A smart approach to commercial assets

Transcription

1 A smart approach to commercial assets Working in partnership with

2 Today s speakers Bob Agnew Partner, Head of Commercial Real Estate Croftons Solicitors Gareth Kreike Managing Director Longden & Cook Real Estate Jonathan Drake Service Director Business Development Salix Homes

3 Opportunities when RP is the OCCUPIER Bob Agnew, Croftons, & Gareth Kreike, Longden & Cook

4 RP as occupier: break clauses Potential to Reduce rental overheads Potential source of extra revenue Example: 10 year lease Annual rent 50K Break option at end of year 5

5 RP as occupier: break clauses Exercising the break option Terminates lease Often used when premises are surplus to operational requirements Be careful with conditions!

6 RP as occupier: break clauses But we intend to remain in occupation RPs: strong tenant covenant = good for the money, valuable to landlords Consider selling break option back for a premium Dependent on market, not always suitable Benefits: For landlord: tenant retained, reliable income protected, enhanced property value For tenant: free cash with zero impact on operations

7 RP as occupier: lease re-gears A what? Renegotiation of lease during current term, often linked with extending occupation period. Opportunity to leverage value as a strong tenant covenant. Benefits: Landlord: nervous of losing a good tenant, rental void, and liability for business rates = keen to secure new lease Tenant: committed to remain, earlier certainty of prolonged occupation, negotiate favourable incentives (eg rent-free period) Look at re-gear two years before lease term expiry

8 RP as occupier: sale & lease-back Less common, but an opportunity for some RPs. Applicable: Where you own premises Money/equity tied-up With RPs seen as strong tenants, consider sale of freehold subject to a favourable leaseback to RP Release substantial capital sum, albeit with ongoing rental liability.

9 RP as occupier: sale & lease-back Issues? Not suitable for all particularly if the premises already secured to a lender But Can be a useful source of capital, with no disruption to operations

10 Established 1891 Specialising in the management and valuation of commercial and residential property So much to talk about and so little time!

11 RP as occupier: dilapidations What are your repairing obligations? Put and keep When does the lease expire? Are you intending to vacate? Limitations on the potential claim What actions should you consider? Costs

12 RP as occupier: rent reviews What are they meant to achieve? How do they work? Legislation? Agree/disagree Third Party Determination Costs

13 Managing a commercial portfolio Jonathan Drake, Service Director Business Development, Salix Homes

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15 Shop portfolio what it isn t

16 Shop portfolio what it is

17 Shop portfolio what it is 45 shops 15 voids 3 illegal assignments Lapsed leases Tenancies at will Community assets Potential of 102,000 income p.a.

18 What have we done so far New valuations Lease renegotiations Empty Homes property fund - 170,000 (x6 empty units) Illegal assignments Payment plans Legal actions Let 3 units

19 In conclusion Sweating the assets vs

20 Opportunities when RP is the LANDLORD Gareth Kreike, Longden & Cook, & Bob Agnew, Croftons

21 RP as landlord: property management Repairing and other obligations of the Parties Is there a lease in place? Do you have a copy? What is the rent? Is it being paid? Are there any arrears? Arrears collection? Is it occupied? If so by whom? When was it last inspected?

22 RP as landlord: service charges What are Service Charges (typical mixed use building)? How should they be calculated? What does the lease say? Collection Do you need to update your commercial leases to reflect reality or commercial sense (or both)?

23 RP as landlord: outsourcing Commercial Property Management and Service Charge operation does it fit your organisation? Should you outsource? Reduce costs, improve efficiency and effectiveness

24 RP as landlord: valuation Ensure that you are maximising your assets Diarise rent reviews always aim for even a modest uplift Use specialist valuers for rental value advice and implementation of rent review procedures Portfolio valuation how much is the commercial element of your property portfolio worth?

25 RP as landlord: reviewing leases Streamline your commercial property management Are your leases readily accessible and up to date? Are all key dates known/noted? Typical issues Repair issue with H&S implications: RP doesn t know who is responsible out of caution, RP arranges and funds the repair Mixed bag of tenants, different leases, inconsistency of obligations = difficult to manage

26 RP as landlord: reviewing leases We can review your leases, creating a dynamic spreadsheet, highlighting key dates and responsibilities Low-cost exercise, and Save unnecessary expenditure, reduce the management time allocated to managing your commercial lettings

27 RP as landlord: adopt a bespoke, house style lease Advantages Consistency of responsibilities Harness internal input to ensure leases reflect organisational needs Maximise recovery of costs on shared items, (eg maintenance of common parts) Much easier to manage, helping preserve and enhance the value of, and returns from, your commercial stock

28 Any questions?

29 Bob Agnew / bob.agnew@croftons.co.uk Gareth Kreike / gk@longdencook.com Jonathan Drake / jonathan.drake@salixhomes.org