Purchase and Sale (Level 2) Flashcards
Explain a factor which impacts upon sale value/sale terms.
- Location
- Age of building
- Use class
- Restrictive covenants
- Design for purpose
- Sustainability standards
Explain an example of when you have provided marketing/sale strategy to a client - Leasehold Disposal, Birmingham
Leasehold Disposal, Birmingham
- Advised my line manager that private treaty was most appropriate method of sale because:
- Time pressures to let the unit
- Wider market audience
- Value of the unit
- Size and specification
- Recent market transactions
- Advised on the use of a sole agent – due to budget requirements and cheaper than joint/multiple agency
- I reviewed recent lettings transactions and advised my line manager on the expected offers we should anticipate receiving
Talk me through an example of when you have purchased/sold a property - Freehold Disposal, PBSA Portfolio
- Appointed a sole selling rights agent with the JV partner
- Initial internal sale launch to discuss disposal strategy and required timelines
- Informal 2 Stage Tender Process:
- Targeted group of bidders to target
- Set timelines to be achieved
- Prepped the first stage data room included the following:
-Technical drawings
-Legal documents and agreements
-Rental schedules from previous years - Launched first stage bid process
- Answered clarifications from bidders
- Final round stage 1 offers called for and assessed
- Prepped shortlist for round 2
- Launched Stage 2 – providing additional documentation where requested
- Called for final bids Stage 2
- Informed parties of successful bidder
- Sale contract negotiation
- Contracts exchanged
Freehold Disposal, PBSA Portfolio - How were collateral warranties relevant to the sale?
Collateral Warranty - A collateral warranty is a contract that sits alongside the underlying contract, such as a building contract or consultant appointment, and grants rights to a third party which can be sued upon.
Relevant to the sale as it provides an additional layer of security to the purchaser that the sub-contractors appointed by the building contractor to carry out the works have fulfilled their contractual obligations or are liable to any breaches of contract by the purchase – provided protection against any potential defects
Freehold Disposal, PBSA Portfolio - How did you ensure the reliability of rental growth projections?
- Extensive review of the wider and local pbsa market
- Based on the rental growth from previous years
- Sought advice and confirmation from the selling agent
Freehold Disposal, PBSA Portfolio - Which method of sale was used?
Informal Tender
Used this method because…
- Time – weren’t any under time pressures to dispose of the property
- Portfolio Sale – large amount of capital required for purchase so there would need to be a targeted marketing approach to purchasers, limited number of parties with the financial capabilities
- Due Diligence – significant amount of due diligence required needed a formal, organised process for this
- Not legally binding – considering other options as well such as refinancing and did not want to be obligated to sell
Freehold Disposal, PBSA Portfolio - Talk me through the sale process?
- Appointed a sole selling rights agent with the JV partner
- Initial internal sale launch to discuss disposal strategy and required timelines
- Informal 2 Stage Tender Process:
- Targeted group of bidders to target
- Set timelines to be achieved
- Prepped the first stage data room included the following:
- Technical drawings
- Legal documents and agreements
- Rental schedules from previous years
- Launched first stage bid process
- Technical drawings
- Answered clarifications from bidders
- Final round stage 1 offers called for and assessed
- Prepped shortlist for round 2
- Launched Stage 2 – providing additional documentation where requested
- Called for final bids Stage 2
- Informed parties of successful bidder
- Sale contract negotiation
- Contracts exchanged
Leasehold Disposal, Canning Town - How does forward funding work?
Forward funding is an investor purchasing a development that has not yet been built
A popular model of investment as the funder can achieve a better yield than a stabilised asset – cheaper value but they take on the construction risk
Leasehold Disposal, Canning Town - Which of the four forms of sale did this follow?
Leasehold Disposal, HQ4
- Used an informal tender process
Used this method because…
- Time - weren’t any under time pressures to dispose of the property
- Price – large amount of capital required so there would need to be a targeted marketing approach to purchasers, limited number of parties with the financial capabilities
- Not Legally Binding – still a lot of uncertainty with construction/project completion did not want to be in a position to be obligated to sell – also timing in the market
Leasehold Disposal, Canning Town - What kind of interest – if any – was being sold?
Long Leasehold Interest
- Transfer of Linkcity’s long term leasehold interest granted under the development agreement with the London Borough of Newham
- London Borough of Newham retaining the freehold
Leasehold Disposal, Canning Town - What happened next?
Linkcity invited final offers
Reviewed all bids – selected preferred bidder
Now negotiating the funding agreement
