Portfolio Management Whats on the Radar? London l Geneva l Zurich - - PowerPoint PPT Presentation

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Portfolio Management – What’s on the Radar?

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1: Group re-organisations & AGAs

Landlord & Tenant (Covenants) Act 1995 introduced ‘authorised guarantee agreements’ (AGAs) L T1 AGA T2 T1 T2 AGA T3

assignments

Lease

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2: Guarantors & AGAs

L T1 AGA T2 T1 G ‘SAGA’

Lease Guarantee

G

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3

T1 T2 T1 G1 ‘SAGA’ G1 G1 ‘GAGA’

even if ‘voluntary’ Good Harvest v Centaur (2010) K/S Victoria v House of Fraser (2012)

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4

G1 T1 G1

even if ‘voluntary’ EMI Group v O&H Q1 Ltd (2016)

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5

T2 T1 G1 (Parent) T1 G1 (Parent)

(GroupCo A) (GroupCo B) (GroupCo A)

House of Fraser case

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6

GroupCo A (strong) GroupCo B (weak) A (GroupCo C) (weak) A A Parent Parent Parent Parent

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Stamp Duty Land Tax – New Rates

Purchase pre - 17 March 2016: Purchase post - 17 March 2016: Share acquisition: Purchase Price Percentage Rate SDLT Due £30,000,000 4% £1,200,000 Purchase Price bands Percentage Rate SDLT Due Up to £150,000 0% £0 £150,000 to £250,000 2% £2,000 Above £250,000+ 5% £1,487,500 Total SDLT Due £1,489,500 Purchase Price Percentage Rate SDLT Due £30,000,000 0.5% £150,000

Commercial Freehold Acquisition

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Commercial Leasehold Acquisition Annual Rent: £1.5m

Pre-17 March 2016: 10 year retail unit lease with a break clause: Post-17 March 2016: 10 year retail unit lease with a break clause: Post-17 March 2016: 5 year retail unit lease with an option to renew after 5 years: Rent Bands Percentage Rate SDLT due Up to £150,000 0% £0 Above £150,000+ 1% £123,249 Total SDLT due £123,249 Rent Bands Percentage Rate SDLT due Up to £150,000 0% £0 £150,000 to £5,000,000 1% £48,500 Above £5,000,000+ 2% £149,498 Total SDLT due £197,998 Rent Bands Percentage Rate SDLT due Up to £150,000 0% £0 £150,000 to £5,000,000 1% £48,500 Above £5,000,000+ 2% £35,451 Total SDLT due £84,951

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Minimum Energy Efficiency Standards (MEES)

1. What does MEES mean for you:

• From 1 April 2018 it will be illegal for a landlord to grant a new letting of a

commercial property that has an Energy Performance Certificate with an F or G rating .

• From 1 April 2023 this will apply to all lettings including renewals

2. The recent ‘Green to Gold’ Summer 2016 Report by Bilfinger GVA has revealed some interesting statistics:

• 57% of respondents have assessed their portfolio’s risk profile in regards to

these regulations

• 98% of respondents think that MEES will lead to increased capital expenditure
• 93% of respondents think that MEES will have an impact on pricing

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Minimum Energy Efficiency Standards (MEES)

3. What should you be looking out for: From a Landlord perspective:

• Carry out a review of your portfolio to determine how much of your portfolio is

at risk

• Sell those poor performing assets or invest to improve their performance
• Consider the extent to which these obligations can be passed on to your

tenants either in existing leases and/or in new leases From a Tenant’s perspective:

• What does your current lease provide?
• Is this an opportunity?
• Should you consider exercising a break/not renewing and move to a more

efficient building

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Paul Brecknell Partner

Tel: +44(0) 207 597 6037

paul.brecknell@withersworldwide.com

Contact details

James Martell Partner

Tel: +44(0) 207 597 6664

james.martell@withersworldwide.com