Home

ARGUS Software: ARGUS Valuation

1. Chapter 12 Lesson 10 LOdSOS ceo aaa li Sueca ed The Lease Schedule yx imita e a e a SIGDDeO REMUS srra n ks COR diete tdci ia Ot a a dca ns VacancleS a A IRURE hee Bc one ed e Dco Vc Ra b ce S ARGUS Valuation Capitalisation version 2 50 Step by Step Guide w CONTENTS FEU Valle TTT 54 Fixed Reversion leases sud iai AS ordeo Hehe WR ESO Qi eee Ra 54 OPHION L ia 54 Chapter 13 Lesson 11 Complex Properties eee 56 the T nancy Schedule accord 56 Filling in the record data oia ba hui REY ER T eR ed See 57 Using Rent Groups for Rental Value 0 oooooooomomooo 57 Valuing using the Cap Groups leeren 58 Generating multiple tenants es 58 Seeing TESUNS osa ss eect bad e cep dS pM EH ae e AH AC eas 59 Adjusting the Schedule 0 ocococooo annann 59 Chapter 14 Lesson 12 ADnalySIS 5a di m Rm RD AA A ia es 61 Gt RI WE TESTES erm 61 ANALYSIS AT eec epe adea dee b pu e PS EA Vd Ux Vd amd ea 63 Chapter 15 Lesson 13 ARGUS Zone ees 73 Chapter 16 Contact detal caida PEOR E Rd RR UE dg og od owed 75 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide CONTENTS ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 1 Introduction 1 CHAPTER 1 Introduction Welcome to the world of ARGUS We are delighted that you have chosen ARGUS Valuation Capitalisation This tutori
2. sattron House 3a Saraton Road Soutameton S 4 H eon jokes omkesue 10000 Freehetafoossg Coventry House 109 111 Carmat Street COVENTRY om T Jortices orice sute 10000 tesseod oise Canary Wharf Tower 16 Limehause London Greater London E16 lana Temes office sute 10000 eals J T Ashleigh House 19 York saha Yorkshre O lenneg jokes Tens ss 10000 eals J T 110 Grange Park 10 Sattron Hi Bvigton and Hove a H sont tices orice sute 10000 Freeroalonsra J T Seaside House 15 Seaview Road BRIGHTONSussex ENT H sama leisure Pub Wine Bar 100 00 Leasehaglooise J T Gmmmorei3Gueen meSweetLondon freno residential Resini t00 00 Freenoafoorss i TEE O n permis EC peer E tos buicing 17125 Charton Kent DAS s Leisure Shopring Center 100 00 Leasenota osesa fer crosoport Shopping Certre 25 30 inara Ste Cambrite Contridgestre sountes Ras sive 10000 Lemsenadpors hte Ciis Business Parkg Goodvew Road WORCESTER Hereford Worcecter WestMidendsmdustia Warehouse 1000o eals J T lUnfordwoodBusessPen SOR Road vORKNortoK vo lanne musti warehouse 100 00 aeaaea J T Number of Properties 15 Data Analysis Property view 2 Both views offer a wide set of columns showing much of the detailed information from each of the records plus some additional information and calculated results These are generally sums and percentages of the portf
3. 08 01 1996 08 01 2001 08 01 2006 08 01 12021 DSJO712021 4 75 000 None 0 00 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 52 Chapter 12 Lesson 10 Leases 2 Alternatively select Fixed Rent if the step is required to fall on a rent review date The importance of this distinction is seen when adding costs to the property for rent review fees When these need to be based on rents agreed at official rent review dates the Fixed Rent event is recognised and dates between review dates are ignored 3 For both Fixed Step and Interim Rent the amount of rent can be typed in manually in the rent column Vacancies A tenant record can represent a vacant unit with an assumption of a probability of reletting on certain terms in the future Thus unless there is a deliberate requirement to produce a nil value for a unit each record should have a form of lease defined 1 Add a new tenant You can do this from within a tenant unit record by clicking the Add new tenant button 2 Enter a lease start date of 24th March 2009 and a term of 10 years with a market rent review cycle of 5 years This 1s several months after the valuation date therefore suggesting a current void 3 Notice immediately that the Current Rent is zero the Holding over option is available and the Status Bar at the bottom of the screen 1s displaying a sign FUTURE LEASE cae Tenant Standard UK Tenant L
4. ARGUS Zone Dave Analvsis User Name Password pores Login Y Remember me next time ARGUS Software s worldwide platform for collaboration and data services Featuring Collaboration File management Product support Forums News and events eLearning Sign Up to ARGUS Zone AM1 3BS AM1 3BS 9u07 SNIYV Once you are logged in you may see something similar to the following ARGUS Zone m Dave Daves Details Create Refresh E as E ql Shared Documents 3007 STY ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 74 Chapter 15 Lesson 13 ARGUS Zone We are going to create a new workspace to hold your files Click on the Create button and type in New workspace This will create a fresh workspace Select the property we created earlier in the Training portfolio Right click on the file and select the ARGUS Zone Send to Zone menu option The property will be saved to the Zone as a CVL file ARGUS Zone Dave Hew workspace Details Create Refresh i ss E ql Shared Documents Lal Fictitious Property 14285 C vL SUO Z SNIYV You will note that a green dot will appear in the Zone column for the record you have just sent to the Zone Drag a column header here to group by that E Tag Active Zone Ref No Standal Standal Sample Properties 5 You can log out of the Zone by clicking o
5. Valuation Date 01 01 2006 Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3B5 Close the Area Schedule with the File Save changes amp Exit option and the tenant record will be updated Ignore Geared ERV and Indexation Group options in this case Do not enter anything in the Current Void months field as this will force a void period of ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 12 Lesson 10 Leases 51 months from the valuation date and overwrite the existing lease terms Type 6 in the Expiry Void months field to add a 6 month reletting period on expiry of this lease It does not matter in this case about the Rent Free months field since this applies at the start of the lease and is now well in the past The Lease Schedule The short term lease can be seen more clearly in the Rent Schedule xi 1 Click the Rents button e to open the time based schedule cee Tenant Rent Schedule Acme Chemists Ltd File Edit Tools Help 4 Save El Cancel ye Reset schedule E Reseguence Fixed Lease Events Tenant valuation Date Yrs Mhs Days Event click to change Override Rent per annum Minimum Uplitt Type Amount D Market Rent RR date 30 000 Mone Do ec ise 1 N a noue o o OfwewaR Fi soe 00 E Lease Schedule event display 2 The sequence of events in the lease can
6. Definition Details Cost Trigger Repeat Until Discount rates On Valuation y Repeat every y 12 S month s DCF post Ext 0 0000 Include Delay 0 fin perpetuity Trad Val future costs 0 0000 month s Amount Inflation For DCF Valuations Amount specified as Epid amount g Growth Group PRIVATE vw Annual Floor area rate 0 00 perfe None O Every 12 months rental value 0 0000 Z Fix on initial Enanos Souce IP DEF rent paid 1 0000 fix on initial C Apply Non rec VAT C Apply Valuation Date 28 09 2008 Propert not Elected For VAT 17 5000 7 You now need to set the Repeat Until section to show Repeat Every with the months field holding 12 to represent an annual charge 8 Make sure the Until field is selected as In perpetuity so there is no specific time limit for the deduction 9 In the Amount section check the Annual option In this case the Every 12 months option means the same thing 10 Our choice for this example will be to type 1 00 in the rent paid field so we will see a consistent deduction of 196 from the gross rent to represent the management fees 11 Once again ignore the rest of the fields 12 Close the screen by selecting the File Save changes and Exit menu option Note If you select the Cancel and Exit option all your changes will be lost Lesson Summary We have now added a capital cost and a running cost With the large range of
7. Growth v Cap Rates a graph Y Checklist Calculate Calculation Target amp Results Ungeared IRR 8 7500 AAA Fictitious Property 9 Fictitious Place Training Y e 8 7500 Repairs Capital Expendit Tenant Rent C Manual PV Value 391 650 Acme Chemists Ltd Use Valuation as PV T 192 680 DCF period From 280972008 Duration vrsho Mths Ds 0 Until Dsospots 5 5 DCF Calculation Options Discounting Monthly bal Ignore rent apportionments V Apply cap ex defined after exit Ignore acquisition fees ARGUS Developer Link Attach data from file sll 4985 e09 suonoe o4d aoueuly anjeA yx3 Yodo AYI suondo y ERY pa for Acme Chemists Ltd Acme Chemists Ltd Exit Value ABC Management Fees Overall data Exit Sale fees Exit Purchasers fees ACQUISITION Price value Acquisition fee 4 751996 Total Rental income Total LH Ground Rent payments Building Costs Management Costs Total Operating revenues Total Capital receipts Total Operating costs 2 Total Capital expenditure SUMMARY nterest service Total Debt Equity Net Cash Flow Net Cash Balance Rental Value Exit Yaluation Running Cost Exit Sale Fee Exit Purchaser s Acquisition Price 391 650 Acquisition Price 391 650 Acquisition Fee Summary Summary Cat Summary Cat Summary Summary Summary Summary Summary Summary Summary Net Cash Flow 410 300 4 852 Net Cash Balanc 4
8. File Tools Help Load Save as Region P Sector P Specific use type P Tenant covenant T Capital value P Market rental value T Property Tenure P Lease break options T Over rent froth T Void periods T Main Use Type T Property T Tenant The Tag Filter window 3 The selection items are on the left the available list in the middle and the selected list on the right 4 We shall assume we want to target all Retail Leisure properties First make sure the word Sector is selected and click to switch ON the adjoining box 5 Use the mouse to highlight the labels in the middle box referring to Retail and Leisure To highlight multiple entries you can do this by holding down the mouse button and dragging over a range or by using the Control key and clicking with the mouse on the selected items 6 Next click the Move Selected gt button so that the screen appears as shown below ce Tag Filter File Tools Help Load Save as Items available for filter Items Selected for filter Region P Y sector P i i Specific use type P Car Parking Leisure Tenant covenant T Industrial Retail Park Capital value P Mixed Commercial selected Retail Warehouse Market rental value T pedet lt gt Property Tenure P Other Lease break options T Out of Town Retail Over rent froth T Parking Void periods T Main Use Type T Recreational Residential Move all ROUKOFF
9. To apply portfolio analysis to a single property set all property tags OFF right click popup menu Tags and then set the required property tag ON click the leftmost column in the Command Centre listing Periodic snapshots of cash flows providing amount and percentage statistics at each interval The cashflow window includes a Projections section to show period by period snapshots 1 From the Command Centre select a property and click on the Cash Flow button 2 The Cashflow screen appears As discussed earlier in Lesson 6 Cash Flow on page 31 the Cashflow options should be set up particularly Rental Growth and Exit Value assumptions ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 64 3 Chapter 14 Lesson 12 Analysis Click the Projections tab and click on the Calculate button to immediately calculate the cash flows for the current settings cae Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit view Tools Calculation Spreadsheet Projections Help Sa Reports 3 Excel i IRR v NPY Z Growth v Cap Rates x graph graph di Checklist Calculate Calculation Target amp Results Ungeared IRR 13 8701 50 000 51 500 C Geared IRR 15 576396 Average Growth NIA 3 00 Manual PY Value 400 000 Growth in Period N A 3 00 Use Valuation as PV S Gross Income pa at Exit 30 000 30 000 Gross Income Received
10. and Cashflow Surplus Retained to 50 This means that if there is a positive surplus 50 will be used to reduce the loan debt If negative then additional money for the whole of the negative balance will have to be borrowed to redress the shortfall Finance in the Cash Flow Each property cash flow can hold individual definitions of loans These can also then be applied in a portfolio cashflow l 2 From the Command Centre select a property and click on the Cashflow button Click on the Finance tab and check the Enable finance switch ON The box headed Finance will now be available ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 11 Lesson 9 Finance 47 3 The central area on the Finance tab shows the list of defined accounts Existing finance accounts can be edited by selecting a name and clicking the Create Edit button below to open the Finance window New accounts can be added in the Finance window itself 4 To select accounts from the Finance list check the appropriate boxes To remove an account from the list select the account and click the Create Edit button You can then delete the account from the Finance window 5 Select Simple Loan for this example 6 Atthe top of the box you can set the interest to be ignored for the purpose of calculation of the whole investment IRR cae Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS F
11. data Merged rent value data Sumary and Rent rows and Empty data showing only the main summaries 7 Certain row types in the spreadsheet can be drilled into in order to access underlying data records To do this double click on a row or right click and select the Expand row menu option Note Changes to data are actual changes to the records so be careful when using this feature 8 You can export and print the cash flow in several ways Using the Excel button will open Microsoft Excel and place the current spreadsheet into a new worksheet 9 The Reports button provides options to produce a formatted schedule or a spreadsheet layout The other options in the DCF screen are generally for analysis purposes and are discussed later on in these lessons and in the main User Manual Lesson Summary The DCF is one of the most important parts of the Valuation Capitalisation system It forms the heart of the Analysis module and provides the valuer or manager with a lot of information The DCF requires attention to the details for basic options rental growth and exit capitalisation Costs and inflation are covered automatically in the Costs Schedule A variety of outputs can be generated through reports and graphics ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 9 Lesson 7 Tenure 37 CHAPTER 9 Lesson Tenure Adding tenures So far our simple example has assumed an uncompli
12. empty box awaiting your input but is an active reservoir of information where data can be added updated deleted and moved around You can load data from files import from other systems and type in data by hand You may not be able to enter all fields for editing as there is a security layer that protects data and you will be informed when this occurs To navigate through screens you can move from one field to another using the TAB key just above the Caps Lock key on your keyboard or you can use the mouse pointer and click with the left mouse button into any available field About the lessons There are several ways of starting a session in Valuation Capitalisation and the procedure presented here is just one typical example of moving through the screens and functions In time users generally find the most efficient way they want to work in the program and this depends on the type of work being undertaken We are going to take a direct route to get up and running as soon as possible and therefore you will be taken through procedures and commands that will be unfamiliar and probably not immediately understood There is a temptation to get diverted and investigate things you come across on the screens This is fine but will interrupt your progress and so prolong the learning timescale There is a lot to get through and it is understood you may only wish to look at subjects that are relevant to your work In this case the
13. so the same group list appears for all tenants in the property Mame amp Status Lease amp Rent Renewal Valuation Capitalization Overrides calculations Fixed value Capitalisation Group Private Valuation Method Hardcore vw Hardcore Cap Rate 10 000 Layer Cap Fate 0 000 Froth Cap Rate noce DCF Exit Cap Rate B000 0 Minimum uplifts Disable in Trad val Indexation method Disable in Trad v al Assumptions Assumptions Tables Annually in Arrears 5 For our example select Private in the Capitalisation Group drop down select Hardcore as the valuation method and enter 10 00 as the capitalisation percentage rate 6 Ignore all other fields at this time The unit is not over rented so we can ignore the Froth Over Rent section 7 The simple tenant record data entry is now complete so leave the tenant screen by selecting the File Close menu option The data is saved Lesson Summary We created and set up a simple standard tenant and looked at the minimum level of data entry to establish a viable valuation entity In the next lesson we will look at refining and expanding the data in order to move closer to the valuation and cash flow stages At any point you can view the valuation based on the current setup In the Command Centre see the Valuation and Cashflow buttons ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 20 Chapter 5 Lesson 3 Costs C
14. 3 YX Customise Show Tenant Info Z Date m ie chenge ed nen Doomsday ange SI HET esoo 58282 211 500 _101 01 2018 24 048 120 sol 5805201 60 000 09 08 2018 24033010 28710 4793501 6 500 31 10 2018 24047720 400 4793501 18 500 09 11 2018 24047720 eezio 4710501 to 25 12 2008 824027470 go 4710501 83 000 24 03 2018 24027470 20 250 4554201 ED 31 12 2019 23352470 0 4484201 156 300 08 01 2021 24 027 470 75 000 4484201 70 000 01 02 2023 823302470 0 3969201 20 000 20 06 2023 23300020 725000 3877001 8 25 06 2024 23002520 2450 3587001 892200 01 01 2025 23002520 237 500 2837001 290 000 27 10 2028 823002520 sol 2687001 750 000 02 02 2028 20 690 520 eo t375001 150 000 31 12 2028 220533 020 2312000 t315001 2312000 02 01 2032 20 633020 257 500 eN 60 000 DECIA e IMM IA sso PEwswsm m 8 89 8 Valuation Date 02 01 2005 Growth Not Used Doomsday Options On Expiry On Upward Downward Review On Ten Doomsday Rent Analysis 2 Click the Show Graphs button to see the data more clearly ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis a Analysis graphs File View Help Gross Doomsda y Doomsday Graph 3 In the main sch
15. 4 Close the Rent Schedule Note An important reminder here is to ensure the property Assumptions hold an appropriate setting in the valuation tables options for Sinking Fund and Tax on the Sinking Fund as part of the leasehold valuation processes Lesson Summary Leasehold properties involve more details in the definition and amount of data required to complete the property record information than for a freehold Occasionally leaseholds can be so complex as to require a separate calculation of ground rent payments with manual inputs into the ground lease schedule ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 10 Lesson 8 Portfolios 41 CHAPTER 10 Lesson 8 Portfolios This lesson applies to users with the portfolio level module enabled Portfolio View The portfolio in Valuation Capitalisation is the master record that holds and controls a group of properties These properties are not permanently linked to the portfolio since they can be copied and moved between multiple portfolios When a portfolio lists its properties any actions are undertaken on those property records that are ACTIVE and TAGGED Note ACTIVE True This means that the record is alive and available for operations Tagging allows the record to be included or excluded from operations calculations ACTIVE False This means that the record is dead Tagging has no effect Within each property record these two flags are shown o
16. Apply the System level default Template Currency General Default GBP Pound Sterling Scenario default Default Currency Scenario Y Align Equity for properties Align properties ta portfolio currency settings Reset property assumptions to default The above currency options are only used when the system is valuing ar Reporting at Portfolio level against properties defined in multiple currencies val Date 21 09 2008 Default Assumptions Values Gross Value 0 Net Say Value 0 The portfolio screen 6 In the Portfolio name field type the name Training Portfolio Use the File Close menu option to close down the window Note carefully that the portfolio record has a valuation date This appears in the records and at the top of the portfolio listing schedule You can change this if you wish This only affects a portfolio valuation or cash flow and not individual properties When you add a new property it will have its own default valuation date but you can change this at any time Look closely at the Properties list in the Command Centre With the Training Portfolio selected there are no properties in the list ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 10 Chapter 3 Lesson 1 Properties To add a new property 1 Ensure the Properties level is focused in the Command Centre ARGUS Valuation Capitalisation BM Portfolios Properties suo7 STY LSK Code Registrat
17. N A 30 000 192 580 Duration Years 1 jai E Annual v Money weighted Projections options Purch costs Apply Y vendor s fees Apply Y Returns Calculations Use total acquisition costs Projections View Decimals 2 Ground Rent pa at Exit 0 0 Ground Rent Paid NIA 0 Equiv Grd Rent for ERY N A 0 Run Costs Paid N A 300 Run Costs pa at Exit 300 Equiv Run Costs for ERY N A 515 Net Income pa at Exit 29 700 29 700 Met Income Received N A 29 700 Cap Expenditure Paid 419 050 0 Gross Value 419 049 585 952 Exit Cap Rate NIA 3 00 Disc Exit Cap Costs 0 0 Pen ORY a ek are Notional Exit Fees 19 050 11 603 Net Value after Vendor s Costs 399 999 574 359 Net Value Change NIA 43 59 Gross Yalue Change N A 39 8396 Net Value Change N A 174 360 I o m o E o Y m zm Q a a gt m x lt x c o 0 E a o o i gt El e E o D LH eq T Gross Yalue Change N A 166 913 Cap Exp to Exit NIA 419 050 Annual Ground Rent based on ER Val Date 01 01 2006 Discount Monthly Target Value 400 000 Cash Flow Projections 4 10 11 12 If the control palette on the left is not visible click the button on the vertical bar on the far left of the window to reveal the palette The schedule holds rows that represent various analytical elements at the specified date shown in each column These are fi
18. Rent Net Rent Rental value Froth Floorspace Cateqory Type use Type Tenant Sample UK Portfolio EN Retail Shop 13 036 849 LL Supermarket 17 917 322 EEUU Retail Warehouse 39 379 042 ES Office suite GE Factory ES Workshop Supermarket 11 222 740 9 245 629 EJ Restaurant 10 783 177 MIA Parking 2 074 768 CL Residential 2 002 569 GE Garage EE Public House Office suite ESPERE MIA Other Other fy EE Bank Pub Wine Bar Head Office Valuation Date 02 01 2005 Category Analysis Screen 4 This shows the Say Value breakdown for Use Type Say Value is a View Change views by selecting a different tab Change categories by selecting a new item from the Category Type list 5 Change the displayed result information using the menu item Analysis As Percentages or Analysis As Amounts or use the buttons on the toolbar 2 2 6 To print the results select the menu item File Print ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 66 Chapter 14 Lesson 12 Analysis 7 There are many options for the display and format of the graphics and much useful information can be obtained through a combination of Filter View and Category cae Portfolio Category Analysis of Use Type Tenant by Say Value File Edit Analysis Graph Valuation Help kx mae Yen Sls a Olo 9 mw Net Value Gross Value Gross Rent Net Rent Rental Value Froth Floorspace Category Type use Type Tenant Sampl
19. SL x EY Cap Costs option x EY value target x Acquisition costs x Special case calculation x Placement order in waluations Target for Running Yields Bog Costs Cap Valuation tables Leasehold Sinking Fund Tax If save cancel I X 4 Note the tick boxes on the right If they are ticked this means the particular option applies the Assumptions setting of the parent portfolio You can turn any of these settings off by unchecking the tick box thus enabling a manual choice for this property 5 The Valuation Capitalisation User Manual goes into detail about the meaning of each of these switches and they will be referred to as necessary in this tutorial but briefly the various options provide alternative calculation and math processes ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 6 Lesson 4 Assumptions 25 6 The first page selects the following Hardcore method can apply a single rate to all varying lease income or add a layer rate to the layer or marginal income Term amp Reversion method capitalisation can apply the reversionary yield at the next lease event or at the renewal date The Next Event Review definition can be regarded as Open Market rental only or as any event type Initial Yield Cap Rate capitalisation can assume zero or a market rent when actual passing rent is Zero Ienore the Special INI fil
20. Schroders Shopping Mall lt lt gt gt Technology Park Unclassified Unit Shops P Property T Tenant Filter with Retail and Leisure Sector categories selected Other items can be added to the filter using the same method but only those with the category type ticked on will apply ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis 63 7 To apply the filter click the Apply button The results are shown at the bottom of the screen declaring the number of records found matching the filter 8 Wecan save this filter as a file so that 1t can be retrieved later on Click the Save As button Type Sector Filter and click OK Click the Close button to close the Filter screen 9 Onreturning to the Command Centre if any properties have matched the filter a tick appears in the Tag column next to the property address in the listing otherwise it 1s blank 10 To add or remove properties from the filter simply click the mouse in the Tag column Any valuation or cashflow at this stage will apply only to the tagged properties 11 We will use a different technique to reset the filter and tags Place the mouse pointer over the property listing box and click the right mouse button Select Tags then All On All tags are restored and the filter is reset Analysis types PROJECTIONS ANALYSIS e CATEGORY ANALYSIS e PERFORMANCE ANALYSIS DATA ANALYSIS RENT ANALYSIS
21. Valuation Capitalisation version 2 50 Step by Step Guide Chapter 13 Lesson 11 Complex Properties 57 Filling Ra e con du Using Our list contains several tenants with similar leases 25 years with 5 year rent reviews Each unit is the same size Zoned 250 sq ft per zone Our first tenant can act as a template for the other tenants if we define much of the data first then duplicate the record and individually adjust the variations for each tenant in the record data Click once in the name field of our new tenant in the Tenancy Schedule and enter General Stores as the tenant name In the description field type Unit 1 The Parent Tenure column is the tenure to which the tenant belongs The Covenant column is available to select the user defined covenant types You can use the Show Fields buttons in the button bar to selectively show or hide sections of the schedule Click on Lease to place the lease section in view In the Lease Start column you can type the lease date or click on the arrow to bring up the calendar Enter 24 06 2001 being 24th June 2001 The lease fields work the same way as the tenant record In the following fields type Years 25 Months O Days O RR Cycle 5 Up only ON Current rent 50000 Rent Groups for Rental Value Click the Areas button to define the tenant s floor areas In the area schedule add the automated retail definition to apply four zones and type 250 sq ft in ea
22. Yld Gtr In Adv 12 74479 136957 10000094 15000095 Initial Yield Reversion Yield Gross Current rent p a Net Current rent p a Gross Rental Value p a 20 000 19 800 30 000 Normal Made Running Yields Graph ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 28 2 Chapter 7 Lesson 5 Valuation There are additional functions relating to the valuation to be found in the menu bar and tool bar but the main fields on the left side of the screen show capital values and base yields On the right there is a targeting section and running yield profile The valuation date can be changed but note that this will change the property valuation date in the record itself The Value Fields l The Gross Value is the result of the sum of capital values produced by capitalisation of net or net operating income before deduction of capital expenditure adjustments Capital costs follow next depending on the order as selected in the property Assumptions Any expenditure defined as capital sums is shown as a discounted amount Acquisition costs apply to the resulting values This is the fee calculated on the residual net value amount as defined in the property assumptions and not on the gross value There are two values that follow The Net Value is the final residual value calculated exactly The Say value figure is the rounded net value based on the roun
23. amp Duration Cost name Enable in DCF Enable in Trad Val Apply to all Tena Type of cost item Cost Starts ef Property JA Acquisition Costs EL Stamp Duty v Acquisition Fee j FB Acquisition Agents F Acquisition Fee io HH Acquisition Legal Fe M Acquisition Fee E y Freehold j i Acme Chemists Ltd m Repairs Capital Expenditure 01 12 2008 No Repeat Definition Details Cost Trigger Repeat Until Discount rates On Date y No repeat gt DCF post Exit 0 0000 Y Include Start Date 01 12 2008 Trad Val future costs 0 0000 2 Amount Inflation For DCF Valuations Amount specified as A PA EU Growth Group PRIVATE Floor area rate 0 00 per f None E 0 0000 initi rental value L Fix on initial FRARGBSGGCEIWDEF rent paid 0 0000 fix on initial Apply Non rec VAT Apply Valuation Date 28 09 2008 Property not Elected for VAT 17 5000 1 The Cost Trigger provides the point at which a cost will apply as a single sum or as the start of a cycle of costs 2 Assuming our capital repair costs will take place on 1st December 2008 ensure the Cost Trigger option is set to On Date and enter the date 01 12 2008 below 3 This is a single cost so the Repeat Until option should be set to No Repeat 4 For the Amount section type 5000 into the Fixed Amount field This will be a capital repair cost of 5 000 on the specific date 5 Ignore the other fields at this time Entering a
24. be tracked from the start showing the date duration event and rent at each step 3 The content of the schedule can be adjusted by hand to represent any unique or peculiar lease constructions 4 Assumptions regarding the leases that follow on the expiry of the current lease are held in the Renewal page of the Tenant record and should be set to Full Rental Value with a review cycle of zero Setting the Years and Months fields to zero will repeat the existing lease pattern and include the reletting void between leases Stepped Rents Often there is a need to define rents that increase from year to year or perhaps are agreed to be varied on a fixed sum basis The Lease Schedule can be used to define these rents 1 In the Rent Schedule for any required date select the Event column and use the drop down list to select Interim Step This 1s used to set rent payments between rent review dates zr Tenant Rent Schedule Car Parts Ple File Edit Tools Help a Save dE Cancel e Reset schedule 12 Reseguence Fixed Lease Events bates J Rents Events Tenant Valuation Date rs bitha Days Event click to change si Rent per annum Minimum Uplitt Type Amounts 1 T 0 Market Rent RR date Rent RR date 50 000 None E step Hie RR 60 000 Mone D Interim Step non RF 70 000 Mone Market Rent RR date ES 4 75 000 None Re letting Void E 25 Renewal Relet NW
25. been advised to us at 500 per annum so type 500 into the Current Ground Rent p a field Renewal Ground Rent p a is used for the long term assumed rental if the ground lease is renewed and we can ignore this for this example Click the Geared Ground Rent ON This enables various gearing options Click the Geared to rental value switch ON and type 10 in the adjoining field ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 9 Lesson 7 Tenure 39 cae Ground Lease Copy of Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit Tools e mee Lease schedule 4 Payment Days Ry Assumptions a Capitalisation Groups E Document amp Image Library Ground Lease valuation setup Ground Lease Tenure Name Parent Superior Landlord File Ref No Start date Years Months Days Expiry date Unexpired Review cycle Yrs Review type Assumptions Active record Leasehold Property 291091890 125 b B 2810972115 0 p A Upward amp Downward m Tables Annually in Arrears SF 4 000 TAX 40 000 Ground Rent Annual Quarter days Payment timing Current Ground Rent pa Renewal Ground Rent pa GEARED GROUND RENT Fixed core ground rent pa Minimum ground rent pa Geared to rental value iv 10 000095 on rental value exceeding Geared to passing rents E 0 0000 on rent paid exceeding 0 m H Gear to rent
26. chapters are set out in a way that enables concentration on specific topics although a fuller understanding of the basic steps may be necessary to complete the picture We will be starting the lessons in the Command Centre with the assumption that we are working with Module 1 that is the basic property valuation and calculation engine This will later be expanded into Module 2 that adds cash flow functions to properties Module 3 will be covered to expand the valuation and cash flow modules to work with portfolios Following lessons then widen the portfolio and property actions in Module 4 handling portfolio analysis and performance measurement Finally Module 5 is explained dealing with finance and debt Other lessons cover specific topics such as graphics and reports These components have an essential place in the structure of the program but tend to have a wealth of features that require special attention and occur often in several places in the program It is not intended to explain the details of the background system settings since this 1s the domain of the System Supervisor which includes a number of IT and system level operations such as network configuration settings and file backups however you need to be aware of the effect of these settings and where you might require adjustments to be made ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 6 Chapter 2 Getting Started CHAPTER 2 Getting Started Th
27. eT vs veio de EA UTOR de wee eee wee ees 1 Welcome to the world of ARGUS es 1 The User InterTaC e conidios 2 MENUS acaricia asa 4 BULLODS 24 0x 3599 no at Oe Co doe AU 4 Input and data windows es 5 ADout tne lessons iia rm Er ec da Saw RR a gre Rute e Rea ec 5 Chapter 2 Getting SIarted 2 42 442 620 ctu POE RAS TuS ES a 6 User PrerereneeSs 233 2 2 2 ddr Spa cock aa ed 6 Customising the Button Toolbar ereeen 6 Chapter 3 Lesson 1 PropertieS ivo hn ee AAA 8 Adding a new propertY 0ocoocoo rn 8 Setting up a property record lt lt lt lt lt ee 11 Sorting property records sivas eR RW uU oe RES MARE EUER RUE 9 9 13 Chapter 4 Lesson 2 Tenatits Loop eee bbe A pue UR RE ee Pe eee dns 14 The nature of tenant recordS e e nnana nanan nnna 14 Tenants and Tenures TTT 14 Adding a new tenant 2 000 cee es 15 Setting Up a tenant record e ccc es 15 Chapter 5 E SSON 3 LOS Sr A DEAD AAA ee 20 Expenditure and RevenueS 0 00 rene 20 Entering a capital COSt 0 ooooooocooro es 21 Entering a running COSt lt lt e e lt e a e a dol e 22 Chapter 6 Lesson 4 Assumptions iae RR du ERR EE Xt CA pd 24 Just before the valuation 1 1 es ex nos gor E Mew XC Sie Hades eit 24 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide CONTENTS Chapter 7 L60SS0n 9 Valuat
28. running cost The same procedure is adopted for a running cost as seen above for a capital cost but individual fields will vary We shall enter a common and typical cost for regular annual management charges 1 Click once on the Property level again and add another cost 2 Labelthe cost ABC Management Fees 3 Adda category Management Costs 4 This time check the box Apply to each tenant ON This means that if there is more than one tenant in the property the cost will apply to all tenants 5 The Type section on the right now allows the selection of Revenue Cost Rent Deduction This is the option we want as the new cost will apply as a deduction from gross rent paid 6 On the Details page you can use the On Date option or select On Valuation from the Cost Trigger drop down This will ensure the cost cycle will run from the valuation date forwards ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 5 Lesson 3 Costs 23 ur Costs Schedule File Edit Help A dEl Cp New Wa Library C Delete 3 Print In ST 1 Enable in DCF Enable in Trad Val Apply to all Tena Type of cost item Cost Starts EH Property 3 Acquisition Costs dH Stamp Duty Acquisition Fee pu E Acquisition amp gents F Acquisition Fee i Acquisition Legal Fe M Acquisition Fee Freehold Po Acme Chemists Ltd Revenue Cost Ren On Valuation Every 12 mths In Perpetuity Capital E penditure 01 12 2008 No Repeat
29. the Cashflow window Tabs are displayed on the left of the window giving access to the setup pages The first page defines the basis for market rental growth The second defines the basis for capitalising the investment value at the end of the DCF period This is referred to as the Exit Date There are several settings for rental growth Your choice will depend on the nature and complexity of the investment The lower part changes when a particular Basis is chosen The User Manual goes into more detail on the alternative choices but for our purposes select Override Make sure Start from is set to DCF Start Date and Growth variant is checked OFF Type the following into the override schedule Item Rate Months l 3 00 12 2 3 50 12 3 4 00 0 4 This will set market rental growth to 3 00 for the first 12 months 3 50 for the next 12 months and 4 00 thereafter Leave all other cells at zero Now we can set up the Exit Value section click on the Exit Value tab Select Override as the basis once again the lower section changes depending on the choice of basis Choose Hardcore as the valuation method This method will discount all future rent and costs occurring at and after the exit date assuming a Growth Implicit capitalisation rate Hardcore does not apply rental growth Other types of exit capitalisation can be based on a Cap Rate or Initial Yield meth
30. 00 0 00 0 00 Mortgage 5 00 0 00 Lending Type Interest only loan simple Y Linked to Purchase v Capital 96 Rate type Effective Y Compounding Quarterly v Payments Monthly v Interest rolled up to end I Duration Years months 0 0 OCF duration 2 Over 100 amount 100 or less percentage Finance setup screen 2 The Finance window displays the list of accounts at the top and settings at the bottom ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 46 10 Chapter 11 Lesson 9 Finance For a simple loan add a new item by clicking the Add Finance Item button EJ and in the Name column type a name for the loan like Simple Loan Enter an interest rate in the Debit columns This will provide a single interest rate throughout the term of the loan Choose Interest only loan in the Lending Type field Select Purchase in the Linked to field This will ensure only the investment purchase figure has the loan applied to it In the Capital field enter 60 00 representing a loan of 60 of the purchase price Any figure over 100 will be regarded as a fixed amount and not as a percentage Leave the Duration at 0 years and 0 months to infer repayment at the end of the cash flow period Select the Rate Type to Effective This is the same as the APR or rate that will be compounded by the remaining parameters to calculate the final annual ra
31. 00009 4i Factory House M2 AT 1 594000 GB IE Wielen House l 2 543 525 2 543 525 GBP 8 8808 48731 al 0 car i hms 5 E g a B TIS Tenants amp Tenures ARGUS Dore Deconnected User a valuaci n Date zo 2000 2 Ensure the portfolio level is active focused You can tell if a level is selected by the darker colour on the list s title on the left hand side of the list 3 To add a new portfolio you can click on the New button or you can right click inside the portfolio list box and select New 4 The new portfolio is created with the default system name To change the name of the portfolio you must edit the record ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 3 Lesson 1 Properties 9 5 Once again there are several ways of entering the record With the newly created record highlighted you can click on the Open button or right click the highlighted record and select Open or you can double click on the record car Portfolio New Portfolio File Edit Tools Help np Mew Co Delete oO QR Assumptions oF Valuation or Cashflow Security fl Portfolio Fees Details Portfolio valuation date Portfolio name raining Portfolio WEI US Ta dete 24 109 2008 File Ref Ma Manager f Contact Align properties to portfolio date Giner T Contact Mo Property Cand tenant template when adding neve records Portfolio owner Category Template default le
32. 10 300 405 448 G l G lG G G G G G G G lG G G 0 0 0 405 448 405 448 Target Ungeared IRR 8 750095 Val Date 28 09 2008 Discount Monthly DCF Spreadsheet page 2 To turn the control palette on the left hand side of the screen on or off click on the vertical dividing bar between the palette and the spreadsheet grid 3 Our set up should have placed the figure from the last valuation in the Manual PV Value field Automatically this will have calculated the Internal Rate of Return IRR Type 10 00 in the Ungeared IRR field and click the calculator button to calculate the Present Value Type a figure in the Manual PV Value field and press the calculator button to find the IRR 4 The Cashflow can be viewed as monthly quarterly 6 monthly annual and 5 yearly Set the drop down list in the toolbar to Annual If you change any data in the cash flow you can update the display using the Update button or F5 The Update Value check box refreshes the spreadsheet automatically after a change 5 Other settings in the palette are placed here for convenience and are the same ones as on the set up page ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 36 Chapter 8 Lesson 6 Cash Flow 6 The spreadsheet row display can be expanded or contracted for condensing the spreadsheet when there is a lot of data These are controlled by the four buttons L _on the toolbar They represent Full
33. 24 06 2001 0 23 06 2026 24 06 2011 Floral Heights Unit 3 Freehold 0 Small 24 06 2001 0 23 06 2026 24 06 2011 Frames R Us Unit 4 Freehold 0 Medium 24 06 2001 0 23 06 2026 24 06 2011 Burger Bites Unit 5 Freehold 0 Medium 24 06 2001 0 23 06 2026 24 06 2011 Shoe Selection Unit 6 Freehold D Small 24 06 2001 0 23 06 2026 24 06 2011 Rennie Records Unit 7 Freehold 0 Medium 24 06 2001 0 23 06 2026 24 06 2011 los Supermarket Unit 8 Freehold D Secondary 24 06 2001 0 23 06 2026 24 06 2011 AJ Chemists Unit 9 Freehold O Secondary 24 06 2001 0 23 06 2026 24 06 2011 Halden Butchers Unit 10 Freehold 0 Small 24 06 2001 0 23 06 2026 24 06 2011 A E AA RA AA lla ala a CH l ov of on on ajaj an Q HEH HHH 88 8 o o o coo oco omg o Valuation Date 29 09 2008 Values Gross Value D Net Say Value D Fields Over rent Seeing results 1 At this point one possible course of action might be a quick look at the progress of the valuation Firstly click the Assumptions button to ensure the settings are correct then click the Valuation button 2 You can also use the Cashflow button if you wish Adjusting the Schedule The Tenancy Schedule can be customised to present user defined views of the data For example you may wish to hide unused columns such as the Holding Over and Outstanding Rent Review columns in the above example 1 Click on the small button in the top
34. 58 FAS FADEN 75 A5 10 TN DR SS CEP Portfolios A P rg X IATH 128 7 CEP i BEEN D 437195 10 ECON Ancares Daking FEN 1 272 606 E DUUS UWUS A Laka House l 174 833 189 338 GBF 200 BB083X SEBS 85124 Coventry Face las AT 34 asic 31300 B6BTe idii ARATE work Fiske 1175 114 554 GBF QUAE ADIAC DANAS Lavender Fiks P 1 188 838 1 165 838 GBP 828 TIMER 128557 lDeckside Ward ane 1500710 1455754 CEP A57 BAHU R anas 1014475 Hereford Place 1 502 102 1 514 010 GOF E Te SENS GIDS South Paat Par x 4 280 000 aiaia R J kaiia BPE 6 rS Yorktfure Place 1 552 500 1 477 366 GOF 4 LOO WOOO OONA Weel Town Plaza i 2 142 857 2028402 068P 26000 7 0000 70000 Tora Ame amp EDO 1 881 588 a ma cap 7 3000 A 554705 AAPL R 2 4 C B 0 nri Mz NU Development Place E i 2 107 500 2 060 313 GB 3 100 OUI HDS Wicsci n Fila 182 284 187 085 GaP b B DDOU amp fi 3 0615 385 173 32 573 CaP ayn 0 nnne Tenants amp Tenures AGUS Zone T Deconnected m velan Dre an Command Centre In the above example of the Command Centre the window displays the following main features 1 The Toolbar containing buttons 2 Information and Input windows in the main body of the screen where you read and enter data for Portfolios Properties Tenures and Tenants 3 The ARGUS Zone pane The appearance of screens can be modified to suit individual prefe
35. 8 10 Adding a new tenant 15 Analysis Analysis types 63 Category Analysis 65 Data Analysis 68 Filters 61 Performance Analysis 66 Projections Analysis 63 Rent Analysis 70 ARGUS Software web address 75 Assumptions 24 Auto regulating loan 46 B Break Options 54 Buttons 4 Customising the Button Toolbar 6 C Capital costs 28 Capital Expenditure 20 Cash Flow screen 31 Category Analysis 63 65 Command Centre 2 Contact details 75 Costs 20 Acquisition Costs 21 Adding Costs 20 Amount 22 23 Apply to each Tenant 21 22 Capital Expenditure 20 Category 21 Cost Definition page 21 Cost Details page 22 Cost Trigger 22 Entering a capital cost 21 Entering a running cost 22 Repeat Until 22 23 Running Costs 20 Scope 21 Stamp Duty 21 Type 22 Current Rent 17 Current Void 18 Data Analysis 63 68 Debt and funding 45 Discounted Cash Flow DCF 31 DCF setup page 31 Discounting 32 Exit Value 33 Finance 32 IRR 35 INDEX Present Value 35 Purchaser s Costs 35 Rental Growth 33 Spreadsheet 35 Vendors Fees 35 Equity loans 46 Equivalent Yield 28 Exit Value 33 Expenditure 20 Expiry Void 18 Filters 61 Finance in the Cash Flow 46 Fixed Reversion leases 54 Fixed Value leases 54 G Geared ERV 17 Getting Started 6 Gross Value 28 Ground Lease Editor 38 Ground Rent Checking ground rent figures 40 Geared Ground Rent 38 Valuation 39 Holding Over 17 How to use the Tutorials 1 Indexation 17 Input and data
36. 9 111 Carmatt Street COVENTRY CRI Canary Wharf Tower 16 Limehouse London Greater London SE16 310 Grange Park 10 Saffron Hill Brighton and Hove BZ Seaside House 15 Seaview Road BRIGHTON Sussex BN1 White Cliffs Business Park 8 Goodview Road WORCESTER Hereford amp Worcester Linfordwood Business Park 5 Old Road YORK Norfolk YO1 industrial North West Warehouse Havilland court 12 Penn street Slough Greater London Ellesmore Park 44 Grasville Road Manchester Yorkshire Portfolio DCF projection analysis Calc Valuation date 02 01 2005 21 ERRORS in checklist Portfolio overrides applied Performance Schedule 6 The schedule provides a full view of the statistical data from each property in the current Filter The columns represent all the items in the Cash Flow Projections Schedule Scroll through the columns to view the range of information ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 68 into three types Chapter 14 Lesson 12 Analysis 7 Each column can be sorted by clicking the header for each column The columns are divided 1 Values and incomes 2 Changes and 3 Percentages and returns These can be isolated using the range buttons 8 The schedule can be viewed by category Hold down the left mouse button on the Region header and drag it to the space above the schedule car Performance Analysis Sample UK Portfolio File Columns Tools Help a 3 s Customise Calculat
37. Capitalisation version 2 50 Step by Step Guide 50 Chapter 12 Lesson 10 Leases For a simple single floor unit add a new row with the Add one or more lines button accepting the default Non retail setup by clicking the Add button on the dialog box Add area data lines Definition Line Type Mo of Lines Retail Zoning Adjustment Percentage In the Label column type Main Office Select G for ground floor and an area of 2 000 sq ft The Measurements Property drop down can be used to select either imperial or metric format Type 25 00 in the ERV ft pa column representing 25 00 per sq ft The rental of 50 000 appears in the Rental Value pa column and at the bottom of the screen Click the Rounded option in the box at the bottom of the screen as the sum to pass back to the tenant record cae Areas for Acme Chemists Ltd File Edit view Tools Help E di 4X GP c3 Rents b Zones Lock Labels J Measurements Property Imperial v sa Print t2 pm Units of Rate Position adjust Adjusted Rate pa Adjusted Rate pm Unit Rent pa Unit Rent pm Rental Value pa Rental Value pm 1 100 0000 100 0000 0 0000 2 08 50 000 4 167 50 000 Summary Rental value passed back to tenant 50 000 Non Zoned ERY Y O Manual Zoned ERV 0 Car Parking 0 Total ERY 50 000 Area ITZA 0 00 Total Area 2 000 00 Rents Per Annum Imperial unuue Jad Unrounded Rent input type Area input type z4
38. HAPTER 5 Lesson 3 Costs Expenditure and Revenues For any property and tenant there are almost always costs associated with them Broadly costs fall into two categories capital expenditure and running costs Revenues are primarily obtained through rental income but other receipts can be allowed for under the same heading as costs Capital Expenditure will include the property purchase price fees and expenses associated with it Also there may be property repairs and building works single payments fees and outgoings and random expenditure Running Costs or Revenue Expenditure are defined in Valuation Capitalisation as deductible sums often aligned or geared to rental income These will include regular sums such as management charges common area maintenance service charges etc Costs for any property or tenant can be accessed from several places in the program where you see the Costs button or the menu option Schedules Costs Adding Costs 1 Ensure you are in the Command Centre 2 Click ONCE only with the left mouse button on the newly created property record 3 Click the Costs button to open the Costs screen cae Costs Schedule File Edit Help dui dE uh New s Library C Delete Print c Cost name fi Property 3L Acquisition Casts E H Stamp Duty Acquisition Fee E Acquisition amp gents F Acquisition Fee HL Acquisition Legal Fe v Acquisition Fee 4 Freehold i B Acme Chemists Ltd Total Acquisit
39. Valuation Capitalisation Step by Step Guide Release Version 2 50 ARGUS Software ARGUS Valuation Capitalisation Step by Step Guide The contents of this document are considered proprietary by ARGUS Software the information enclosed and any portion thereof may not be utilised for any purpose other than the consideration of ARGUS Software Information in this document is subject to change without notice and represents no commitment on the part of ARGUS Software Copyright 2008 ARGUS Software Inc All rights reserved Trademarks ARGUS Software is a trademark of ARGUS Software All other trademarks and registered trademarks are property of their respective companies and should be treated as such ARGUS Developer was formerly known as CircleDeveloper ARGUS Development Budget was formerly known as CircleBudget ARGUS Valuation Capitalisation was formerly known as Circle Visual Investor ARGUS Multiview was formerly known as CircleMultiview Disclaimer This manual has been prepared for use by ARGUS Software personnel licensees and customers ARGUS Software reserves the right to make changes without notice at any time to this document and shall not be held legally responsible for any typographical arithmetic and listing errors Build date 9 October 2008 12 55 am Version 2 50 Doc Version 1 0 Rev Date 9 10 08 ARGUS Valuation Capitalisation Step by Step Guide CONTENTS Table of Contents Chapter 1 Iet deare TE
40. a Analysis menu option The screen is presented in a multi sort schedule and has two main views a Tenant lease view b Property view ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis 69 Portfolio Data Analysis Sample UK Portfolio 02 01 2005 View Columns Tools Help Convert y Customise 23 Graph 3 Excel Expand Collapse Tenant Lease View v Tenant Lease View Valuation Gross value Say value Value area Equivalent Yield Initial Yield Reversion Yield oT cio Tio Grange Par 10 Satan Hon and move Ra its H R H ate io orange Par 40 Satan von dove nz acne e enantssr H ute io orange Park 10 Saffron Hilton H cnt e fon east Jortces once sute Ef See ose 15 semon esd BRIGHTON H Sons Fn Sepre eut Sou Est ficas pa vine bar orere A A own ft f H foters harltan Kent DA UF a IShnnhinri Center ente econda NES of Leases 102 Portfolio Data Analysis Sample UK Portfolio 02 01 2005 Valuation Gross value Drag a column header here to group by that column 3 Property Name UPRN Region Sector Primary Use Equity Tenure Type Prop File Ref No Supl Ref Ma Havana court 12 Penn street SoughGrester London London Outer industrial Factory 100 00 Femodeso Etesmore Park 44 Grasvile Road Manchester Yorkshire leane musti Factory 100 00 teaserra J T possdewmerzWWerSweetpRSTOLAwn OO es musa Factory t00 00 Frenor
41. ach separate groups of tenants to specific tenures Each tenure can then describe unique costs for its tenants This will be clearer when we look at adding costs ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 4 Lesson 2 Tenants 15 Adding a new tenant To add a new tenant There are several ways of adding tenants In the Command Centre From inside any Tenant record From the Tenancy Schedule From inside the Quick Valuer These various screens will be encountered in these lessons but we shall use the Command Centre option for now l In the Command Centre click on the Tenants listing box to ensure it 1s focused and click on the New button You will now see the new tenant record The fields are not blank They are filled in with the content of the default tenant record associated with the Property Template If the Property Template holds more than one tenant these form a list of Tenant Template records and you will be asked to choose one Setting up a tenant record cae Tenant Standard UK Tenant Freehold File Edit Schedules Tools Help np ca S E Costs Rents lt 4 reas 2 Assumptions y X5 Payment days X Breaks Schedule 1a Tenant Growth Tenant Covenant Guarantor Covenant Name amp Status Lease amp Rent Turnover Rents Renewal Valuation Tenant General Name Acme Chemists Ltd File Ref No Description Front Unit Manual Sort Order Tenant Status Occupie
42. al guide will make life easier for you as it sets out to provide essential and important information on using the program and handling portfolios properties tenures and tenants in the most efficient and comprehensive manner A program the size and complexity of Valuation Capitalisation cannot be learnt instantly and indeed it is not designed as a quick fix product Time and patience will be needed to go through all the features of the system and it is most likely that you will not need to know everything in the program to carry out your work effectively But you can gain a good working knowledge if you pace out the lessons and examples and practice the steps when you have the time A good understanding of the program will enable you to find the answers and solutions to your particular tasks quickly The companion User Manual supplied with the software offers a structured explanation and description of the contents of the program and the combination of both manuals should provide sufficient detail and information to enable you to work alone The ARGUS support team is available if you have any queries You may also find further information on the ARGUS Software website http www argussoftware com In addition you can use the resources provided for collaborative and team working in the ARGUS Zone http www arguszone com How to use the Tutorials The pages are divided into major subjects and sub divided into action sections Th
43. alse Renewal Relet 23952 470 0 08 01 2021 CarPartsPlc North West Industal False RedettngVoid 24 027 470 75 000 08 07 2021 CarPartsPlc North West Industial_ False Renewal Relet 24 027470 75 000 28 09 2021 Baxter Building Supplies WestMidla Industial False Renewal Relet 24 027470 0 01 02 2023 Galwayltd South Offices False Renewal Relet 23 302 470 0 20 06 2023 Waterstone Clothing Inc North West Industrial False Noevent_ 23300 020 725 000 25 06 2024 PhiipH Management O London DulIndustral_ False Renewal Relet 23 002520 2450 01 01 2025 Car parking spaces North west Industrial_ False Noevent 23 002 520 297 500 27 10 2028 Wholesale Stores Lid South Leisure False Renewal Retet 23 002520 0 02 02 2029 Dpodium Cinemas South Leisure False Renewal Relet 20690520 0 31 12 2028 Warehouse HO facility North West Industrial False Noevent 20 633 020 2 312 000 CRUG jeg pases uomine fake oerni E0853 900 erm KEk ms Renl 5 986 201 5 926 201 5 806 201 5 081 201 4 818 501 4 812 001 24 733 501 4 793 501 4 710 501 4 710 501 4 554 201 4 484 201 4 454 201 3 383 201 3 363 201 3 969 201 3 877 001 3 587 001 2 837 001 2 687 001 375 001 315 001 Valuation Date 02 01 2005 Growth Not Used Dc Doomsday Rent Expanded View ARGUS Valuation C
44. andlord Tenant The Penalty only applies when a break cost is defined in the Cost Schedule fr Done Break options 2 Onthe left select None to ignore all break options To Activate a break select the appropriate Ist 2nd 3rd row and so on ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 12 Lesson 10 Leases 55 3 Dates can be entered in all the fields and the tick boxes can be filled in appropriately 4 Setting both Landlord and Tenant boxes ON signifies mutual break options Note You cannot set a break on a row without specifying Landlord or Tenant choices Lesson Summary Leases rents and terms for occupancy come in many forms most of which are handled automatically and others requiring manual input through the Lease Schedule Flexibility is provided in a property where the ownership structure is defined as tenures each of which holds the property s tenants ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 56 Chapter 13 Lesson 11 Complex Properties CHAPTER 13 Lesson 11 Complex Properties In the earlier examples in these lessons the focus has been on properties with single or few tenants When it comes to dealing with a large shopping centre for example there are ways of handling the volume of data quickly and efficiently In such cases the Tenancy Schedule plays an important part in the input process To demonstrate the workings of the schedule we need a mu
45. apitalisation version 2 50 Step by Step Guide 72 Chapter 14 Lesson 12 Analysis 4 To set the criteria conditions for the Doomsday assumption click the menu Doomsday Options In the menu select the options of your choice Doomsday Options On Expiry On Active Break On Tenant Break h On Landlord Break On Upward Only Review On Upward Downward Review Ignore Fixed Future Uplifts 5 Preview and print a report by selecting File Print from the menu Lesson Summary Analysis covers a lot of ground with various views and options at each level Not every option and situation can be covered in this lesson and you are encouraged to experiment with the menus and button options to simulate particular circumstances ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 15 Lesson 13 ARGUS Zone 73 CHAPTER 15 Lesson 13 ARGUS Zone ARGUS Zone allows you to collaborate with other people on projects It provides the tools for exporting and storing your work externally for the purposes of group working In our example here we will perform a simple operation such as storing a file on the Zone Before you can begin you should first sign up to ARGUS Zone You will be given a user ID and password to log in Log into the Zone by clicking on the ARGUS Zone tab to open the ARGUS Zone pane and enter your user ID and password LA 2 y lagricers S Analysis Scenario Builder Tools Tools
46. art from DCF Start Date Manual start date psum Growth variant omo fa 3 Calculation Method Standard gt od aa suondo y Please Calculate Spreadsheet aoueurJ anea xg 0 0000 0 0000 0 0000 36 0 0000 96 0 0000 96 0 0000 96 0 0000 96 n nnnn 9c yaas e09 suoiaa o4g 2 o ojojojojo j o Val Date 28 09 2008 Discount Monthly Target Stored value Rental Growth setup ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 34 CAP File Edit View Tools Calculation Spreadsheet Projections Help Chapter 8 Lesson 6 Cash Flow Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS Group Monthly Calculation Target amp Results Ungeared IRR 8 7500 c 60009 Manual PV Value 280 859 C Use Valuation as PV x be y 192 680 Exit Calculation Options Basis wr 1H Method Hardcore y Vendor s fees 0 000096 Purchaser s costs 5 762596 Froth cap rate 0 0000 Please Calculate Spreadsheet Override Exit Yield Schedule Calc method Stepped SNE A 1x3 UDI AR suondo 490 Item Rate Months 1 0 000096 0 000096 0 000096 0 000096 3 4 5 0 0000 5 0 000095 yaas 209 suanaa o4d aoueurJ Val Date 28 09 2008 Discount Monthly Target Stored value Exit Value setup l 3 These are presented using two tabs on
47. ashflow E Documents Address Tenure Buy Sell Extras Property Purchase in DCF General Apply locked value Say L Property IRF 5 7 500 Re letting probability 4 00 000 Market Rental alue 1171 0 00 Property Dispozal in DCF Apply disposal MOTE Property ix ignored when sale date is before valuation date in both OCF and Traditional valuations Yal Date 21 09 2008 Default Assum Values Gross Value 0 Met Say Value 0 Custom Fields 17 Leave all these fields in their default state ensuring the Property Purchase in DCF and Property Disposal in DCF options are checked OFF 18 The remaining fields on the right of the Buy Sell Extras page will be referred to later on but can be ignored for now There are several other options switches and commands that relate to the property record but these will be encountered later on when we refine the property setup For now you can leave the property record screen by using the File Close menu option This will save all the data entered and return you to the Command Centre To re enter the property record you can double click the record item again The basic information will update the listing in the Command Centre You cannot directly edit the record in the Command Centre but where there are lots of property records you can sort these in a pre defined order Sorting property records With the property listing focused click on the heading of a co
48. cated freehold property so that it has an outright ownership status Many properties however are leaseholds so that the rights of enjoyment are limited by time The consequence of this brings into play several new factors and we can extend our example property by making some new assumptions First of all we must make a copy of our example property so we can work with the duplicate and preserve our original record 1 In the Command Centre highlight the original example property 2 Right click to open the pop up menu 3 Select Copy records and click OK when the prompt appears The new duplicate record should appear Depending on the current sort order the default setting may place the record at the end of the list 4 The Name will probably say Copy of name You may change this if you wish Tenure listing To the left of the Tenant listing you will find the Tenure tree and there will be one item under the PROPERTY header labelled Freehold ES Property 4 Freehold X E Tag Activ u D 3 C 03 od s e C 03 ARGUS Zone Disconnected Tenure tree 1 Click ONCE with the left mouse button on the word Freehold to highlight it Click the right mouse button to bring up the tenure menu Select Change Type ps e d Answer Yes to proceed ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 38 5 Chapter 9 Lesson 7 Tenure Right click again and select E
49. ch Next click the Rents button e ns In the Rental Value Groups schedule add a new group type Retail in the Description column and 150 in the ERV p a Rate column ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 58 Chapter 13 Lesson 11 Complex Properties 2 Save and close the schedule and return to the Area Schedule In the ERV Group column select the Retail rent just entered cr Areas for General Stores File Edit View Tools Help A 4 up ca Rents Lo Zones LockLabels Measurements Property Imperial 3 No PP Line Type Label Area Ft2 ERY Group ERV ft2 pa ERV ft2 pm Units l of Rate Position Retail Zone 4 250 00 Retail 150 00 pa 150 00 12 50 100 0000 100 0000 Retail Zone B 250 00 MANUAL INPUT 150 00 12 50 100 0000 50 0000 l l Retail 150 00 paT Retail Zone C 250 00 Retal 0 00 150 00 12 50 100 0000 25 0000 Retail Remainder 250 00 Retail 150 00 pa 150 00 12 50 100 0000 12 5000 Summary Rental value passed back to tenant 0 Non Zoned ERY Manual 0 Zoned ERY 70 313 cd Rounded Car Parking 0 Unrounded unuue Jad Total ERY 70 313 Area ITZA 468 75 Total Area 1 000 00 Rents Per Annum Imperial Rent input type Area input type zu valuation Date 29 09 2008 N Sample Shopping Centre 3 Click the Rounded option at the bottom of the Area Schedule Save and close the screen 4 The rental value should app
50. cquisition fees ARGUS Developer Link Attach data from file xessjeoo suonoefoid SQUBULY MISA px3 YAKoUD ANA suondo 4 Val Date 28 09 2008 Discount Monthly i Target Stored value DCF Setup page with options section 1 This page sets the parameters for the timing and behaviour of the spreadsheet ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 32 Chapter 8 Lesson 6 Cash Flow 2 Leave the From start date to be the same as the valuation date The exit date 19 automatic 3 Enter 10 years 0 months 0 days in the three Duration fields You can enter a duration of up to 100 years 4 In the DCF Calculation Options section select Monthly as the Discounting basis This assumes all figures are processed as if timed at the first of the month This setting matches the accuracy of commercial spreadsheets that cannot track sums on a daily basis For a more accurate result you would select Daily as the Discounting option 5 Set the Calculation Target amp Results to Ungeared IRR The result of the last property valuation appears in the stored value field at the bottom of this section Other settings allow you to preset the Present Value PV or Internal Rate Of Return IRR as the first cash flow sample target The IRR for updated value enabled by the Update Value check box sets the PV at the stored value automatically on re entering the spreadsheet 6 It is possible to select a Say R
51. d and Let Y Main Use Type IPD Activity Code Parent tenure Freehold Tagged enabled for valuations and filters v Active record Alive non archived D amp B SIC Code Notes Registration No Val Date 28 09 2008 Status Normal Event Review Fictitious Property 9 Fictitious Place Training Street Ambr Tenant record screen Name amp Status page The tenant record is divided into four paged sections For now we will assume a valid tenancy for this unit Tenant Name and Status l On the first page Name amp Status fill in the tenant name such as Acme Chemists Ltd and enter for example Front Unit in the description field optional Leave all the other fields in the Name section blank or on the current settings These are used for analysis and printouts ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 16 Chapter 4 Lesson 2 Tenants 3 In the General section once again leave all fields as they are You must however ensure the Tagged and Active record boxes are ticked ON otherwise the record is ignored in valuations Tenant Lease 1 Click the Lease amp Rent tab We will now enter a lease for this tenant Mame amp Status Lease amp Rent Renewal Valuation Lease start date 28 08 2008 Years hS Months MO Days p Expiry date 27 08 2023 Unexpired term 1 5 vr s 0 mth s D day s Break exercised None Mest Review aima 3 Market Rent Review cyc
52. ding settings in the property assumptions The small check box with the lock enables a manual figure to be entered according to personal choice hence the say analogy In cases where Vendors Fees are defined in the Costs Schedule extra fields appear in the next position showing the extra adjustment The Yield Fields l The first of these items is the Equivalent Yield field The Equivalent Yield is the single capitalisation rate that produces the current valuation capital value This means that if there are multiple capitalisation rates in use then the individual rates are not physically over written but the equivalent yield displays the single rate that produces the same answer The Equivalent Yield is affected by the type of valuation tables applied as set up in the property assumptions The Assumptions also control the value against which the equivalent yield is measured In the iterative process the value being targeted by the equivalent yield can be the Net Value i e the natural capitalisation rate override or the Say value as if this was the Net Value There may be two Equivalent Yield fields visible in which case the first is the general industry standard basis of measurement using Annually in Arrears valuation tables The use of Quarterly in Advance tables produces the second equivalent yield The Initial Yield field shows the first yield as seen in the running yield profile schedule on the right of th
53. dit or double click on the word Leasehold to open the Ground Lease Editor screen ce Ground Lease Copy of Fictitious Property PM et SECO Street Ambridge Borsetshire AM1 3BS File Edit Tools Help E 47 3 Lease schedule 4 Payment Days v Assumptions a Capitalisation Groups Document amp Image Library Ground Lease Ground Rent Annual Tenure Name Leasehold aum timin Parent Property y Current Ground Rent pa Superior Landlord Market Ground Rent pa File Ref No GEARED GROUHD REHT Start date 1031 211984 Years Months Days Expiry date 020 2 2083 Unexpired 7 Syrs 2mths 4days Review cycle Yrs 6 Review type Upward Only Mi Assumptions Tables Annually in Arrears SF 4 000 TAX 40 000 Active record Valuation date 26 09 2008 As and When is not compatible with Gear ER Passing Leasehold screen Our original template will have filled in the details automatically but we will change the parameters l In the Start date field type or select 29th September 1990 and set the term of the ground lease as 125 years In the Review cycle Yrs field type 5 years Review type can be selected as Upward amp Downward This assumes the ground rent can go down if the rent on which the ground rent is calculated falls On the right side of the screen the ground rent detail can be entered Payment timing should be set on Quarter Days for this example The Current Ground rent payable we shall assume has
54. dule 2 Checklist Es S Edit Portfolio Property Tenants Assumptions Valuation amp DCE Analysis Tools Drag a column header here to group by that column 3 Zone Name File Ref No Vain Date Category Last Gross Value Last Say Value Equiv Yield Initial Yield Revn Yield Currency Last Net Value Sample UK Portfolio 02 01 2005 325 860 173 295 298 700 6 6895 3 9759 5 4011 GBP 297 737 060 Sample EUR Portfolio B1675 01 0 2005 364 214 722 342 650 788 7 3454 4 4230 7 6049 EUR 0 Training Portfolio 28 09 2008 Portfolios Drag a column header here to group by that column 3 Tag Active Zone Ref No Building Name Street No Street Town County PostCode Region Val n date True Fictitious Property S Fictitious Place Training Street Ambridge Borsetshire AM1 3BS Other 28 08 2008 P 9u07 SNINY Description o E 3 E L E o 2 E E C w ARGUS Zone Disconnected Usera Valuation Date 28 09 2008 1 To the left of the tenant listing there is a Tenure pane if this 1s not visible drag the pane s border out to reveal the tenure tree Any tenants you add will be attached to the currently selected tenure This is important when you have multiple tenures so that the correct calculations are applied to the appropriate tenants Note This technique is very useful for complex cost definitions You can split a property into multiple freeholds for example and att
55. e Checklist Sd 2 Fixed Columns Grouping Columns 3 Property Name Sector Primary Use File Ref No 02 Jan 2005 01 Jan 2006 01 Jan 2007 01 Jan 2008 01 Jan 2009 01 Jan 2 Region London City 9 Let go and the schedule is then broken down by region Rental value pa at Exit Canary Wharf Tower 16 Limehouse London Greater London SE16 Offices Office suite 00132d 1 750 458 1 772 513 1 795 688 1 827 326 1 862 115 1 899 Region London City Calc Region London Outer Lew el el el wi Havilland court 12 Penn street Slough Greater London industrial Factory 00349 C1 567 638 1 567 638 1 567 638 1 567 638 1 567 638 1 567 Region London Outer B Cac Region London WE Glanmore 13 Queen Anne Street London 441 Residential Residential D0145f 37 770 37 770 37 770 37 770 37 770 Region London VE Calc Region North West Ashleigh House 18 York Street North Yorkshire Lintordwood Business Park 5 Old Road YORK Norfolk Y O1 Ellesmore Park 44 Grasville Road Manchester Yorkshire Region North West Region South Helens Bury 136 Prescott BRACKNELL Berkshire Saffron House 3 3a Saraton Road Southhampton S A1 Calc Calc Region South Region South East Crosspoint Shopping Centre 25 30 Minard Street Cambridge Cambridgeshire 10 Grange Park 10 Saffron Hill Brighton and Hove BN2 Seaside House 15 Seaview Road BRIGHTON Sussex BN1 R
56. e UK Portfolio A Retail Shop 13 036 849 Retail Warehouse E Supermarket 17 817 322 EE Retail Warehouse 39 379 042 ES Office suite 139 844 157 GE Factory 3 864 972 ES workshop 5 529 062 Supermarket 6 404 053 1 900 273 11 222 740 9 245 629 10 783 177 Retail Sh i 2 074 768 etail Shop C Residential 2 002 569 EH Garage 46 420 Fora E Rial EE Public House 512 301 Other pl 439 759 PUB House 4 022 254 cil Parkin 23 584 IT Bank prt ae mine E Pub Wine Bar Head Office Valuation Date 02 01 2005 A 3 D pie chart display cae Portfolio Category Analysis of Use Type Tenant by Gross Rent File Edit Analysis Graph Valuation Help kR xzumumnheyBs ko Gr QD dd w Say Value Net Value Net Rent Rental value Froth Floorspace Category Type Use Type Tenant Sample UK Portfolio EH Retail Shop 983 150 E Supermarket 1 050 000 EH Retail YYarehouse 4 155 550 E office suite 4 436 512 A Factory 300 380 ES shop 498 050 EE Cinema 150 000 NN Head Office 9 750 E Pub Vine Bar 244 000 MIA Restaurant 274 500 E Parking 350 000 EN Residential 122 846 E Garage 1 GE Other 26 500 EU Bank 176 000 EN Parking 1 500 oP HT Valuation Date 02 01 2005 A 3 D vertical Bar chart PERFORMANCE ANALYSIS This is a portfolio overview and statistical profiling of filtered records based on projected cash flows Cash Flows in Valuation Capitalisation provide the base information for viewing single property or portfo
57. e Valuation Capitalisation interface can be customised to some degree based on your preferences Most of the major screens in the program retain their size and position after you leave each one Although each screen and dialog box is modal i e is at the front of underlying windows and remains the active window until it is closed it is useful for example to expand the Command Centre to full size so that you can see the lists whilst working in other screens User Preferences Some aspects of the Command Centre display can be customised by clicking on the Application button and using the User Options menu item User options for A InterFace Options Tag Colour Property Only mode Reset Preferences Enable Template portfolio Ask for revaluation on selecting DCF Language Dictionary Native l Lise local date Format User Options dialog box 1 The option labelled Ask for revaluation on selecting DCF switches on a special reminder prompting you to revalue the selected property or portfolio before proceeding to the Discounted Cash Flow function 2 The Tag Colour drop down allows you to select the colour of the tags in the first column of the property and tenant listings Since these two items are fundamental to the program x functions you have the opportunity of displaying colours that will draw your attention to them 3 The Dictionary drop down allows you to change the program language if alterna
58. e main portfolio functions can be undertaken The Portfolio Valuation is a batched grouping of Active Tagged properties Note In normal circumstances all Active records will be Tagged However where the Analysis module is enabled and the Filter option used or where property and tenant records have been manually tagged the portfolio will only see the tagged records The portfolio valuation result is the accumulation of values of individual properties Portfolio yields are the result of a true integration of all costs and income as if a single property thus ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 44 Chapter 10 Lesson 8 Portfolios presenting a real time calculation at the portfolio level The program does not generate an artificial averaging of these statistics The portfolio cash flow figures require a broader understanding of the principles involved The portfolio DCF can assume a single iterated capital value a static calculated value and separate individual property values The portfolio DCF setup takes control of the portfolio cash flow function although the user can select to use the individual property cashflow settings Valuation Capitalisation provides the functionality to obtain a single residual Present Value for a portfolio with a given single Internal Rate of Return but for obvious reasons cannot iterate to multiple values when numerous properties are involved Lesson Summary A portfoli
59. e option For the purposes of calculating the Equivalent Yield where there is over rented income the choice is to capitalise the excess froth income at the continuously residualised Equivalent Yield Rate or to apply the individual froth rates set in the tenant or Cap Group records For the purposes of calculating the Equivalent Yield capital costs can be discounted at the equivalent yield rate or at the rates set specifically in the Costs Schedule The target value used to calculate the Equivalent Yield can be selected as the Unrounded Net Value or Rounded Say Value Acquisition Fees calculations can be based on the resulting Unrounded Net Value or the Rounded Say Value In circumstances where leasehold properties are capitalised using the standard approach for Sinking Fund and Tax there is a commonly known inherent mathematical error that can be corrected using Pannell s Method for Double Sinking Fund Correction The order of placement of the Capital Costs in a traditional valuation can vary as being deducted from the Gross Value before calculation of acquisition fees or after the fees Running Yields in the valuation results can be based on several settings from Gross to Net values with combinations of applying fees and costs Valuation Tables provides several choices for the basis of Years Purchase calculations Leasehold Sinking Fund and Tax on the Sinking Fund apply to leasehold valuations and work in c
60. e screen The Reversion Yield shows the last running yield The Rent Fields The final three fields provide a quick reference to the rents and rental value and are seen again in the context of the running yield profile schedule Valuation Details There is not much detail on the screen at this point but it 1s essential that the figures shown are correct and accurate Valuation Capitalisation presents this information in report formats ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 7 Lesson 5 Valuation 29 Generating a report is simple and is a flexible way of getting immediate output on screen and on a printer 1 Select the File Reports menu option or click on the Reports button Sa Reports 2 Select a report as directed 3 A list of reports will appear Find one called Detailed Valuation Report or something similar If there are no suitable reports in view speak to your System Administrator to provide a report car Reports Property Fictitious Property 9 Fictitious Place raining Street Ambridge Borsetshire AM1 3BS File view Tools Help i L Preview 2 Open 4 Edit 2 View Style y all BTS Area Analysis Standard Area Schedule Standard Category Valuation Report Standard Cost Schedule by Property amp Standard Cost Schedule Report Standard Cost Valuation Schedule Standard Detailed Tenancy Schedule Standard 231 Detailed Valuation Report Standard Portfolio Summar
61. ear in the Tenancy Schedule with the ERV Update column showing Rounded Areas Valuing using the Cap Groups 1 The next column we need is the Capitalisation section We are going to assume all tenants will be valued the same way and use the Capitalisation Groups Schedule 2 Click on the Assumptions button and select the Capitalisation groups option Add a new group Type Retail Group in the Group column choose Hardcore as the method and 8 00 as the Hardcore rate Save and Close the group schedule 3 In the Tenancy Schedule s Cap Rate Group column select Retail Group from the drop down list 4 Forany other more specific terms required for the tenant records we can double click the row in the Tenancy Schedule to open the actual tenant record For this example we will ignore this step Generating multiple tenants 1 Now we need to duplicate the master tenant record for the other tenants in the list 2 Click the Copy button and type 9 in the number field This generates the multiple records We can now make adjustments to each record ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 13 Lesson 11 Complex Properties 59 Tenancy Schedule Sample Shopping Centre File Edit Tenant Schedules Valuation Tools Help i qn New C Delete Copy of Costs 9 Rent schedule 4 Zh Tag Active Tenant Name General Stores Freehold 0 Secondary v 12410621 v AG Newsagents Unit 2 Freehold D Small
62. easehold File Edit Schedules Tools Help 1 np ca T E sy Costs a9 Rents lt 4 Areas 2 Assumptions 4 Payment days X Breaks Schedule Tenant Growth Lease Rent Start date Payment dates Quarterly Years Months Holding over L Days unuug Jad Expiry date 23 03 201 9 Unexpired term 1 D yr s 6 mth s 12 day s Geared ERV Break exercised None Indexation Group Next Review 24 03 201 4 Market Rent Review cycle Yrs B Review type Upward Only Current Void months Expiry void months Lease type Standard lease M Rent Free months val Date 12 09 2008 Event Pre Void Ellesmore Park 44 Grasville Road Manchester Yorkshire 4 Let us assume this is a retail shop property We can enter the rental value using the Area Schedule again but we need the more complex zoning options 5 Click the Areas button 4 35 to open the Area window 6 Click the plus button to add area lines Select Retail from the Line Type field 7 We need No of Lines 1 e retail zones to be 4 This allows us to see Zones A B C and Remainder 8 Reduction per zone should be 50 as the reduction from the previous zone rental rate Zone Area does not matter here ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 12 Lesson 10 Leases 53 9 Click on the Add button to close the dialog box Add area data lines Definition Line Type Mo af Lines Retail Zoning Reduction
63. edule expand the basic view by clicking the Show Tenant Info button 71 This enlarges the view to provide more useful information giving rental details tenant by tenant ar Portfolio Rental Analysis Sample UK Portfolio File view Columns Doomsday Options Tools Help Customise Drag a column header here to group by that column Date Tenant Name Region Sector Initial Eveni Type Aos im Change prevent pcnsas Jena m estem rota Loma 01 11 2017 AK Cedar Londonwt Residential False Renewal Relet 24 048 120 800 01 01 2018 Brighton s Fish Shoppe South East Leisure False RenewalRelet 24 048 120 0 05 03 2018 Warehouse South East Retal__ False Renewal Relet 24048120 0 20 06 2018 Waterstone Clothing Inc North West Industal False Market Rent RF 24 048 120 20 01 07 2018 Howell Risk Manageme South Retail Park False Renewal Relet 24039 410 0 09 08 2018 MrGardener_ LondonWt Residen al False RedetinaVoid 24039010 870 31 10 2018 ADinson South East Retail False Renewal Relet 24 047 720 2400 09 11 2018 MrGardener London WE Residential Fale Renewal Relet 24 047720 8 10 25 12 2018 Wholesale Outlet Foods SouthEast Offices False Renewal Relet 24 027 470 0 24 03 2019 Standard UK Tenant North West Industial False Renewal Relet 24 027 470 20250 31 12 2018 Bristol Crane Hie West Industial F
64. egion South East B L pa L Willows building 177 25 Charlton Kent DAS L L B Calc Portfolio DCF projection analysis Calc Lej el el eel el 37 ej el s eel el Offices Office suite 00135 5 764 000 5 764 000 5 764 000 5 764 000 5 764 000 5 764 industrial Warehouse 0054d 3 389 701 3 389 701 3 389 701 3 389 701 3 389 701 3 389 Industrial Factory Office suite as Shopping Center 109950 efl s er Oo a 1 443 998 1 472 872 1 502 321 1 532 366 1 563 014 1 594 397 ej el el el el NTE el el el ell ell Yaluation date 02 01 2005 21 ERRORS in checklist Banded view in Performance Schedule 10 Hold down the left mouse button and drag the Sector column header next to the Region header Portfolio overrides applied The view now changes to show regions broken down by Sector 11 Collapse and expand the groups using Expand all groupings or Collapse all groupings toolbar buttons 12 A report can be generated using the File Print menu option DATA ANALYSIS Display grouping and breakdown of properties lease by lease Information provided by this function gathers together all the lease and other details for every property in the filter and every tenant and tenure in each property 1 In the Command Centre select a multi property portfolio and click on the Analysis button Select the Dat
65. ep by Step Guide Chapter 7 Lesson 5 Valuation 27 CHAPTER 7 Lesson 5 Valuation Traditional valuation For our simple example we can proceed to the valuation functions For this process ensure you are in the Command Centre Make sure the property record is highlighted although it works the same way when any tenant record is selected Locate the Valuation button on the tool bar Remember that commands operate on the focused level so that the valuation will produce a portfolio valuation if the portfolio record is selected and a property valuation when the property record is selected Viewing the valuation results 1 On selecting the Valuation button the calculations are executed and the results are presented in the Valuation window c Property Valuation Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Tools a Reports Checklist ys Costs y Assumptions Save Log view log iw 29 Force EY Calculate Goal Seek Target 25 09 2008 Item Target result 198 000 No Target Normal M 0 0 Gross Value D 00 ft 0 00 ft Acquisition costs SES Yield Ann Yield Gtrly Net Value 192 580 10 0000 96 10 6577 15 0000 96 16 5191 Say E 3 1 92 700 No Vendor s fees defined Sensitivity Log Help Valuation date Gross Value Capital costs Net Rent pa 19 800 29 700 Equivalent Yield Annually in Arrears Equiv
66. ese are numbered as steps for you to follow Illustrations will ensure you are seeing the correct screens and accessing the correct keys or menu options The first section sets the scene as you will get familiar with some of the important actions that take place behind the scenes before you even see your first portfolio or property listing Each lesson builds on the previous lesson although you can jump in at any point when you want to know about a specific topic Examples are provided where it is necessary to illustrate a point or command Due to the complexity and inter connection between functions and processes there will be cross references to lessons elsewhere in this guide The comprehensive index should also provide quick access to answers ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 2 Chapter 1 Introduction The User Interface As a typical Windows application all the main screens in Valuation Capitalisation have a similar format Qe 2c yz ARA Valuation Capitalisation B Xx hna 9 GLEN E Ed ET NT ih e amp p jen Porem EA Patholo Fees Cuick Valusi hies Sel wehbe e c qe nom os Tay Filters 35 Seri Caleta K er rescce ds 4 securty lale Costs Pert Schedule aael Valustun Cash low gehat Anahus soanar Duder Took Portfolo T perty IL Tenants Assumphons Wales Uk DCT File Reto VamDae Category Last Gross Value Last say Value Louw vied Ya vieii evn YR Currency 125314
67. g button 2 On the dialog box that follows select MASTER to denote a special or significant record or SCENARIO to save an interim or test valuation 3 The records build into a list of valuations View the list by selecting the Log View Log menu option or clicking on the View log button About reports There are three reporting systems integrated within Valuation Capitalisation These are the ARGUS custom report generator the Crystal report generator and the SSRS report generator A range of default reports is included in Valuation Capitalisation however the creation of new or modified reports is a matter for the System Supervisor ARGUS Software provides a bespoke report writing service but all the necessary skills for ARGUS reports are provided in the documentation with the system Note that Crystal and SSRS are third party products that can be purchased separately Lesson Summary Valuations are based on the scope of the request to perform the calculations When focused on a portfolio the effect is to value all the valid properties in the portfolio A property valuation is performed when a property or any of its tenants is selected The valuation screen provides a number of functions associated with valuations and these will be seen shortly At any time even outside the valuation screen report listings can provide fully formatted report outputs for presentation or data checking ARGUS Valuation Ca
68. he addition of the Analysis module for Valuation Capitalisation opens up a range of functions that extend and build on the valuation and cash flow modules At the portfolio level analysis works in conjunction with Filters This enables a total or sub view of the portfolio to be valued or analysed Before proceeding to use the analysis options we will see how filters work Filters Every property record and tenant record has a TAG flag This is displayed as a tick column in the Command Centre listings Only those properties that are ACTIVE and TAGGED apply to the valuation and cash flow processes The filter automates the selection of records by tagging and un tagging records meeting the filter parameters The filter parameters cover a range of items as shown in the list on the left of the screen and choosing any one provides a relevant choice of settings Filters can be combined so that you can have say a selected group of regions together with a selected group of sectors To access the filter selector from the Command Centre you must have a property or portfolio selected 1 From the Command Centre select a portfolio with multiple properties for which the category fields region sector and so on have been defined such as one of the Sample Portfolios 2 Click on the Tag Filters button E y Tag Filters ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 62 Chapter 14 Lesson 12 Analysis lag Filter
69. he current set of records in the filter Category Analysis works by reading category settings in property and tenant records These categories are often found in drop down list items such as Region Sector Covenant Use type and so on If there is no setting for these fields they are classed as undefined and so the more detailed the information that is available the more useful will be the analysis In the Category Analysis screen there is an important field called Category Type Viewing this list gives a good idea of the basic analytical headings These can be extended to include user defined fields This is an advanced option where extra unique fields can be added to records by the system administrator 1 From the Command Centre select a portfolio that has properties with some category fields containing data For example if you do not have multiple properties in a portfolio try adding a few using the Copy Selected Record command enter each record and make selections for the Region Sector and Use Type fields 2 Open the Category Analysis screen by clicking on the Analysis button and selecting the Category Analysis option 3 Ifthe default screen is showing a blank area in the middle of the screen select Use Type from the Category Type drop down list cae Portfolio Category Analysis of Use Type Tenant by Say Value File Edit Analysis Graph Valuation Help R x Z mue VY ZLB 530150 od a Net Value Gross Value Gross
70. he fields relating to Indexation are not available in this example but will be seen later on when we look at more detailed valuation issues ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 18 Chapter 4 Lesson 2 Tenants 8 Voids have an important place in the valuation process and the types of voids applicable in the tenant unit record are 1 Current Void months for the definition of a fixed void period from the valuation date until letting This moves the new lease start date consistently when the valuation date is changed This can be used for vacant units for example 2 Expiry Void months defining the reletting or marketing period following determination of the lease detailed in the tenant unit record 3 Rent Free months representing the period at the start of the lease where there may be an agreement for the tenant to pay zero rent Leave all these fields with a value of zero Tenant Lease Renewal At the end of the lease period for the purposes of the valuation we need to define some terms to assume what will happen after the expiry of the current lease In this example we shall leave the fields in the default state however to understand what will happen in the valuation process 1 Click the Renewal tab Mame amp Status Leaze amp Rent Renewal Valuation Reversion Lease Terms Rent basis Full Rental Value Alesse one of Den dees XOU RODA ae one eae Review cycle yra 5 Rent free m
71. hrough the lessons Menus Most commands and actions can be accessed from a menu except in the Command Centre where most of the commands can be selected from the toolbar There are two types of menus 1 Top menus at the top of the window where you point the mouse pointer on the name and click with the left mouse button You can also use the Alt key on the keyboard plus the underlined character on the menu name 2 Sub menus or pop ups when you click with the right mouse button when the pointer is over a particular part of the screen A different menu will appear depending on the possible activities for that item Buttons The button toolbars that are seen just below the top menus contain buttons representing some of the commands these act as a short cut to some of the more frequently used commands Holding your mouse pointer over a button for a few seconds reveals the purpose of the button As you go through each lesson the appropriate buttons will be pointed out to you In addition to the conventional buttons you can find the Application button which is located in the top left hand corner of the Command Centre ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 1 Introduction 5 Input and data windows Valuation Capitalisation 1s a database system and any data already existing in the database records are displayed in fields or schedules It is to be remembered that the program is not an
72. ights aluation USERS Y Can View Portfolio A iV Can Edit Portfolio l Can Add Properties Tenures to this Portfolio Y Can Add Tenants to this Portfolio Can Delete Tenants from this Portfolio Can View Log Valuation for this Portfolio 3 4 For now we will close the security dialog box without making any changes Close the portfolio record General usage of a portfolio record The concept of the general usage portfolio is that any number of properties listed in it have no relationship with other property records in the same portfolio ARGUS Valuati on Capitalisation version 2 50 Step by Step Guide Chapter 10 Lesson 8 Portfolios 43 Valuation dates can be quite different in each property record and the valuation and cash flow parameters are unique One major departure from this is the Assumptions settings You may recall that the system defines a set of defaults for the general calculation options tables rounding and so on and the portfolio record can adopt these as its own defaults and pass these on modified as appropriate as a set of defaults for the property records In turn each property record can alter its Assumptions to suit a particular circumstance For a general usage portfolio other functions of the portfolio record may not be relevant but this depends on the degree to which the portfolio 1s required to unify a group of properties Specific usage of a portfolio record When a po
73. ile Edit View Tools Calculation Spreadsheet Projections Help Ry NPV Growth v Cap Rate graph to graph Hr Group Monthly Calculation Target amp Results C Ungeared IRR 8 452996 C Geared IRR 8 4529 Manual PV Value 400 000 C Use Valuation as PV TB 192 680 Finance V Enable finance Select Accounts Simple Loan O Senior Debt O Mortgage O Equity Partner Please Calculate Spreadsheet Create Edit 4895 809 SUOHIAIOAd aueurJ ana yx3 HAND A99 suondo 490 Val Date 28 09 2008 Discount Monthly Target Value 7 Ignoring all the other cash flow parameters click the Calculate button to display the spreadsheet 8 Look at the main spreadsheet and locate the row labelled Simple Loan IRR calculated IRR gt E OLA OPET aLI IE T GYE ILLE oul i Total Capital receipts Sul 3 Total Operating costs SUI 3 Total Capital expenditure SUI ame Com are 102863 700000 Capital Borrowed Lo Debit Rates Log Credit Rates Lo afd 9 The program calculates an internal rate of return for the loan itself as well as the IRR for the whole investment 10 Additional loans can be added and adopt a hierarchy based on the order in which they are added assuming the most senior loans are defined first ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 48 Chapter 11 Lesson 9 Finance Lesson Summary Whilst there are a great many types and formats for loa
74. ine Type Area ft ERY Group ERV ft2 pa ERV ft2 pm Units of Rate Position Retail Zone A 300 00 MANUAL INPUT 20 00 1 67 1 100 0000 100 0000 Retail Zone B 800 00 MANUAL INPUT 20 00 1 67 1 100 0000 50 0000 Retail Zone C 800 00 MANUAL INPUT 20 00 1 67 1 100 0000 25 0000 Retail Remainder 3800 00 MANUAL INPUT 20 00 1 67 1 100 0000 12 5000 Non retail Storage 1 200 00 MANUAL INPUT 5 00 0 42 1 100 0000 100 0000 Car Parking Car spaces 0 00 MANUAL INPUT 0 00 0 00 3 100 0000 100 0000 Summary Rental value passed back to tenant 6 000 Non Zoned ERV Manual 11 250 Zoned EY f oT Car Parking 3 000 Total ERY 20 250 Area ITZA 562 50 Total Area 2 400 00 Rents Per nnum Imperial winuue Jad Rent input type 4rea input type zt Valuation Date 12 09 2008 Ellesmore Park 44 Grasville Road Manchester Yorkshire ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 54 Chapter 12 Lesson 10 Leases 17 A total rent of 20250 appears as the total rent Click on the option labelled Unrounded in the Rental Value passed back to tenant section and close the window by clicking on the Save amp Exit button on the toolbar 18 Check the Rent Schedule to see the final effect Fixed Value leases Where it is necessary to define a tenant unit record with a fixed known value or a value of zero you can do this manually ignoring all capitalisation inpu
75. ing in the portfolio listing box and clicking the New button on the toolbar Click Yes to confirm adding a new portfolio Double click on the new portfolio to open the portfolio record and in the Portfolio name field type any label you wish to identify the portfolio The Valuation date field will not be relevant for a general usage portfolio but is essential when performing portfolio level valuation cash flow and analysis functions At this point you should check the Assumptions that will be used in portfolio level actions and as the defaults being passed to the property level Click the Assumptions button n Mss ur FE Select the Valuation rules option to review these settings In a general usage portfolio the security function may be less important than in a multi user client portfolio record although this can be set up to restrict users accessing the record As the creator of the portfolio you have primary rights to control security For multi user security control l Click the Security button in the portfolio record 2 See the list of groups and users on the left As you place your mouse pointer over a user name the box on the right displays the access rights for that user car Portfolio Security New Portfolio File Help 3 4X Unrestricted access for ALL I E GROUPS Portfolio Permissions for user B Everyone In vestment New Group Supervisor v i Can Modify User Group r
76. ion 200 L a EE EO ae ae CR d Traditional valuation cereeee hh RI Viewing the valuation results e ee The Value 2 e is d Be Ro aee x mac E es COH ee ac E The Yield FIelds su ceu ro EO ee SLE RC RC d bd cae ee AR EC dace WHESICMLRICIOS 23 4 6 75 tu areca ata wea oo Oe ee ee eee Valuation Detalls sis oes ee he ES A e Roe a ae ds The Valuatlon E69i auta eters cider he gee En AboutTeports iiis A A a ERR eh CR A Chapter 8 Lesson 6 Cash FIOW 2 22 RR REB EUER Ru Ex EP Discounted Cash FlOW 42333 2 3204 pg Scy codec ERE Ao RC Rc READ SUC The Cash Flow screen soii RR Ex ERREUR ed ERR oe REN Se RE sita Rental Growth Exit Value se e e e RR RR RR RI m nnn The Spreads heel pias Chapter 9 Lesson 7 ONU vr Adae E EOS Ern AS e as ane E Ebo retis Adding femulres xa tite KE 7 eee EE S ara e rere Ra E DR ACC iC Tenure SUNO o acu be ek Be RES OOD AAA A e RP a lusti EE Complex tenues cix SG tee E a Checking ground rent figures lt e cee ee Chapter 10 Lesson 8 Portfolios v5 vs sd SSS a es POOO VIEW sita a ee ee Ee ee bee owes POMIOIO FO CONG x cosa eee ds e ep we an eee al General usage of a portfolio record 0 00 cee ee Specific usage of a portfolio record 0 0 ce ee POONG AClIONS silo EAS E oen eit ae ee eerie a bee Bed Chapter 11 Lesson 9 FINANCO XR eEWGUESR REREISQEREE Ta E EARS Debt and TUNING y metan da ad Finance in the Cash Fl0QW ooo
77. ion Cost 3 Click new to add a new Acquisition Cost valuation Date 28 09 2008 Property not Elected for VAT 17 5000 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 5 Lesson 3 Costs 21 4 The tree on the left of the main schedule shows the hierarchy of the costs The steps for costs determine the scope of application Costs attached to the Property item relate to the whole property Costs attached to the Tenure level affect only those tenants under that definition Individual tenant costs apply to the single tenant only 5 Look first at the item labelled Acquisition Costs This provides the property with the default settings for Land Purchase Tax or Stamp Duty plus agency and legal fees associated with the purchase For the United Kingdom there should be a default set up for tiered Stamp Duty and in other cases a single percentage rate may apply The setting for this field is controlled by the System Supervisor 6 We will add a capital cost Click ONCE with the left mouse button on the Property level in the tree then click the New button to add a new cost This appears with the default label New cost Entering a capital cost Cost Definition page 1 Look at the bottom part of the screen A two tab folder has appeared and the Definition page will be open Type the name Repairs over the words New cost either in the tree or in the Name field r Costs Schedule File Edit Help A dEl Gp Ne
78. ion No Manual Order PO Code Tenants amp Tenures ARGUS Zone Disconnected user a Valuation Cate 21 09 2000 m 2 With the Properties list selected click on the New button or right click and select New from the menu 3 You will be prompted to confirm the use of a template Click OK to proceed Mew Property Confirm adding Property gt Property Template v Use Portfolio s Default Template 4 A property record should be created If you open it you should notice that some of the fields contain default data This is due to the effect of the default property Template Your Supervisor can set up unlimited templates and each portfolio can determine the default template that is used when adding new properties 5 When multiple templates have been defined by the Supervisor you will be asked to choose whether you want the default template recommended by the portfolio or any other template 6 Double click the new line in the list or select it and click on the Open button ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 3 Lesson 1 Properties 11 Setting up a property record cap Property Standard UK Property File Edit Schedules Valuation Cash Flow Tools Help nnm Add co Delete 3 a Costs 4 Tenants Assumptions Valuation Cashflow Documents Address Tenure BuySell Extras Address Location General data Bldg Estate Standard UK Property Va
79. le Yrs 5 Review type Upward Only x Lease type Standard lease 7 2 You can enter a lease start date term and expiry date This is the contractual term and not payment dates Now you have choices either a enter a start date for the lease say 28 09 2008 and a term of 15 years The expiry date then automatically appears Note The expiry date is always the last day of the lease and NOT the first date after expiry OR b enter the expiry date say 27 09 2023 You will then be asked whether you want to update the start date or adjust the term Note Dates can be typed in manually or for convenience you can click the hypertext date labels to produce a calendar to set the date 3 Ignore the Break Exercised and Next Review fields Ensure the Market Rent Review cycle years field is 5 4 For this typical lease we will assume rent reviews are based on Upward Only This of course will allow over rented units to fall back to market rental value at lease expiry or when a break option is exercised 5 Leave the Lease Type as Standard lease Tenant Rent 1 In the Rent section click the hypertext label to view the Payment Dates dialog box Select English Quarter Days In Advance and click the Done button ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 4 Lesson 2 Tenants 17 cap Payment Days English Quarter Days In Advance Y 1st quarter day 2nd quarter day ard quarter da
80. left corner of the schedule s This displays a list like the following OIS RR Rent pa Total Area Ft Area ITZA FLS Avg ERY Rate per FE Rent Rate per FE Zone A Rate Indexation Group Current Rent Free Parent Tenure Renewal Rent Basis Lease Start Discount Rate Renewal Review Cycle Renewal Rent Free Renewal Lease Basis New Lease Yrs New Lease Mths Expiry Void Months Indexation Group Cap Rate Group Valuation Method Term Hcore Rate Rewn Layer Rate Froth Disabled Froth Rate Froth Basis Froth Growth Fixed Value Fixed Value Amount DCF Exit Yield OCF Rental Growth 2 Check the unwanted column heading items OFF ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 60 Chapter 13 Lesson 11 Complex Properties 3 You can set the leftmost columns to be fixed so that only the main part of the schedule scrolls To do this select the menu option Tools Fixed left columns Lesson Summary The Tenancy Schedule is a powerful and flexible way of entering and viewing large amounts of tenant data For properties with complex tenure structures all tenants are seen in the schedule with their associated parent tenures and the job of switching tenants between tenures is a simple task of re selecting the parent See the Valuation Capitalisation User Manual for more information ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis 61 CHAPTER 14 Lesson 12 Analysis T
81. lio projections The Performance Analysis function brings together the individual property cash flow projections in a single view ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis 67 1 From the Command Centre select a portfolio containing several properties Click on the Analysis button and select the Performance Analysis option from the menu car Performance Analysis Setup Style Period Years p201 2006 Manual Schedule mode Excel mode Copy Portfolio DCF set up to all properties Set all properties to Portfolio valuation date 02 01 2005 2 For the Style field select Display single period only This will snapshot a single year in the schedule 3 Make the period 5 years The result will be shown for year 5 Ensure Manual Date is OFF 4 There are two modes in this screen Select Schedule Mode by clicking the Schedule mode button 5 Click Proceed to create the schedule s Performance Analysis Sample UK Portfolio File Columns Tools Help Sy BES Customise 77 Calculate Checklist Drag a column header here to group by that column Fixed Columns Grouping Columns Rental Yalue pa at Exit 3 Property Name Sector Region Primary Use File Ref No 02 Jan 2005 01 Jan 2006 01 Jan 2007 01 Jan 2008 01 Jan 2009 Crosspoint Shopping Centre 25 30 Minard Street Cambridge Cambridgeshire Coventry House 10
82. lled Once again these fields display user defined lists for you to select suitable categories Note These fields specifically relate to the geographic region the main use type sector and the primary use type within the sector You must ensure that these settings make logical sense 5 Enter further data as required in the General data section 6 Enter a valuation date by typing for example 01 01 2009 Note the character appears automatically Alternatively you can click the Valuation date hypertext to set a date from the pop up calendar 7 Ignore the File Ref No and Supl Ref No fields for now These are required when linking properties to management or file records 8 Keep the owned as 100 This is only used when the property is partially owned or split between separate portfolios 9 Keep the Area Measure as Imperial unless you prefer to see all floor areas in metric standard ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 12 Chapter 3 Lesson 1 Properties 10 Rent input view should be set to Rent per annum This will ensure all your screen views of rents interprets your inputs as rents per annum If your local tradition or custom is to enter rents on a monthly basis then switch to that standard 11 Ignore the Manager Code field This is used primarily where several portfolio managers are responsible for specific properties 12 The Tagged check box MUST be checked ON If this box is
83. lti tenanted property We will create a small shopping centre with 10 tenants The Tenancy Schedule 1 From the Command Centre select the tutorial portfolio and click once inside the property listing Add a new property enter the record and call it Sample Shopping Centre 2 Return to the Command Centre or stay in the property record but whichever you choose open the Tenancy Schedule by selecting the menu option Schedules Tenants or clicking on the Tenants button ar Tenancy Schedule Sample Shopping Centre File Edit Tenant Schedules Valuation Tools Help q New c Delete 7 Copy yy Costs 4 Rent schedule Areas Ea Tenant Growth Assumptions y oy Valuation DCF 3 Excel Name and Status 3 No Tag Active Tenant Name File Ref No Description Parent Tenure Sort Order Covenant Lease Start Years Months Days Expiry Date Next Review Breaks RR Cycle Up Only Current Void Expiry Void Current Rent pa Current Rent 0 Valuation Date Fields Tenancy Schedule 3 The Tenancy Schedule will appear without any tenants Add a tenant using the New button 4 Assuming we are entering data from a schedule document most of the information would probably be clearly displayed for us to copy the data into the schedule However much time can be saved by examining the typed schedule first and identifying common characteristics such as lease terms rent and so on ARGUS
84. luation date street number es File Ref Mo Street name l Supl Ref Ma District M UPR Town 56 owned 1 00 0000 County Area measure Imperial M Postcode Rent input views Rent per annum Z Country Manadger Code Currency WAT Elected Rate 17 500096 le Tagged enabled for valuations and fitters Categories for analysis Iw Active record Alive non archived Motes Region Sector Primary Use Property record window In the Property record the first page labelled Address is presented Work through the fields to overwrite the default text 1 Use the TAB key to move through the fields and enter address information Type in a fictitious address ensuring the correct type of data 1s entered in each field You do not have to enter data in every field but ensure there is enough to identify the property 2 The fields Town and County have labels that are blue hypertext controls Clicking these labels opens lists for you to select pre defined text Based on your security rights you can add new entries in these lists or simply type in any text directly in the fields 3 The Currency field is most likely to be useful if you are involved with international properties and wish to hold all financial information in another currency 4 The final three fields on the left of this page are categories for this property These are important when the Valuation Capitalisation Analysis Module is insta
85. lumn you wish to sort by The sort direction arrow shown on the column heading will change when you do this This is a toggle so each time you do this the sort direction will change Lesson Summary To generate a property record it was first necessary to make sure there was a valid parent portfolio From there the property record was added and filled in with details sufficient to identify it and provide the basic parent for tenants and units Next we will add a simple hypothetical tenant and avoid complex and diverse issues ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 14 Chapter 4 Lesson 2 Tenants CHAPTER 4 Lesson 2 Tenants The nature of tenant records Tenant records represent the physical elements of a property These may include buildings occupied or vacant premises or non buildings such as open sites or car parks The important function of the record is to store rent and lease information plus the basis for valuation Tenants and Tenures You should be in the Command Centre with the TENANTS listing box visible W M Ge Ud gt ARGUS Valuation Capitalisation s H j Home i Search 2 XS 2 Finance TE X Qn New Portfolio Fees sp Quick Valuer Area Schedule e x L AS T Tag Filters Ke Move records v Log Open c Delete RENS Security Tenancy jj Costs Rent Schedule Assumptions Valuation Cashflow Analysis Scenario Builder Tools Copy records Sche
86. lways have a parent portfolio and any individual property can be sub divided using tenures Adding a new property To add a new property ensure you are in the Command Centre Note If the portfolio module is not installed the following section will not apply Please go directly to the next section To add a new property If you do have the portfolio module you must select or create a portfolio to work in For our purposes we will create a new portfolio 1 Left click the mouse anywhere in the list marked Portfolios O w v IR g 4 Z A MAR Valuation Capitalisation BE nome 3 gt o A s EL UR B ES ig mM Search E m T ci A CK Yi prance j S og i dh New B Poti oku Fesi GCL Y ahun fusa Elda e ar Dd Fi T Tay Fiere ud Sa Mere records a s LA Log e Fe ux eats Bent Schedule iesumploms Yauslon Galien Anas ranne Dulder Took Hereford Place z i 1 502 102 1 514 010 Gee TUTE Sadh Ragi pars 4 240 000 4 008 882 GBP 8250056 imbann Pier zaeni 1 552 500 1 877 355 CEP 00 West Town Plaza 242057 2 080 102 606 70000 Witches Hose 1 441 588 1 363 418 0BP 800005 Development Pince FEET 2187500 268 313 CEP ALCA Worcester T da 192 364 107 095 GOP TUTE Senaide Humr 70 3188173 amaaa nom Mighwiew Heute 3 993 194 939 070 GEF 9 0000 G00 lod House i 280 181 737872 CaP 10 0000 Saturn Heise ET 158851 164 41 GB 10
87. mail info argussoftware com Tel 1 713 621 4343 Support Tel 1 888 472 1005 Support email support argussoftware com Info email info argussoftware com 75 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 76 Canada contact details ARGUS Software Coquitlam BC CANADA Chapter 16 Contact details Toll free 1 888 472 1005 Tel 1 604 472 1001 Fax 1 604 472 1002 Support email support argussoftware com Info email info argussoftware com Australia and Asia Pacific region contact details ARGUS Software Sydney NSW AUSTRALIA Singapore region contact details ARGUS Software SINGAPORE Japan region contact details ARGUS Software Tokyo JAPAN South Africa region contact details ABO Software Cape Town SOUTH AFRICA Tel 61 2 9262 1332 Fax 61 2 9262 1350 Support email support argussoftware com Info email infoasiapacific argussoftware com Tel 65 6411 2288 Fax 65 6338 7959 Support email support argussoftware com Info email info argussoftware com Tel 81 3 5404 8138 Fax 81 3 5404 8585 Support email support argussoftware com Info email info argussoftware com Toll free 080 226 7638 Tel 27 0 21 447 9592 Fax 27 0 21 426 2708 Info email info abosoftware co za ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 77 About reports 30 Acquisition Costs 21 Active records 12 16 41 Adding a new portfolio 8 Adding a new property
88. n the Logout button Your file is now stored remotely and can be worked on by other members of your team wherever they might be in the world Lesson Summary ARGUS Zone is a versatile new method of working There are many more things that can be done with ARGUS Zone than we have described here Please see your User Manual for more detailed information and please see http www arguszone com ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 16 Contact details CHAPTER 16 Contact details Find us on the Web http www argussoftware com or http www arguszone com UK contact details ARGUS Software UK London UNITED KINGDOM US contact details ARGUS Software Houston TX USA ARGUS Software Plano TX USA ARGUS Software Mount Laurel NJ USA ARGUS Software Clearwater FL USA Tel 44 0 20 8906 4059 or 0845 6440 400 Fax 44 0 020 8959 6079 Support Tel 44 0 20 8238 8345 Support email support argussoftware com Info email infoEU argussoftware com Tel 1 713 621 4343 Fax 1 713 621 2787 Support Tel 1 888 472 1005 Support email support argussoftware com Info email info argussoftware com Tel 1 469 791 1000 Fax 1 469 791 1810 Support Tel 1 888 472 1005 Support email support argussoftware com Info email info argussoftware com Tel 1 856 439 2201 Fax 1 856 439 5019 Support Tel 1 888 472 1005 Support email support argussoftware com Info e
89. n the first Address page The TAG is also seen as the tick in the leftmost column of the property listing and the ACTIVE status is shown next to it Drag a column header here to group by that column I Tag Active one Ref ho Building Mame Y Standard UK Property uL ME sce Eu ue uu Fictitious Property Cony of Fictitious Property Properties Tag and Active indicators A property that is ACTIVE means it is alive and valid for any operation If it is turned off to be inactive the property record is ignored in all circumstances With an active record the tag indicator must be ON for the property to be included in valuations cash flows and other activities Portfolio record When dealing with multiple properties these may be a collection of individual unrelated buildings or a group forming part of a holding owned by a corporate body etc Thus our sample property might well be in a general portfolio where we can dump anything we like On the other hand this may be just one property as part of an owned group of properties in a controlled portfolio We can take different views depending on the nature and purpose of the portfolio record It is possible to have unlimited numbers of portfolios so be sure to give each one a unique name ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 42 EA Chapter 10 Lesson 8 Portfolios Add a new portfolio record from the Command Centre by click
90. ns the most common types are available in Valuation Capitalisation Loans operate at the local data level when viewed in the cash flow screen but are fully implemented when using the portfolio analysis functions from the Command Centre This means the Portfolio Performance function will apply the individual property finance options as per each individual property cash flow ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 12 Lesson 10 Leases 49 CHAPTER 12 Lesson 10 Leases With a general knowledge of the structure of Valuation Capitalisation we will revisit and reinforce some of the issues previously discussed Recurring income is derived from rent The frequency and amount of rent for a particular unit or entity 1s controlled by an agreement in the form of a lease licence or other such legal document setting out rights and obligations for occupancy and payment Valuation Capitalisation offers a whole range of options for setting up leases that reflect as much as possible these real life documents For this lesson we shall set up some leases with some breadth of imagination to understand how both simple and complex leases can be engineered l From the Command Centre open the example property record and set the Valuation date to 01 01 2006 First of January 2006 Next add a new tenant record to our example property To do this click on the Tenants button to open the Tenancy Schedule and click on the Ne
91. o record is the header for a group of properties Properties may have a common owner or be totally independent The scope and scale of a portfolio is practically unlimited with the added capability of being created to hold copies of properties from multiple portfolios to form super portfolios Data integrity is paramount and whilst portfolios can be protected from inadvertent modification or deletion much of the activity relies on responsible users understanding the concepts and limitations ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 11 Lesson 9 Finance 45 CHAPTER 11 Lesson 9 Finance This lesson applies to users with the Finance Module enabled Debt and funding The standard valuation process applying capitalisation methodology does not traditionally take account of debt other than recognising major commitments incurring expenditure at some point in time The element of interest is largely ignored as this is implied in the capitalisation yields used The cash flow however is strongly connected with loans and borrowings and explicitly displays the figures as part of the process A simple loan Interest Only 1 To access the Finance module from outside the cash flow environment ensure you are in the Command Centre select a property or portfolio and click on the Finance button in the toolbar 8 Finance or Finance File Help op Ed Simple Loan 10 0096 0 0 00 0 0095 0 00 0 60
92. od or Term and Reversion Be careful with Initial Yield method as the value will be zero if the rent is zero unless you have set the option in the property record Assumptions to apply market rent instead The Term and Reversion method option uses an equivalent yield basis and therefore applies the same yield rate to the term and reversion income In this case the selection of Override allows us to input a set of capitalisation rates to make variable assumptions depending on the DCF exit date for example after 1 2 3 4 years and so on ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 8 Lesson 6 Cash Flow 35 7 Type in the schedule Item Rate Months 1 8 00 0 This means 8 00 will be used whenever the cash flow ends Leave all other cells at zero and Calc Method as Stepped 8 Type 1 00 in the Vendors Fees field and 1 00 in the Purchasers Costs field These fees apply to the exit capital sum only The Spreadsheet The cash flow is displayed in a spreadsheet or grid of cells representing date columns and data rows It is usually not visible until you have performed a calculation 1 The spreadsheet page shows the central grid with the control palette on the left cap Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit View Tools Calculation Spreadsheet Projections Help 7 Reports 3 Excel hi IRR v NPY
93. off the property will be temporarily ignored in all calculations 13 The Active record check box MUST be checked ON This switch effectively turns the record off regardless of the Tagged setting The purpose is to create an archive option so that the record can be referred to If this box is off the property will be permanently ignored in all calculations 14 Ignore the Notes field for now but you can store random text by left clicking the Notes hypertext label 15 Click the Tenure tab and ensure it shows a single freehold item under the word Property in the Structure or tree box r Property Standard UK Property File Edit Schedules valuation CashFlow Tools Help nm add co Delete 3 E oi Costs a Tenants Assumptions oe valuation 7 Cashflow E Documents Address Tenure Buy Sell Extras Tenure structure Tenure Freehold v Display name Structure El Property W Active 4 Freehold CA New E l a Edit selected tenure LI Delete selected tenure Yal Date 21 09 2008 Default Assum Values Gross Value 0 Met Say Value 0 Custom Fields Property tenure page 16 Click on the last tab labelled Buy Sell Extras ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 3 Lesson 1 Properties 13 r Property Standard UK Property File Edit Schedules valuation CashFlow Tools Help nm Add ca Delete 3 GY ai Costs uj Tenants Assumptions valuation C
94. olio such as percentage of rental value for each tenant or sum of areas ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 70 Chapter 14 Lesson 12 Analysis 3 The lease view columns can be divided into four groups using the section buttons 4 Each column can be sorted in ascending and descending order by clicking each column header 5 Breakdowns are easily viewed Select the Tenant Lease View using the drop down list in the toolbar Click and drag the Region column header into the space above the schedule and release the mouse 6 Open the view with the Expand button 7 To preview and print a report for the current view select the File Print option 8 Additional graphics are available for the selected view Click the Graph button to open the display screen Here you can select different graphs and modify the views RENT ANALYSIS Variable risk analysis showing continuity of income and loss of income projections based on Doomsday scenarios This function provides a date based schedule from the valuation forwards measuring the hypothetical loss of income assuming a worst case scenario until all income ceases The conditions assumed for the loss of income can be selected from a menu 1 Open the Rent Analysis schedule from the Command Centre using the Analysis Rent Analysis menu option ar Portfolio Rental Analysis Sample UK Portfolio File View Columns Doomsday Options Tools Help a Ea
95. onjunction with the Valuation Tables settings It is to be noted that Years Purchase figures for freehold properties will always assume these settings to be zero 7 We shall accept the current settings ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 26 Chapter 6 Lesson 4 Assumptions 8 Similarly click on the Rounding page The boxes control the Rounding settings for the property These are also subject to overriding settings in the portfolio record We shall accept the current settings car Property Assumptions Fictitious Property 9 Fictitious Place raining Street Ambridge Borsetshi E Use portfolio default x nnn 1 to 1000 None 1001 to 10000 10 10001 to 1000000 100 1000001 to 10000000 1 000 Over 10000004 10000 Bon 1 to 1000 Mone 1001 to 10000 10 10001 to 1000000 100 1000001 to 10000000 1000 Over 10000001 10000 Y save cancel 9 Having inspected these settings we can now proceed to the valuation stage Lesson Summary It is strongly recommended that you check Assumptions before any valuation or cash flow In general these are corporate rules and preferred methods and approaches to valuation and depend on the customs adopted by your company or organisation Some are obvious some are obscure but it is important to know that these settings could possibly explain the reason for particular results ARGUS Valuation Capitalisation version 2 50 St
96. onths 0 Re letting probability h 00 000 e Renewal Lease Basis Single Lease Renewal Rm Indexation Group Not Indexed 2 Ensure Full Rental Value is selected in the Rent Basis drop down This means the sequential lease will be let on full market terms The alternatives allow the renewal to be on the same basis of Geared Rental Value to have a manually input Reversionary Rental Value or to have a specific manual Valuation input as an amount 3 The Renewal Review cycle can be set as well as an assumed Rent Free period in the following renewal lease Re letting probability should be 100 The term for the renewed and subsequent leases can also be set Tenant Valuation set up The overall property valuation is an amalgamation of tenant valuation settings This means that each of the tenant records can uniquely specify how they are valued or they can be a member of a group that sets the basis for valuation In this way the valuation can be of a general nature or broken down into components making it easier to represent risk and income security 4 The Capitalisation basis for tenants can be controlled by either selecting a Capitalisation Group or being PRIVATE Selecting the group is a simple matter of clicking the hypertext label and ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 4 Lesson 2 Tenants 19 selecting one of the groups that may be defined Groups are aligned to the property record
97. ou to open the finance account set up For further details on applying finance see Lesson 9 Finance on page 45 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 8 Lesson 6 Cash Flow 33 cae Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit View Tools Calculation Spreadsheet Projections Help E Reports cel ia IRR v NPY Growth v Cap Rates os graph graph Checklist E Calculate 7 __ Group Monthly Calculation Target amp Results C Ungeared IRR 0 0000 C Gear 8 750096 C Manual PY Value Pa Use Valuation as PY Update Value X 192 680 Finance Select Accounts Please Calculate Spreadsheet I2 a n o E o 3 oe mf af Sa ou l 2l E gt mi X a M s cC eui Naaz e09 suoiaa o4g an Val Date 28 09 2008 Discount Monthly Target Stored value Finance setup for DCF Rental Growth Exit Value cae Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit View Tools Calculation Spreadsheet Projections Help Reports Excel IRR v NPY Growth v Cap Rates os graph graph Checklist Calculate Group Monthly Calculation Target amp Results Ungeared IRR 8 7500 6 R 0 0000 C Manual PY value 240 859 Use Valuation as PV 5 Growth Options Basis overrides v St
98. ounded value by selecting Use Valuation as PV and selecting the Say Rounded option from the drop down This allows you to choose to use the rounded net value rather than the exact calculated net value result from the property valuation If this option is selected the Say Rounded value will appear in the stored value field next to it Do not select this option for now 7 The option switches should be set as follows Ignore rent apportionments should be OFF Rent apportionments are the fractional rents that would appear in a transaction where rents were paid in advance for instance and the purchaser or vendor of the investment would be actually paying or receiving a calculated rent balance As with the acquisition fees this setting depends on whether this 1s an actual transaction or the property is already owned and retained Apply cap ex defined after exit does not apply in our example so you can leave this OFF but if such costs occur in the future after the end of the cash flow period then these may have a significant effect on the final exit valuation 8 ARGUS Valuation Capitalisation works with ARGUS Developer by using a special file that can be imported into cashflows In this case Attach data from file in the ARGUS Developer Link section should be OFF 9 On the Finance tab Enable finance should be OFF since this requires the Finance Module When enabled an additional button Create Edit becomes available enabling y
99. per zone 95 one Area Adjustment Percentage 10 Four rows have been added with access only on the first row to the rental value rate per sq ft the Zone A Rate 11 Type 300 into the Area column for all zones and type 20 into the ERV sq ft p a column Automatically you see 20 appear in the greyed out cells and the rental value calculated at the lower part of the screen Note The menu item View Visible Columns Column Selector will allow you to change the column type to display rent per month if required Used in conjunction with the metric imperial option mentioned above rents for rates per metre per month can be entered 12 Note the ITZA Area in Terms of Zone A has been calculated along with the total floor area in the Summary section in the bottom pane of the window 13 Our shop has an upper floor used for storage Add a new line in the schedule using the plus button but add one Non retail line 14 Type 1200 in the Area column and 5 in the ERV sq ft p a column This adds further rent to the total 15 Finally there are 3 car spaces at the rear of the shop so add one new line with the line type Car Parking 16 You can only type in relevant fields In the Units column type 3 and in the Unit Rent p a column type 1000 ca Areas for Standard UK Tenant File Edit view Tools Help idu dE cp ca Rents El ZoneA 3 G LockLabels Measurements Property Imperial z ca Print B 3 No PP L
100. pitalisation version 2 50 Step by Step Guide Chapter 8 Lesson 6 Cash Flow 31 CHAPTER 8 Lesson 6 Cash Flow Discounted Cash Flow ARGUS Valuation Capitalisation offers a seamless connection between the standard valuation processes and the generation of Discounted Cash Flows DCF You do not have to go through any special set up operations to open the cash flow functions In fact the valuation features are all accessible from inside the cash flow screen The Cash Flow screen 1 Continuing with our property example first ensure you are in the Command Centre and then highlight the property row in the listing To open the cash flow module click on the Cashflow button Cashflow 2 The Cashflow window appears and displays six tabs We will be concerned only with the first three pages in this exercise The DCF setup page cr Property DCF Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS File Edit View Too Calculation Spreadsheet Projections Help eckist E Calculate Group Monthly Calculation Target amp Results C Ungeared IRR 0 0000 5 8 750095 C Manual PY Value 0 Use Valuation as PV Update Value Net X 192 680 DCF period oq From 28 09 2008 Duration 5 Mths 10 Ds 0 until DCF Calculation Options Discounting Monthly y Please Calculate Spreadsheet Ignore rent apportionments V Apply cap ex defined after exit Ignore a
101. potential costs that can be added we have only seen a brief example of the addition of costs Valuation Capitalisation allows unlimited costs and these can be quite detailed including the import of the results of a full property development appraisal defined in ARGUS Developer Random related and unrelated costs can be defined using combinations of triggers and timing types We shall encounter more costs and cost types in future lessons and a more comprehensive review of costs is to be found in the Valuation Capitalisation User Manual ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 24 Chapter 6 Lesson 4 Assumptions CHAPTER 6 Lesson 4 Assumptions Just before the valuation At this point we can take a step closer to a valuation Before doing so we will examine the underlying switches and options that affect the valuation Make sure you are in the Command Centre 1 Select the property record by clicking ONCE with the left mouse button on the record 2 Click the Assumptions button Select the Valuation rules option 3 Look carefully at the Assumptions screen car Property Assumptions Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshi E Use portfolio default All x Hardcore method iv x Tem and Rewersion method x Next ewent rewieu definition x Initial Yield Cap Rate method x DCE Exit IY valuation Equivalent Yield EY Froth option
102. rences and in some cases the size and position of windows is retained after you close down the program so that they are the same when you log in again The first screen you encounter in the program is the Login dialog The Login dialog requires you to enter your unique User Name and Password This will be given to you when the program is supplied but can be changed in the program by the System Supervisor ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 1 Introduction 3 ARGUS Valuation Capitalisation Login ARGUS Valuation Capitalisation e Copyright ARGUS Software 2005 User Name JBLOGGS 4 Valuation Cashtlow Portfolio G Analysis E Finance Licenced to Override Serial Number Override Security Method Internal Notice This computer program is protected by copyright lay and international treaties Unauthorized reproduction or distribution of this program or any portion of it may result in severe civil and criminal penalties and will be prosecuted to the full extent possible under the law Login window Note A user with Supervisor status has access to all the features and options in the program and can set user names and passwords using the System Options The User Manual and Administrator s Manual deal fully with the role of the System Supervisor and whilst this manual assumes the user has Supervisor status this may not be the case in practice and you should consult your Supe
103. rtfolio represents a collective group of properties then the portfolio functions rely on certain important data settings 1 In the portfolio record ensure the valuation date is correct as it will be used in all valuation and cash flow operations regardless of individual property settings 2 If you wish to ensure individual property records in the portfolio hold the same valuation date click the Align properties to portfolio date button c Portfolio Training Portfolio File Edit Tools Help E al Mew Co Delete 9 Q3 Wy Assumptions or Yaluation c Cashflow Security Fl Portfolio Fees Details Portfolio valuation date Portfolio name Training Portfolio valuation date 28 08 2008 File Ref Ma Manager Contact Owner T Contact Ma EO nen oer Property Cand tenant template hen adding new records Category Template default tard k I le Apply the System level default Template Currency General Default GBP Pound Sterling Scenario default Default Currency Scenario 2005 r Align Equity 96 for properties Align properties to portfolio currency settings Reset property assumptions to default The abowe currency options are only used when the system is valuing or Reporting at Portfolio level against properties defined in multipla currencies val Date 25 09 2008 Default Assumptions Values Gross Value EU Met Say Value 0 Portfolio Actions From the portfolio record or Command Centre th
104. rvisor if you need clarification on specific issues Without Supervisor intervention the program can be entered through the login dialog with the default setup 1 Type A in the Username field 2 Type A in the Password field 3 Click the OK button After logging into the program you will be in the Command Centre window This is main location from which most activities start or take place An understanding of the format of the data 1s necessary to get a clear picture of how all the component elements fit together The structure is best imagined as a tree with the main roots being the SYSTEM level that deals with initialisation and defaults branching out into the PORTFOLIO level followed by then PROPERTY and TENANT levels SYSTEM Security Defaults Assumptions PORTFOLIO Assumptions and Overrides Valuation Cash Flow Analysis Reports PROPERTY Assumptions and Overrides Tenures Costs Groups ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 4 Chapter 1 Introduction Valuation Cash Flow Analysis Reports TENURES Freehold Leaseholds Ground Leases and Ground Rents TENANTS and UNITS Occupiers and Vacancies Floor Areas Leases Rents Costs A Ca H IE IO I l1 we mewes Y Y E 1y y CA CA Bw p LL A r Weus v v Y y 1 l1 CA Table showing basic operations at each level At each level there are sub branches and common shared functions and these will be evident as you go t
105. s net of revenue costs E Use tenant rental value if tenant rent is zero Valuation date 28 09 2008 As and When is not compatible with Gear ERY Passing 8 Next click the Valuation setup tab and select Deduction from gross income from the Basis drop down list This will reduce the Net Rental Income by the appropriate amount of the calculated ground rent 9 Since there is only one tenant we can select percentage based on tenant rental values In a multi tenant property the proportion of ground rent deducted from each tenant s rent for the purpose of the calculations is a matter of choice by the valuer as to the appropriate basis An alternative option would be the separate capitalisation of the ground rent The resulting value would then be deducted from the gross capitalisation of tenants income 10 Close the Ground Lease screen Multi tenure Matters are sometimes complicated when a property is the sum of combined interests where perhaps two adjoining properties have been purchased each with different ownership structures In such cases the Tenure tree is expanded using the right click menu It is important to remember that tenants have a tenure parent even in our simple original freehold example and you must be careful to ensure the correct occupancy structure To add additional tenures you must select the parent and ensure it is highlighted open the right click menu and select New Tenure ARGUS Valua
106. sts Net Value Before Fees Less stamp Duty 1 00 of Net Value Acquisition Agent amp 1 0095 of Net value Acquisition Legal 0 50 of Net value Fees include non recoverable VAT 17 50 Net Valuation 12 744796 10 000096 15 000096 Equivalent Yield Initial Yield Deemed Reversion Yield Total Contracted Rent 20 000 Total Rental Value 30 000 Capital value per ft 0 00 No Tenants Capital Costs Income abel Timing True Equivalent Yield Initial Yield Contracted Total Current Rent 196 000 0 198 000 1 926 2 263 1 131 192 680 Say 192 700 13 6957 10 0000 20 000 1 Initial Annual Amount Discounted Value Repairs 01 Dec 2008 No Amount Set 0 0 AAA Progress 2 5 You can navigate through the report using the button toolbar ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 30 Chapter 7 Lesson 5 Valuation Move tools to move between pages 0900 the Zoom tools Page width zoomIn Zoom Qut Page width Full Page and the Output tools L Export a Print The output tools allow you to export a report as a file or for use in other applications and to print a report The File menu contains a Printer Setup option The Valuation Log Each valuation result and all supporting information can be stored in a special database called the Valuation Log 1 Following a valuation select the menu item Log Save Log or click on the Save Lo
107. te Set Compounding to Quarterly and Payments to Monthly Finally make sure the Interest rolled up to end switch is off otherwise all interest will be accumulated at the end of the cash flow Other loans Mortgage m To create a Mortgage or amortised loan add a new Finance item as before and type 60 in the Capital 9 field Select Mortgage from the Lending Type drop down and type a name and interest rate in the schedule All other fields are defined in the same way as a simple loan except for the Interest rolled up to end flag that is not available here Other loans Equity l Ze 3 Similarly add a new loan as above In the Capital field type 20000 as the equity investor s capital Fields previously unavailable are now enabled to set up an equity partner s input These are the Equity at end of DCF flag with its associated input field and the Equity on monthly balance field Set an interest rate in the schedule This will act as a basic return on equity capital to be extracted out of tenant income To represent a lump sum of the profit at the end of the DCF tick the Equity at end of DCF box and type 100 so that the investor retains 100 of the profit Other loans Auto regulating I This special purpose loan uses available income in prior months to reduce the debt balance and to specify the sum or percentage that will be retained in the cash flow Set the Capital to 100
108. tion Capitalisation version 2 50 Step by Step Guide 40 Chapter 9 Lesson 7 Tenure Complex tenures The structure of multiple tenures can get quite complex Valuation Capitalisation uses a tree construction to show this ca Freehold Y 4 Sub Headleaze 1 U 4 Freehold E 4 Base Ground Lease e y Sub Headleaze 2 U ARGUS Zone Disconnected User 4 Concurrent tenures are added vertically for properties that comprise several head interests Sub tenures are added in lower level steps so that ground rent paid out from these tenures is received as income by the superior interest In the above example we see two freeholds and one head lease at the base or root level with two sub headleases one attached to one of the freeholds and the other to the base leasehold The design is tiered so that it that can be nested downwards Checking ground rent figures As a quick reference to the effect of a ground lease deducted from the tenant s rent you can inspect the tenant s personal valuation sheet 1 In the Command Centre select the tenant whose parent tenure is Leasehold 2 To open the tenant s Rent Schedule you can click on the Rent Schedule button 3 When the Rent Schedule appears click the Tenant Valuation tab and scroll down to view the valuation calculations The valuation process is seen with the gross tenant rent less the deduction based on the ground lease settings
109. tive dictionary translations are available Customising the Button Toolbar Right click on a button in the toolbar and select the More Commands option This opens the ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 2 Getting Started 7 car Customise E Commands Options iv Quick amp ccess iv Assumptions 1 On the Toolbars tab select the toolbars you wish to be visible 2 With the Commands tab open you can drag items to the toolbar in order to rearrange the buttons on the toolbar 3 The right click menu item Minimise the Ribbon allows you to specifically show or hide the toolbar itself 4 In some of the windows you can also move the toolbar off the top line and make a floating toolbox It is possible to use the mouse to select and drag the toolbar off the bar at the top of the screen to any other position Once it is in this mode the toolbar can be resized by dragging the borders np Add QU Delete aa a Costs aj Tenants 2 Assumptions cr Valuation rt Uy kad alat cs kz a 0 re E EE um K The toolbar can be replaced at the top of the screen by dragging the header on to the top again ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 8 Chapter 3 Lesson 1 Properties CHAPTER 3 Lesson 1 Properties ARGUS Valuation Capitalisation has the capacity to store any number of properties depending upon the limit of your hard disk Properties a
110. ts 1 In the tenant record click the Valuation tab and click the Fixed Value box All fields are then greyed out and a new field appears for the fixed figure value 2 Reports valuations and cash flows now apply the fixed figure Fixed Reversion leases In some circumstances the value of the reversionary component of a renewed lease might need to be a fixed figure For example an agricultural holding with a tenanted farm that will revert to a fixed agricultural land value when the current tenanted lease expires 1 Click the Renewal tab in the tenant record 2 From the drop down menu in the Rent basis field select Specific Value 3 Two new fields appear enabling you to enter a fixed sum as a reversionary value and a discount rate when evaluating for the present date Option leases In many cases both the landlord and tenant may agree to incorporate Break Options in leases These can be favourable to the landlord tenant or mutually When an option is exercised the lease is terminated and the program treats the situation as a lease expiry with consequent application of post lease voids and reletting periods 1 To set Break Options in the tenant record click the Breaks Schedule button to open the Breaks Schedule cae Breaks Schedule Warehouse HQ facility Date ALTAE Landlord Tenant 21 07 2002 Landlord Tenant C 3rd 21 07 2007 Landlord Tenant C 4th 21 07 2012 Landlord Tenant C Sth 21 07 2017 L
111. using the Cap Groups 58 Tenants Lease 16 Lease Renewal 18 Lease Type 16 Name and Status 15 Rent 16 Rent Payment Dates 16 Setting up a tenant record 15 To add a new tenant 15 Valuation Set up 18 Tenure 12 Adding tenures 37 Change Tenure Type 37 Complex tenures 40 Multi tenure 39 Tenure listing 37 The Rent Fields 28 The Tenancy Schedule 56 The Value Fields 28 The Yield Fields 28 Toolbar Customising the Button Toolbar 6 Traditional valuation 27 U User Interface 2 User Preferences 6 Username 2 3 V Vacancies 52 Valuation Assumptions 24 Valuation Date 9 11 Valuation Log 30 Viewing the valuation results 27 Voids 18 Current Void 18 Expiry Void 18
112. w button Open the tenant record and type a suitable tenant name in the Name field Nothing more is needed on this page at this time Click on the Lease amp Rent tab Example 1 Short term lease Set the start date for the lease to the twenty first of July 2005 21 07 2005 Set the Years field to 3 for a 3 year term Type zero in the Market Rent Review cycle Yrs field so there are no rent reviews The Review Type will not matter in this case On the rent section click the Payment Dates label to select Monthly from the top drop down box In advance on day 1 of the month Type 30000 in the Current rent field as the annual rent currently being paid The Holding over field is unused since the valuation date is within a valid lease term If our valuation date had been set within a re negotiation period between leases the Holding over field becomes available to define any income received during that time Since we have no rent reviews in the lease the Outstanding RR option is ignored If the valuation date was just after an open market rent review date and the rent has not yet been agreed an assumed rent can be entered based on the probable rental figure Next we need to define market rent We could easily enter a figure for market rental value but we shall use the Area schedule to define the floorspace and attach rental rates Click the Rental Value label or Areas button to open the Area Schedule ARGUS Valuation
113. w kz Library C Delete 5 Print E MA e D 19 Enable in DCF Enable in Trad Val Apply to all Tena Type of cost item Cost Starts Repeat kH Property Bl Acquisition Costs n Stamp Duty Acquisition Fee pu d Acquisition Agents F Acquisition Fee i Acquisition Legal Fe v Acquisition Fee Freehold j B Acme Chemists Ltd Capital Expenditure 28 09 2008 No Repeat Name Accounting ref G epairs Category Scope Type Category not in list Enable in DCF Capital Expenditure Enable in Valuations pra Apply to each tenant Receipt 7 Income Valuation Date 28 09 2008 Property not Elected For VAT 17 5000 2 The Category field is blank Add a category by typing Building Costs in the Category field and press the Add Insert category item button on the left hand side just below it The Building Cost category is added 3 The Scope section should have both Enable in DCF and Enable in Valuations options checked on This means the cost will be used in both processes 4 Do NOT click Apply to each Tenant because if we add another tenant the cost will be duplicated ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 22 Chapter 5 Lesson 3 Costs 5 In the Type section ensure Capital Expenditure is selected and the Receipt Income box is not checked Cost Details page cr Costs Schedule File Edit Help i4 dEl RM New ds Library C Delete a Print y ee Definitions amp Scope Timing
114. windows 5 Interest Only loan 45 Internal Rate of Return 35 L Lease 16 Expiry Date 16 Start Date 16 Term 16 Lease Schedule 51 Lease Type 16 Leasehold Checking ground rent figures 40 Geared Ground Rent 38 Ground Lease Editor 38 Valuation 39 Login window 2 3 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide INDEX Menus 4 Mortgage 46 Multi user security control 42 O Option leases 54 Outstanding Rent Review 17 P Password 2 3 Payment Dates 16 Performance Analysis 63 66 Portfolio Adding a new portfolio 8 General usage of a portfolio record 42 Portfolio Actions 43 Portfolio record 41 Portfolio security 42 Portfolio View 41 Specific usage of a portfolio record 43 Valuation Date 9 Present Value 35 Projections Analysis 63 Property Adding a new property 10 Address 11 Buy Sell Extras 12 Rent input view 12 Setting up a property record 11 Tenure 12 Valuation Date 11 R Receipts 20 Re letting Probability 18 Renewal 18 Rent 17 Payment Dates 16 Rent Analysis 63 70 Rent Free 18 On renewal 18 Rental Growth 33 Rental Value 17 Revenues 20 Running Costs 20 Screens 2 Security 42 Sorting property records 13 Stamp Duty 21 Starting point 5 Stepped Rents 51 Support 1 ARGUS Valuation Capitalisation version 2 50 Step by Step Guide 78 Tagged 12 16 41 Tenancy Schedule Filling in the record data 57 Generating multiple tenants 58 Seeing results 59 Using Rent Groups 57 Valuing
115. xed values or sum of numbers over each period On the screen next to the Update button there is an Auto check box switch This forces a refresh of the screen when something is changed Set this ON Use Valuation az Py i Update value Ensure the period of analysis is set in the Years field to 5 The viewing period frequency is set by the field below the Years field Set this to Annual for a yearly cycle We can now make a choice between Money Weighted or Time Weighted analysis This relates to the performance statistics for Total Return and Capital Employed Money Weighted applies an annual averaging for income over each cycle period Time Weighted compounds the monthly figures The application of the special options below the first section provides variable views of the data for including or excluding fees and costs Leave these on the default settings for now You can click the two graph buttons on the toolbar for 1 Amount graphs and 2 Percentage graphs To print the schedule information select the menu item File Reports Alternatively click the Reports button on the toolbar ARGUS Valuation Capitalisation version 2 50 Step by Step Guide Chapter 14 Lesson 12 Analysis 65 CATEGORY ANALYSIS This is a breakdown of data based on physical attributes displaying results in graphs and schedules with a set of Views and variable Category types As previously mentioned this is a portfolio level function based on t
116. y 4th quarter day Set in NATALIA file 2 In the Current Rent field enter a rent of 20 000 Do not type the currency or commas If the label to the right of the field reads per annum then the 20 000 will be the annual rent Rent Payment dates English Quarter days 20 000 9 9 E Outstanding RR 30 000 LINDE Jad Geared ERY Indexation Group Mot Indexed Current oid months Expiry oid months Rent Free months 3 Ignore Holding Over for now Our assumption is that this is a valid lease spanning the valuation date Where the valuation date falls between a lease expiry date and a future renewed lease any rent passing between these dates is represented in the Holding Over field 4 Ignore Outstanding RR Rent Review for now This is relevant only where the valuation falls after a rent review date and the new rental has not yet been agreed The assumed backdated rent can be entered in this field for valuation purposes 5 Rental Value is the market rent that can be derived from a single calculated or rough figure or detailed in the tenant s Area Schedule We will look at this shortly but for the meantime ensure the ERV Mode field is set to Manual Type in 30 000 Remember no currency symbol or commas 6 The following fields can remain as they are but note that the Geared ERV option allows definition of a percentage of Market Rental Value to be applied at reviews 7 T
117. y Valuation Standard Eel Property Summary Valuation Report ndard Single Line Tenancy Schedule Standard Valuation Log Report Standard Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Argus Software Summary area analysis report Detailed tenant area schedule report Valuation by Category Report Detailed Cost Report Property Type Detailed Cost Report Property Tenant Detailed valuation cost schedule Multi Line Tenancy Schedule report Standard Valuation Report Portfolio valuation summary Property summary valuation report Tenany schedule report printing one row for each tenant Prints details of values logged over time for properties Property Fictitious Property 9 Fictitious Place Training Street Ambridge Borsetshire AM1 3BS 4 Double click the report name or select the report name and click on the Preview button cae Report Preview Detailed Valuation Report i File View Help Export a Print Page Width REPORT Property Valuation gt T ZoomIn A Zoom Out Page width Full Page Override Fictitious Property 9 Fictitious Place Training Street Ambridge AM1 3BS Report Date Valuation Date 28 September 2008 28 September 2008 File Ref No Region Other Description Notes Assumptions Valuation Tables Annually in Arrears Valuation Gross Valuation Capital Co

ARGUS Software: ARGUS Valuation

Contents

Download Pdf Manuals

Related Search

Related Contents