Surplus property is a drain on an organisation, acting as a brake on its development. Holding unwanted property carries risk and a daily cost. The risks range from missing break options to illegal occupiers all of which contribute to higher holding costs and can consume management time.
If it is a freehold property there is a balance between realising any value now to de-risk matters against holding longer term to try and increase the capital value through the likes of change of use. There is a need to be pragmatic about timing, costs and risks of continuing to hold something that is non-core compared to a prompt disposal and focussing back on the business.
Leasehold property is all about liability and risk and how to mitigate both. As the clock to the lease exit ticks down there are fewer options available and hence speed of decision-making is vital to remove the liability without delay..
In both cases the disposal process needs to focus on the key attributes of risk and cost, it is rarely about value. The first stage is to have the right team in place. That includes a solicitor who knows the issues the property has and an agent that understands that delay removes value, it doesn’t increase it. Managing the disposal process with assessing the gross and net liability per property and with that having clarity on what the alternative solutions might cost is important. Understanding the landlord for the property and their objectives will help with the subsequent decisions especially if proposed deals are being frustrated by a landlord. Getting the agent marketing and finding the tenant, then the solicitor to have prepared for sub-letting etc with completed enquiries all needs managing to drive through the deal. Each property will require a different mitigation strategy which the manager should produce.