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In the last 40 years, the UK valuation profession has relied heavily upon the “hardcore” or “layer” method for valuing reversionary properties (under‐ and/or over‐rented). This approach is not used elsewhere in the world and, prior to the rent freeze of the 1970s in the UK, it wasn't a principal method in the UK. However, valuers today, particularly in London, use this method exclusively despite it producing erroneous answers in certain cases (over‐rented; non‐normal cash flows). This paper seeks to address these issues.

This paper undertakes an indicative pilot study of valuation models used in the valuation of reversionary properties in the downturn of 2008‐2012. The study, whilst small, provided an insight into the techniques chosen by valuers to look at properties where the risk of falling rents, voids and prolonged vacancy is relatively high.

The paper looks at approaches, methods and techniques for property valuation. It identifies that the determination of the UK valuation profession to cling to familiar valuation models, no matter how inappropriate, may lead to mis‐valuations. Alternative, more appropriate, implicit and explicit models are suggested.

It is the opinion of this paper that the UK property market is now so different from the market that prevailed when the layer model was introduced that it no longer has a place in the valuers' armoury of methods to use. This paper looks at a number of case study examples and offers other (more appropriate) options for valuing reversionary interests. In particular, the findings from the study will be useful for valuers to be better able to identify the critical points in the expected cash flow and thus be better able to reflect the appropriate risk in the valuation figure provided.

Purpose – This paper intends to respond the question that comes up to CRE managers when they consider the outsourcing technique for their CRE management and portfolio. The question, if it is possible to capture in the outsourcing contract sufficient flexibility to meet the changing needs of the business and add value, addresses the existing debate on flexibility arguing the suitability of the outsourcing structures for corporates portfolio. Design/methodology/approach – The paper undertakes a methodological analysis, considering the main outsourcing deals in the UK and continental Europe and discussing the main theories on management outsourcing. Theories of flexibility of CRE portfolios are considered and the main characteristics of the new REPs discussed. Findings – The paper finds that it is possible to capture in the outsourcing contract sufficient flexibility to meet the changing needs of the business and add value because a contract can capture all the flexibility desired and iit would add value as the properties would be used efficiently. Two outsourcing contracts in the UK are explained in two case studies, which support this. Originality/value – The paper suggests methods to outsource CRE portfolios and obtain adequate flexibility to add value to shareholders.

The majority of investment property is valued at a point after the original letting or agreed market rent (MR) at review. This briefing aims to look at the valuation of “over‐rented” property. That is the term used to describe a property where the current rent passing exceeds the current market rent.

This briefing looks at the valuation of over‐rented property by discounted cash flow and provides an example of setting up a flexible template by spreadsheet.

The spreadsheet template allows the valuer to value the over‐rented cash flow by modified or full DCF.

The flexibility of the template allows the user to change the length of the lease, the rent reviews and it calculates the term until the rent passing is exceeded by the estimated market rent.

The technique is not original but the spreadsheet template helps to explain the profile of the cash flows derived from over‐rented properties.

In a previous paper Sykes derived a mathematically consistent investment valuation model for freehold properties which he referred to as the Rational Model. This new model overcomes certain serious failings of other methods commonly in use. The present paper readdresses the arguments of the earlier paper in a manner rather more familiar to a practising valuer and compares current methods of valuation with the Rational Model. It is also shown that the Rational Model can be simply adapted for the valuation of leasehold interests without resorting to a separate (and usually quite artificial) ‘sinking fund’ rate.

Reviews ways in which sunk costs, particularly those embedded in property ownership, can affect programmes of selective closure of retail outlets. Three examples from UK retailing in the 1990s – Littlewoods, the British Shoe Corporation and Do it All – are used to demonstrate that sunk costs have been significant in delaying the execution of rationalisation programmes, and have led to substantial “write‐offs” of property assets in company balance sheets. Certain conventions and inflexibilities in British property law and management are identified as key influences. There is shown to be a need for further research into corporate closure programmes and their relationships with property and locational issues. Some tentative conclusions for corporate retail strategies are discussed.

A preceding paper by Baum examined the valuation of reversionary freehold interests, distinguishing between conventional and modern approaches. This paper applies the same approach to the valuation of leaseholds, and falls into two parts. Part 1 examines conventional leasehold valuations and the criticisms that may be made, concluding that both dual rate and single rate conventional valuations should be abandoned except in limited circumstances. Part 2 identifies three alternative modern approaches — real value, rational model and DCF — and compares their use in three general variations of leasehold valuation. The results are compared, and recommendations for their use are made. Finally an overview of the application of modern approaches to investment property valuation is presented.

To share the author's experience in advising not for profit occupiers on relocation strategy and implementation and to draw conclusions that apply across all occupier sectors.

An examination of the issues impacting the charity sector's selection of operational property with a pros and cons analysis of the benefits of ownership versus leasing. Policy implications are addressed by way of conclusion.

Identifies a tendency for decisions to be taken without the support of a financial framework and to be biased towards an ownership approach, following investment rather than strategic objectives. The need is highlighted to prioritise operational needs and treat property as a business resource.

The paper offers an insight into how property decisions are reached in the not for profit sector, an area not widely addressed by analysis or research. The paper is useful to CRE managers in highlighting policy implications and best practice for property selection generally.

Some companies see property as a strategic resource that can add value to corporate performance; others view it as a commodity that more often acts as a barrier to core business activities. In both instances, insufficient forward planning often prevents companies from making the most of their property portfolios and avoiding unnecessary costs. This paper looks at how operational property portfolios can be classified according to their strategic significance to the business and, specifically, how occupiers can more closely align property holdings with core business objectives by differentiating between ‘core’, ‘tactical’ and ‘(semi)surplus’ properties. The paper focuses specifically on the topical issue of flexibility, identifying potential costs and considering whether and to what extent short leases and break clauses are worth paying for. It also contains a large number of practical tips for managing real estate liabilities and making assets perform better.

One of the curious features in the literature of property valuation is the lack of concern for general issues of valuation. The most obvious deficiency is the absence of serious discussion on risk‐adjusted discount rates, but another important and neglected issue is the analysis of leases as an investment decision from the lessee's viewpoint.

Examines the valuation difficulties that have arisen as a result of the falls in rental value in the UK property market during the early part of the 1990s. Considers overage cases being caused by the rent passing being above rental value on a normal rent review pattern because of a letting on an abnormal review pattern. Comments on the straightforward case of a fall in rental value since the last rent revision. Concludes that the growth explicit model is a better and more consistent methodology for the market valuation of investment property.