initial appraisal except where specified.

COST AND VALUE DATA

DEVELOPMENT COSTS AND VALUES BY TYPE OF CONSTRUCTION (INDICATIVE)
Land Cost: £s per m2 Cost: £s per ha Cost: other basis
Low High Low High Low High
Site
Market price for redevelopment 286.00 286.00 2,871,774 2,871,774
Site acquisition fees 5.25% 5.25%
Site Works Cost: £s per m2 Other Misc. Data
Low High Cost: £s per unit Prices: £s per m2
Low High Low High Notes
Demolition 35 60 Water feature 10,000 50,000
Abnormals and Site Preparation 50 100 Public art 5,000 25,000
Soft landscaping Footbridge 800 1,220
Grassed Areas 4 7 Petrol Filling Station 848 1,650 1,600 3,100 100% net/gross
Planted Areas 10 20 Sheffield Winter Garden 3,500 4,000
Hard landscaping 3 storey town houses 450 650 1,440 1,620 97.5% net/gross
Grey Concrete Paving 15 19 2 storey town houses 520 680 1,340 1,520 97.5% net/gross
High Quality Paving 25 50 General Purpose Hall 650 1,000 1,000 1,150 97.5% net/gross
Roads and Footpaths 40 55
Buildings
Cost: £s per m2 Prices: £s per m2 Rents: £s per m2 pa Yields: %
Low High Low High Low High Low High Notes
Parking spaces
Surface 44 68 40 50 10 10 20-22m2 per car
Undercroft 144 192 50 60 10 10 22-24m2 per car
Basement 536 656 50 60 10 10 22-24m2 per car
Multi-storey 144 192 50 60 10 10 22-24m2 per car
Offices
Old, unimproved 30 35 10 10 80.0% net/gross
Old, reasonable repair 65 90 9 9 80.0% net/gross
Modern, reasonable repair 85 95 9 9 85.0% net/gross
New build, good quality 880 1100 140 160 6 7 85.0% net/gross
Refurb, old to good quality 1000 1480 110 140 7 8 80.0% net/gross
Refurb, modern to good quality 200 570 110 140 7 8 85.0% net/gross
Industrial/Workshops
Old, unimproved 15 20 12 12 90.0% net/gross
Old, reasonable repair 20 35 10 10 90.0% net/gross
Modern, reasonable repair 40 55 9 9 97.5% net/gross
New build, good basic 360 700 60 60 7 8 97.5% net/gross
Refurb, old to good basic 400 875 55 60 7 8 97.5% net/gross
Live-Work Accommodation
New build, good basic 725 950 1,400 1,600 90.0% net/gross
Residential
New build apartments 650 880 1,600 1,800 90.0% net/gross
Warehouse conversions 735 1,100 1,600 1,800 85.0% net/gross
Retail
Shops (shell), high street 440 560 150 200 6 6 97.5% net/gross
Shops (shell), convenience stores 440 560 80 100 8 9 97.5% net/gross
Retail warehouse, modern 100 150 7 8 97.5% net/gross
Retail warehouse, new build 280 410 150 200 6 7 97.5% net/gross
Other
Hotels (mid-range) 1,030 1,350 100 120 6 6 85.0% net/gross
Pubs and bars 850 1,100 130 180 7 9 97.5% net/gross
Restaurants and cafes 900 1,250 130 180 7 9 97.5% net/gross
Leisure centre (dry) 1,040 1,560 150 150 7 7 97.5% net/gross
Leisure centre (wet and dry) 1,720 2,400 225 225 7 7 97.5% net/gross
Student Accommodation 960 1,250 1,800 2,000 90% net/gross
Bank, existing 125 150 5.5 6 97.5% net/gross
Bank, new build 1,020 1,265 150 200 5 5.5 97.5% net/gross
Art Gallery, new build 875 1,020 97.5% net/gross
Public Toilets 600 800 97.5% net/gross
Cinema 920 1,680 1,000 1,150 97.5% net/gross
Other Development Data
Low High Notes
Professional fees: % building costs 10% 10% Standard industry fee
Pre contract period: months 3 6 Varies with site size; Recommended as 6 months (0.5 years)
Building contract: months 9 18 Varies with site size; Recommended as 15 months (1.25 years)
Disposal period: months 6 12 Varies with site size; Recommended as 9 months (0.75 years)
Finance rate 7% 7% Standard industry fee
Letting fee (% ERV) 10% 10% Standard industry fee
Investment sales fee (% GDV) 3% 3% Standard industry fee
Occupier sales fee (% CV) 2% 2% Standard industry fee

LAND COSTS

Land Costs
Land Value
Area Unit cost Total cost
m2 £s per m2 £s
Market price for redevelopment 14,537 286 £4,157,582
Exisiting Use Value (EUV)
Gross Net/Gross Net Price Rent Rental value Estimated
Element Flsp m2 Ratio Flsp m2 per m2 per m2 £s pa Yield Value (£s)
Owner-occupied
0 0
0 0
0 0
0 0
0 0
Sub-total 0
Tenanted
Car Body Shop 1,000 90.00% 900 15 13,500 12.00% 112,500
Accountant 2,180 90.00% 1,962 15 29,430 12.00% 245,250
0 0 0
0 0 0
0 0 0
Sub-total 357,750
EUV £357,750
LAND COSTS £4,157,582

CONSTRUCTION COSTS

Construction Costs
Site works
Unit cost Area Total cost
Element £s per m2 m2 £s
Demolition 47.5 10,000 475,000
Abnormals and Site Preparation 75.0 13,447 1,008,525
Hardstanding 17.0 3,830 65,110
Footpaths 47.5 532 25,270
Roads 47.5 605 28,738
Grassed Areas 5.5 1,915 10,533
Planted Areas 15.0 57 855
0
0
0
0
0
Total cost of site works £1,614,030
Buildings
Unit cost Area Total cost
Element £s per m2 m2 £s
Multi story carpark 168 914 153,552
Tait Apartments undercroft parking 168 957 160,776
Tait Apartments 765 2,871 2,196,315
Keskin Offices 990 2,888 2,859,120
Bibby Offices (executive) 1,100 5,984 6,582,400
Hincks Hotel (5*) 1,350 3,795 5,123,250
Retail (shops, convenience, highstreet) 500 1,914 957,000
Watkins Workshops (refurbished) 638 2,180 1,389,750
0
0
0
0
0
0
0
0
0
0
0
0
Total cost of buildings £19,422,163
TOTAL CONSTRUCTION COSTS £21,036,193

VALUATION

Valuation
Gross Net/Gross Net Price Rent Rental value Estimated
Element Flsp m2 Ratio Flsp m2 per m2 per m2 £s pa Yield Value (£s)
For sale
Tait Apartments 2,871 90% 2,584 1,700 4,392,630
0 0
0 0
0 0
0 0
0 0
0 0
0 0
0 0
0 0
Sub-total (for sales fees) £4,392,630
For rent
Keskin Offices 2,888 85.0% 2,455 150 368,220 7.00% 5,260,286
Bibby Offices (executive) 5,984 85.0% 5,086 160 813,824 6.00% 13,563,733
Hincks Hotel (5*) 3,795 85.0% 3,226 110 354,833 6.00% 5,913,875
Retail (convenience) 957 97.5% 933 90 83,977 8.00% 1,049,709
Retail (high street) 957 97.5% 933 175 163,288 6.00% 2,721,469
Watkins Workshops 2,180 98% 2,126 57.5 122,216 8.00% 1,527,703
Tait Apartments undercroft parking 957 100% 957 55 52,635 10.00% 526,350
Multi story carpark 914 100% 914 55 50,270 10.00% 502,700
0 0 0
0 0 0
Sub-total (for letting & investment sales fees) £2,009,263 £31,065,825
GROSS DEVELOPMENT VALUE £35,458,455

APPRAISAL 1

FINANCIAL APPRAISAL 1
Scheme Valuation A
GROSS DEVELOPMENT VALUE £35,458,455
LAND COSTS £4,375,855
CONSTRUCTION COSTS £21,036,193
FINANCE COSTS £1,992,816
PROFESSIONAL FEES £3,324,373
RESIDUAL PROFIT £4,729,218
DEVELOPMENT PERIOD (YEARS)
Pre-contract Period (years) 0.50
Building Contract Period (years) 1.25
Period to Physical Completion (years) 1.75
Disposal Period (years) 0.75
Development Period (years) 2.50
FEES AND FINANCE RATES
Finance rate (% p.a.) 4.5%
Professional fees (% building costs) 10%
Land acquisition fees (% land costs) 5.25%
Letting fee (% ERV) 10%
Investment sales fee (% GDV) 3%
Occupier sales fee (% CV) 2%
RESIDUAL VALUATION
Gross Development Value £35,458,455
Construction costs £21,036,193
Finance on construction costs (to completion) £594,934
Professional fees £2,103,619
Finance on professional fees (to completion) £89,240
Land costs £4,157,582
Land acquisition costs £218,273
Land cost finance (to completion) £350,392
Costs at physical completion £28,550,234
Holding costs £958,249
Letting fee £200,926
Investment sales fee £931,975
Occupier sales fee £87,853
Total costs £30,729,237
RESIDUAL £4,729,218
DEVELOPER'S PROFIT (% ON COSTS) 15.39%

ANALYSIS

ANALYSING CHANGE (SENSITIVITY AND SCENARIO TESTING)
% Change Notes
Variable B C To enter a negative number you must use a minus before the number
Rent/Price 10% -10%
Yield -10% 10% Red indicates a negative number should be added (see explanation below)
Construction Costs 10% -10% Green indicates a positive number should be added (see explanation below)
Finance Rate 10% -10%
Disposal Period -10% 10%
B is an Optimistic Scenario: Economic Growth / Boom Economic activity grows faster than its current rate. The demand for accommodation increases and, consequently, rents/prices increase. The risk of property developments and investments being unsuccessful is reduced, so yields fall. Contractors increase building tender prices in the face of increased demand for their services from developers so construction costs rise. Interest rates are raised to dampen potential inflation. Property can be let/sold more quickly in the face of increased occupier demand so the disposal period falls.
C is a Pessimistic Scenario: Recession / Crash Economic activity slows and then contracts. The demand for accommodation decreases and, consequently, rents/prices stabilise and then fall. Property development and investment becomes more risky, so yields rise. Contractors decrease building tender prices in the face of decreased demand for their services from developers so construction costs fal. Interest rates are lowered to encourage investment and economic growth. Property takes longer to let/sell in the face of decreased occupier demand so the disposal period increases.
AUTOMATIC WORKINGS
Valuation A
Gross Net/Gross Net Price Rent Rental value Estimated
Element Flsp m2 Ratio Flsp m2 per m2 per m2 £s pa Yield Value (£s)
For sale
Tait Apartments 2,871 90% 2,584 1,700 0 0 0 4,392,630
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
Sub-total (for sales fees) £4,392,630
For rent
Keskin Offices 2,888 85% 2,455 0 150 368,220 7% 5,260,286
Bibby Offices (executive) 5,984 85% 5,086 0 160 813,824 6% 13,563,733
Hincks Hotel (5*) 3,795 85% 3,226 0 110 354,833 6% 5,913,875
Retail (convenience) 957 98% 933 0 90 83,977 8% 1,049,709
Retail (high street) 957 98% 933 0 175 163,288 6% 2,721,469
Watkins Workshops 2,180 98% 2,126 0 57.5 122,216 8% 1,527,703
Tait Apartments undercroft parking 957 100% 957 0 55 52,635 10% 526,350
Multi story carpark 914 100% 914 0 55 50,270 10% 502,700
0 0 0% 0 0 0 0 0% 0
0 0 0% 0 0 0 0 0% 0
Sub-total (for letting & investment sales fees) 2,009,263 £31,065,825
GROSS DEVELOPMENT VALUE £35,458,455
Valuation B
Gross Net/Gross Net Price Rent Rental value Estimated
Element Flsp m2 Ratio Flsp m2 per m2 per m2 £s pa Yield Value (£s)
For sale
Tait Apartments 2,871 90% 2,584 1,870 0 0 0 4,831,893
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
0 0 0% 0 0 0 0 0 0
Sub-total (for sales fees) £4,831,893
For rent
Keskin Offices 2,888 85% 2,455 0 165 405,042 6% 6,429,238
Bibby Offices (executive) 5,984 85% 5,086 0 176 895,206 5% 16,577,896
Hincks Hotel (5*) 3,795 1 3,226 0 121 390,316 5% 7,228,069
Retail (convenience) 957 1 933 0 99 92,374 7% 1,282,978
Retail (high street) 957 1 933 0 192.5 179,617 5% 3,326,240
Watkins Workshops 2,180 1 2,126 0 63.25 134,438 7% 1,867,193
Tait Apartments undercroft parking 957 1 957 0 60.5 57,899 9% 643,317
Multi story carpark 914 1 914 0 60.5 55,297 9% 614,411
0 0 0 0 0 0 0 0% 0
0 0 0 0 0 0 0 0% 0
Sub-total (for letting & investment sales fees) 2,210,189 £37,969,342
GROSS DEVELOPMENT VALUE £42,801,235
Valuation C
Gross Net/Gross Net Price Rent Rental value Estimated
Element Flsp m2 Ratio Flsp m2 per m2 per m2 £s pa Yield Value (£s)
For sale
Tait Apartments 2,871 90% 2,584 1,530 0 0 0 3,953,367
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
Sub-total (for sales fees) £3,953,367
For rent
Keskin Offices 2,888 85% 2,455 0 135 331,398 8% 4,303,870
Bibby Offices (executive) 5,984 85% 5,086 0 144 732,442 7% 11,097,600
Hincks Hotel (5*) 3,795 1 3,226 0 99 319,349 7% 4,838,625
Retail (convenience) 957 1 933 0 81 75,579 9% 858,853
Retail (high street) 957 1 933 0 157.5 146,959 7% 2,226,656
Watkins Workshops 2,180 1 2,126 0 51.75 109,995 9% 1,249,939
Tait Apartments undercroft parking 957 1 957 0 49.5 47,372 11% 430,650
Multi story carpark 914 1 914 0 49.5 45,243 11% 411,300
0 0 0 0 0 0 0 0% 0
0 0 0 0 0 0 0 0% 0
Sub-total (for letting & investment sales fees) 1,808,336 £25,417,493
GROSS DEVELOPMENT VALUE £29,370,860

APPRAISAL 2

FINANCIAL APPRAISAL 2: RESULTS FROM ANALYSING CHANGE
Scheme Valuation A Scheme Valuation B Scheme Valuation C
GROSS DEVELOPMENT VALUE £35,458,455 £42,801,235 £29,370,860
LAND COSTS £4,375,855 £4,375,855 £4,375,855
CONSTRUCTION COSTS £21,036,193 £23,139,812 £18,932,574
FINANCE COSTS £1,992,816 £2,272,018 £1,761,477
PROFESSIONAL FEES £3,324,373 £3,770,718 £2,915,683
RESIDUAL £4,729,218 £9,013,099 £1,155,539
DEVELOPMENT PERIOD (YEARS)
Pre-contract Period (years) 0.5 0.5 0.5
Building Contract Period (years) 1.25 1.25 1.25
Period to Physical Completion (years) 1.75 1.75 1.75
Disposal Period (years) 0.75 0.675 0.825
Development Period (years) 2.50 2.425 2.575
FEES AND FINANCE RATES
Finance rate (% p.a.) 4.5% 4.95% 4.1%
Professional fees (% building costs) 10% 10% 10%
Land acquisition fees (% land costs) 5.25% 5.25% 5.25%
Letting fee (% ERV) 10% 10% 10%
Investment sales fee (% GDV) 3% 3% 3%
Occupier sales fee (% CV) 2% 2% 2%
RESIDUAL VALUATION
Gross Development Value £35,458,455 £42,801,235 £29,370,860
Construction costs £21,036,193 £23,139,812 £18,932,574
Finance on construction costs (to completion) £594,934 £720,264 £481,633
Professional fees £2,103,619 £2,313,981 £1,893,257
Finance on professional fees (to completion) £89,240 £108,040 £72,245
Land costs £4,157,582 £4,375,855 £4,375,855
Land acquisition costs £218,273 £229,732 £229,732
Land cost finance (to completion) £350,392 £406,335 £331,362
Costs at physical completion £28,550,234 £31,294,019 £26,316,658
Holding costs £958,249 £1,037,380 £876,238
Letting fee £200,926 £221,019 £180,834
Investment sales fee £931,975 £1,139,080 £762,525
Occupier sales fee £87,853 £96,638 £79,067
Total Costs £30,729,237 £33,788,136 £28,215,322
RESIDUAL £4,729,218 £9,013,099 £1,155,539
DEVELOPER'S PROFIT (ON COSTS) 15.39% 26.68% 4.10%
A B C
Developer's profit £4,729,218 £9,013,099 £1,155,539
Land costs £4,375,855 £4,375,855 £4,375,855
Finance costs £1,992,816 £2,272,018 £1,761,477
Professional fees £3,324,373 £3,770,718 £2,915,683
Construction costs £21,036,193 £23,139,812 £18,932,574
£35,458,455 £42,571,503 £29,141,128

FIGURES

FINANCIAL STRUCTURE OF SCHEMES (ABSOLUTE)

Developer's profit

A B C 4729218.3750774041 9013099.4986850917 1155538.8056793697 Land costs

A B C 4375855.0549999997 4375855.0549999997 4375855.0549999997 Finance costs

A B C 1992815.9461130651 2272017.5466879811 1761477.3252480614 Professional fees

A B C 3324372.9214285719 3770718.239662698 2915683.14900974 Construction costs

A B C 21036193 23139812.300000001 18932573.699999999

A B C

SCHEME

£s

FINANCIAL STRUCTURE OF SCHEMES (PROPORTIONATE)

Developer's profit

A B C 4729218.3750774041 9013099.4986850917 1155538.8056793697 Land costs

A B C 4375855.0549999997 4375855.0549999997 4375855.0549999997 Finance costs

A B C 1992815.9461130651 2272017.5466879811 1761477.3252480614 Professional fees

A B C 3324372.9214285719 3770718.239662698 2915683.14900974 Construction costs

A B C 21036193 23139812.300000001 18932573.699999999

A B C

SCHEME

£s

TABLES

TABLES: FOR RECORDING THE RESULTS OF ANALYSIS
Table 1: Sensitivity Analysis (Proportionate Change) Table 2: Sensitivity Analysis (Break-even)
Original New Change in Profit Proportionate change required
Variable Change Profit Profit Absolute % Variable to reduce the developer's profit to 0%
Rent/Price 10% 15.39% -15.39% -100.00% Rent/Price
Yield 10% 15.39% -15.39% -100.00% Yield
Construction Costs 10% 15.39% -15.39% -100.00% Construction Costs
Finance Rate 10% 15.39% -15.39% -100.00% Finance Rate
Disposal Period 10% 15.39% -15.39% -100.00% Disposal Period
Table 3: Scenario Analysis Table 4: Comparative Analysis of Design Change
Scenario Original New Change in Profit
Variable B C Nature of Change (10%) Profit Profit Absolute %
Rent/Price 25% -5% Higher density 15.39% -15.39% -100.00%
Yield -5% 15% Different mix of uses 15.39% -15.39% -100.00%
Construction Costs 26% -10% Increased specification 15.39% -15.39% -100.00%
Finance Rate 15% -20%
Disposal Period -50% 100%
Orignal profit
New profit
Change in profit Absolute 0.00% 0.00%
% ERROR:#DIV/0! ERROR:#DIV/0!