Level 3 - Disposal Bristol

Question 1

Tell me about the property?

Answer 1

Grade B city centre multi let office
Recently upgrades reception amenities
Demise was a suite within the building
3,000 sq ft
Perimeter trunking, recessed CAT II lighting, in need of refurbishment
Low rents - £16.00

Question 2

How did you set up Terms of Engagement?

Answer 2

Agreed scope of works
Agreed Fee
Attached CHP
Ensured no conflicts
Written agreement from client

Question 3

What did you note from inspection?

Answer 3

Low quality space but wholly unoccupied
Furniture still in situ
New tenant would need to upgrade demise
Open plan with meeting rooms
Portioned walls suitable for reconfiguration

Question 4

Give me an overview of the lease

Answer 4

2.5 years remaining on term
5 year lease
Passing rent of £16.00 psf
Ability to assign or sub-let demise (subject to LL consent)
Repairing covenant - reinstate premises

Question 5

What is the difference between sub-let and assignment?

Answer 5

Relationships between parties
Sub-let - Act as an intermediary landlord
Assignment - removes involvement

Question 6

How did you market the suite?

Answer 6

Photographs
2 page brochure
Advertised on C&W website, CoStar and circulated to agents

Question 7

How did you get a 6 month marketing void?

Answer 7

Understood that cheap, low quality space took 6 months to let
Other evidence in building took between 4 - 9 months

Question 8

How did you identify this occupier?

Answer 8

Through marketing and circulating to agents
A Bristol agent had an occupier who fit the requirement

Question 9

What rent did you achieve?

Answer 9

As it was an assignment, it was the passing rent of £16.00 psf

Question 10

Why did you client want to dispose quickly?

Answer 10

WFH change need for space
No longer occupying it
Wanted to reduce cost of maintaining - i.e. rents, rates, service charge

Question 11

How did an assignment meet needs of client?

Answer 11

Quick disposal and remove the most liability
An assignment would mean they would not need to act as an intermediary landlord

Question 12

What is an AGA?

Answer 12

Authorised Guarantee Agreement
The outgoing tenant is responsible for the rent and covenants of ingoing tenant

Question 12

Did you require an AGA upon completion?

Answer 12

No
The incoming tenant has a Government covenant, and the LL was happy they would oblige with covenants
Removed all client liability

Question 13

What is a reverse premium?

Answer 13

A reverse premium is effectively a rent free or capital sum paid by the outgoing tenant to ingoing tenant to account for fit out

Question 14

Why was your advice not to give a reverse premium?

Answer 14

Rents had not changed dramatically between lease start and time of assignment
I advised my tenant to leave their furniture in situ instead of reverse premium

Question 15

Did the furniture satisfy the new occupier?

Answer 15

Yes, the new occupier was willing to accept the furniture instead of capital, as they needed to fit out anyway
The furniture was relatively new, with one 1 year of use prior to Covid-19 when it was no longer occupied.

Question 16

Why did you need landlord consent for assignment?

Answer 16

It is a provision of the lease
The landlord must agree to a new tenant taking on the lease

Question 17

How did you save on dilapidation liability?

Answer 17

The incoming tenant took on the dilapidation liability for the remaining period of the lease

Question 18

Tell me about this property?

Answer 18

Point 1 – I was instructed to dispose of a remainder of a lease whereby my client could sub-let or assign the property.
Point 2 – I identified an occupier looking for short-term solution, and advised my client to assign the lease based on their objective of removing liability. I advised an AGA may be required.
Point 3 – I advised my client to leave their second-hand furniture in situ instead of a reverse premium, agreed the assignment with the landlord and saved my client 2 years of occupational costs