Research and analysis, before anything else
When a property opportunity comes to our attention we instigate initial checks to establish its suitability before a formal proposal is offered to our clients. This is the first layer of safeguards designed to exclude unsuitable options. Usually a minimum of six key considerations are taken into account:
- Location - we review the advantages and the possibility of future capital growth. We also consider the potential value of alternative uses.
- Covenant strength - this only applies to commercial properties as Medical Centre rents are reimbursed by the Government.
- Unexpired lease term - can dictate whether the proposition is viable and whether satisfactory lending will be likely or restricted.
- Lease terms - can vary and may be onerous. Eg Full Repairing and Insuring, Internal Repairing and Insuring or Tenant Internal Repairing. We also examine whether the lease has fixed RPI uplifts to enable rental growth.
- Alternative use - we examine if the deeds have restrictive covenants or if the building is listed and we evaluate the potential value of any alternative use.
- Price and yield profile - we balance the reality of cost against future gains. We project capital growth and consider income growth from potential rental uplifts.
Following this assessment, clients are advised of the sum they should invest. At this stage a formal bid will be submitted for the property.
The Oakdeane structured acquisition process
Following initial analysis, if the property is deemed to be a suitable investment opportunity, it is proposed to lenders for their consideration of terms.
A Purchase Account spreadsheet will be created to show cost projections and the amount of purchase investment required for acquisition.
The spreadsheet content will be clear and transparent. It will set out the cash position going forward, based upon our experience and knowledge of running costs.
Please note, though generally accurate, the spreadsheet details may vary slightly depending on the success of controlling specialist professional fees, during the acquisition. Also, as some Lenders quotes will be based on flexible ‘gilts’ rates, which move on a daily basis, the lending rates may also be subject to slight adjustments.
Acquisition process – standard support services
Each investment acquisition will be analysed by Oakdeane and by its external team of specialist professional advisors.
Searches, valuations, negotiation, legal matters and financing are all handled by Oakdeane and its advisors as part of the integrated delivery process.
Following acquisition, most clients entrust Oakdeane with the management of their property.
Once a property is acquired, Oakdeane will provide, where requested, hands-on management services dealing with rent collection and any other routine issues.