Loan Security Valuation

Question 1

L1

Where is Loan Security Valuations in the Red Book?

Answer 1

VPGA2

Question 2

What does VPGA 2 state?

Answer 2

Gives valuations that are used by lenders for secured lending.

Question 3

Is VPGA2 mandatory?

Answer 3

No - just guidance

Question 4

L2 - Gateway

How did you calculate the WAULT?

Answer 4

1. The rent for the remainder of the term

TIMES

2. Unexpired Lease Term

DIVIDE BY

3. The total Annual Rent

Question 5

L2 - Gateway

What were your threats in you SWOT analysis?

Answer 5

• Potential volatility due to Global economic circumstances which may have a material impact on Rents and - - Capital Values
• Tenant failure
• Tenant vacating

Question 6

L2 - Gateway

Did you have regard to any other VPGA?

Answer 6

VPGA9 - Portfolios

Question 7

ALL

How did you advise if the property was suitable for the loan if you didn’t have sight of the loan terms?

Answer 7

I assumed a prudent LTV of 60% - 70%

Question 8

What Case Law are you aware of for Loan Secuirty Valuations? (10% margin of error)

Answer 8

Singer & Friedlander v John D Wood & Co

The court held that a permissible margin of error for valuers is generally 10% either way