Surplus Property

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Surplus property is a drain on the business. Holding property of any sort carries a daily cost and risk. Costs include management and security costs as well as the lost opportunity of spending the money and management time on the core business.

If it is freehold property it is a matter of balancing realisable value now with the net benefits from disposing of the property at some point in the future. Too often the prospect of an increase in the capital value of a property, driven say by a change of use, makes decision-makers oblivious to the total costs and risk of realising the final capital sum. Objectivity and pragmatism is important to look at the total cost, including diverted management time, of a project compared to what could be achieved now.

For a leasehold liability property it is all about cost and risk management.A business needs to know the gross and net liability of their surplus leases to allow it to make decisions in the context of the management of the business. An objective assessment of costs and risks per property provides a clear view of the overall risk the business faces from these liabilities. With that information a platform can be created for mitigating the costs and risks, including a robust decision-making process, on a property-by-property basis or for Leasehold Liability Transfer of the portfolio.
This requires an understanding of accounting requirements, the market place and an ability to develop various mitigation strategies.