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Discover more intelligent advice and news on commercial property, as well as the latest case studies and reports.


We were looking at a difficult investment for a pension fund client a few weeks ago. Great tenant, good location for the industrial use and a new 10 year unbroken renewal lease.

Our “desk-top” due diligence report made a recommendation to submit a bid subject to inspection and the client agreed.

Then it started to go pear-shaped. The inspection revealed a late 1970’s industrial unit in poor condition. No worries –  the agent had marketed on the basis of the lease being full repairing. But on reading the lease it turns out that the repairing liability was subject to a schedule of condition.

Except nobody could find the schedule. The vendor advised that it had never been completed and did not exist. Not good enough.

We negotiated a significant discount to the price which helped, but our concern was that the works required to the property could far exceed the discount given. The fact that the vendor was prepared to give such a large discount heightened our concerns.

We came to the view that this was not an appropriate investment for a pension fund. Perhaps a professional investor or company but not for a hard-earned family pension.

The client was keen to continue – seeing the discounted price as some insurance. We disagreed and said so. In the end the client said to us “we trust you – you decide”.

They could not have paid us a higher compliment.

We strive to give clients confidence in our professional opinion and advice. That can only be done through successful results over many years. We don’t want to buy one investment property for a client – we want to buy ten and more.

We don’t do deals to hit targets – we do them because they are good deals.

So we didn’t do this one.



Business Rates, Tenant Security and the impact on Investment Value

The furore over business rates is gathering speed.  Today government ministers claimed the “revolt” over business rate revaluations was rooted in “distortions and half-truths”.  Sajid Javid called it a relentless campaign of misinformation.

Really?  Well here is just one example.

We look after many properties for investors and that naturally means that we have to build a strong relationship with the tenant.  On one particular property in an affluent area of London, the rateable value has increased from £80,000-£168,000.  As you might imagine the tenant is less than pleased.

The landlord feels exactly the same way. There is a five yearly rent review due later this year.  Where we had been expecting a significant increase in the rent, any increase is now going to be tempered by the 100% rise in the rates liability.

Also, this type of rate increase is bound to affect the tenants operating liability, increasing the risk of tenant default and having an adverse effect on investment value.

Therefore this massive increase in tax impacts both the tenant and the landlord.

If you have read our posts before you will know that we always look to secure investment properties for clients with real potential for both rental and capital growth.  It looks like affluent areas of the south-east may be off our radar if this hike is typical.

As for the distortions, half-truths and misinformation referred to by the government, they should know that figures quoted here are freely available on the government’s own website.  It’s just that you don’t know the address – we don’t want to encourage the tenant do we?


PS. Excellent article by David Smith in the Times on Business Rates on Wednesday 22nd February – Click here to view

Choose Your Retail Investment with Care

January is when every publication carries its own predictions for their relevant market. The property press is no exception.

Although all of the business indicators are positive at present for the end of 2016, the future is deemed to be anywhere from slightly dark to pitch black.

The combination of a “hard” Brexit, rising inflation, a falling pound, rising oil prices and Donald Trump seem to dictate that this year will be extremely difficult.

As regards property, someone should really tell the market participants who seem to be ignoring all forms of doom-mongering and carrying on regardless.

However, there are some real risks to certain sectors.  One of those is the retail investment market, or more particularly the retail occupier market.

Most retailers have reported increased sales over the Christmas period and that of course is very welcome.  Despite this, retailers face many headwinds all of which will combine to reduce the amount of cash they have to spend on rent.  This will limit rental growth.

From an investor’s point of view, it is vital to ensure that if you are purchasing a retail investment, then it is in an area where there is competition for scarce space to enable current and future rental growth.

This is where your agent will come into his own.  You need a proper analysis of demographics, demand, available space and rental value history before committing to any retail investment.

This year, it may be worth considering one of the less glamorous sectors.  Industrial is very much in favour and well located offices are not far behind.

However, according to the Daily Mail, it makes no difference – were all doomed.

Selecting Investments for the Private Investor

Private investors should be wary of believing the press when they report on the commercial investment market.

Reporting in the national media and property press will generally focus on the “fund” market. Here investment deals transact in the tens of millions of pounds.

There is plenty of freely available evidence and analysis for journalists to report on. This enables them to construct articles to suit the political or financial bias of their editors or owners. Although it can make for good headlines, it is not always relevant to the private investor.

Using the principles of fund investment in private investment would be as successful as applying driving techniques from Formula 1 on the road. Sooner or later a car will be coming the other way.

Funds will pursue an investment model to their own specific and sophisticated investment criteria. The press will use the fund market to support whatever news story they believe will sell their publications.  But private investors should focus on what investment will deliver a secure return on their funds.

To do this they will use their own experience or talk to people like us who are involved in the market on a daily basis.

So, despite the doomsday scenarios peddled by the press, we can report that there is still huge demand from private investors. Especially those seeking a secure, long term return on their capital.

There is also a good deal of stock still coming to the market. The problem is that the majority of it is utter rubbish (the technical term is “secondary”), with vendors seeking to take advantage of strong demand to dispose of poor quality assets. Our advice will ensure that you avoid making up for a poorly advised investor’s mistake.

Private investors want to ensure that their purchases have the best chance of increasing in value in the future.

That is what our acquisition service is designed to achieve.

Dear Santa – For Christmas Intali Would Like ……

A Break

It’s been a great year for us and our clients but it’s been hard work. So we are closing the office for Christmas at 5.00pm on Dec 21st and promise not to come back until January 3rd. Hope that’s OK.


A New Surveyor

We’re on the lookout for a top quality surveyor to help us grow the business. So if you know anyone who is qualified to undertake viability appraisals and investment sales and acquisitions put them in touch with Adam. It will be a world of opportunity for the right person.


Appreciation of  Developers

Developers are not greedy. They are the engine delivering the housing target ambitions of the government. They risk enormous amounts of money to do this and they need a return to reflect that risk.  Developers sometimes need to reduce contributions to make a scheme deliverable not because they are trying to increase their profit.


Properly Funded Planning Departments 

The level of funding in planning departments and the resultant pressure on their planners is now beyond a joke. If we really want to achieve our housing targets we have to invest in the front end delivery infrastructure. That means paying the right rate for planners and getting far more of them.


Only Relevant Emails

We work hard to make sure that we only email people with stuff that will be of interest to them. We would like other companies to do the same.


Not sure how many of these Santa can sort for us but we thought we’d ask anyway.

Thanks to all our clients, professional colleagues, suppliers and staff for making 2016 so memorable.

Merry Christmas.




Auction clamour

Are the Best Prices Achieved at Auction? Not Necessarily!

So the year has now ended for the commercial auction houses and they are reporting record results for their December sales.

The major commercial auctioneers provide a thoroughly professional, efficient and effective service in selling commercial property. Particularly investment properties. But is it always the best way to sell your investment? Will you always get the best result?

Earlier this year a long-standing client decided to sell a couple of their investment properties. They made it clear that they wanted the sale to go to auction but were gracious enough to give us the opportunity to place the properties “off market” to known investors prior to the auction.  We agreed the sale price but they required any deal to exchange before the auction date.

We quickly secured purchasers for each of the properties at, but crucially not above, our recommended sale price. Even though the offers received were in excess of the reserves quoted by the nominated auctioneers, our clients felt that they may be able to do better in the room.

They decided to take the two properties to auction. We advised both bidders but neither were prepared to go to auction.

Unfortunately for the client, the prices secured in the room were exactly the same as the offers we had secured . The only difference was that they had incurred significant additional fees and therefore their net receipt was less.

The point is that the level of information available to investment agent “in the market” is now far greater than it ever has been. That means that a good agent will know what price a particular property let to a particular tenant under certain lease terms will achieve. With the appropriate experience, knowledge and crucially information, your agent should be able to accurately predict a sale price. To a very high degree of accuracy.

So it is not always true to say that auctioneers achieve the best price on the market. True, it is transparent and offers certainty in time sensitive situations. But just because the property is sold in the room does not mean it achieves the best price.

Try us and see!

May Marketing logo

May the Marketing Force Be With You

 We normally write to comment on issues that relate to the services we offer our clients. For once, please allow us the indulgence to write about a service provided to us by May Marketing.

How do you grow a business in a fiercely competitive market place? Provide great service? Of course but its not enough.

Intali has been buying and selling investment and development property for clients for 14 years. 83% of our work is sourced from clients we have worked for before. That shows that we are providing the service they want (and is also very satisfying). But it also showed a weakness – that not enough potential clients were aware of how good we are.

When we started the business, “marketing” was stuffing details of properties into envelopes, taking them to the post office and waiting for the phone to ring. We progressed to be one of the first commercial agents to drop printed particulars in favour of email brochures.  We have always been “early-adopters” of IT systems that help to provide better client service. So we are not afraid of change – in fact we embrace it.

Following a business review in the Spring of 2016 we identified the need for a formal marketing strategy. We asked Market Harborough based May Marketing to work with us on this project. Their brief was simple – provide a marketing strategy that will help to grow the business exponentially, year-on-year.

We assumed that armed with that objective they would come back to us in a couple of weeks with a plan of action which we could implement immediately with devastating effect on our competitors. It did not quite work out like that.

Before their instruction was confirmed, they wanted several meetings to “get to know” the business. There was nothing superficial about this – they wanted to know and understand it all. From their 27 page, four-stage, fully costed and scheduled proposal, it was clear that May knew our business.

Their proposal required significant input from us – far more than we had expected. But then this was no “off-the-peg” strategy – this was bespoke to our business and our people. And so we entered into an exhaustive and comprehensive review of the business, the services offered, its clients, our ethos and our aims.

For reasons of commercial confidentiality we would not wish to divulge too much information about the process we undertook, the way the strategy was constructed and implemented, but what we can say is that the work was delivered  exactly in line with the proposal submitted by May Marketing at the outset.

We are absolutely delighted with the outcome. The whole team at May Marketing were engaging, understanding and proactive to our requirement. We were not even aware that some of the skill sets they have existed, but as the work developed it became clear that their individual talents dovetail beautifully to provide a comprehensive and distinctive marketing service.

We found that marketing touches everything our business does. May Marketing have the resources and skills to advise on any aspect. Following their engagement to provide the marketing strategy we also commissioned them to provide a new website, to assist with the development of a specific marketing campaign and provide marketing collateral. All of  of which helped to deliver on the strategy adopted.

Finally a word on the cost. It is not considered polite to talk about fees – particularly of service providers. But we feel it is very important to understand that you get what you pay for. May Marketing are not cheap and why should they be with the skills and services they offer? Engaging them on our project was a significant investment of both time and money for a company of our size, but it became clear very early in the process that their service offers outstanding value for money.

Not as cheap as stuffing envelopes – but then if we were still doing that we wouldn’t be here.


When Viability Appraisals Are Simply Not Enough – Barter!

Sometimes, the agreement of planning contributions through viability is not technical. Although we are happy to engage in deep discussion on development inputs, planning policy, national policy and interpretation of case law, sometimes agreement comes down to good old-fashioned barter.

A good example of this is a recent viability study we undertook on behalf of long-term clients Westleigh Developments. They were proposing the re-development of an existing industrial unit on the outskirts of Lutterworth, Leicestershire to provide a 57 unit residential scheme on a 3 acre site.

Local policy required that a minimum of 30% (17) of the new houses should be for affordable, but two key issues affected the viability of the scheme namely:

  • The requirement of the local council for alternative access arrangements to those originally planned, which added significant infrastructure costs to the scheme
  • The removal of Vacant Building Credit following the West Berkshire case.

As usual, we prepared a cogent and justifiable Viability Statement which concluded that, due to these two key issues, the scheme could not meet the required level of affordable housing.

Unusually, we could not reach agreement with either the council or their professional representatives on the viability of the scheme. The disagreement revolved around the interpretation of the policy environment in which the agreement to purchase the land was made and how that impacted on viability.

Very unusually, we reached an impasse in our discussions. The Council simply refused to accept our fully supported and (in our view) reasonable assumptions to arrive at the viability conclusion.

Our client therefore had a choice of either appealing the imminent refusal or engaging with the council to see if there was any way of reaching a mutually acceptable agreement.

After much detailed discussion between the applicant and the council, the affordable provision was eventually agreed. This required the provision of five starter homes to be sold at 80% of open market value with a further provision that all of the starter homes had to be provided before 60% of the remaining market dwellings were occupied. (see Beware Conditional Section 106 Agreements)

The significant reduction in the number of affordable units justifies our assertion that the scheme was not viable. It no doubt informed the basis of much of the discussion between the parties and assisted in reaching the eventual agreement.

It is doubtful that we would have reached the same agreement by negotiating with the council’s representative. Our positions were simply too far apart for agreement to be reached.

But as both the applicant and council were keen to see this development come forward, they were able to reach a mutually satisfactory settlement.


Beware Conditional Section 106 Agreements

We have recently completed a viability job in Devon. Our developer client was suffering the unintended consequences of a conditional Section 106 agreement.

The developer purchased a brownfield site for the construction of 31 houses.  The scheme was to provide 8 affordable units as required by local policy. There was a full planning consent and a conditional Section 106 agreement.   The condition was that only half of the market units could be sold before the affordable housing was completed.

However there was no demand for affordable housing in this location. Despite their best efforts the developer could not persuade an association to buy the affordable units.

The scheme also reduced from 31 units to 29 units due to sewer diversions and other site constraints. As a consequence of the delays caused by this and the fact that only 12 of the market sale units could be sold, the viability of the scheme went very swiftly south.

Our task was to negotiate an amendment to the conditional Section 106 agreement to allow more of the market units to be sold whilst we dealt with the unwanted affordable units.

Despite preparing a robust viability case, the local authority refused to accept the financial situation. They would not agree to a variation of the conditional Section 106.

The developer put forward a very generous compromise offer which would deliver some affordable units at the expense of his profit margin. Still the authority would not accept the economic reality.

As a last resort, and much against the developer’s wishes, we were forced to submit a Section 106 BA appeal. This finally made the council see sense.  All of the affordable housing was removed and the developer was able to secure a reasonable return. Most importantly, the developer lives to develop another site.

Unfortunately, the council concerned (no names mentioned) have missed an opportunity. In our opinion, politics prevented a business decision that would have delivered at least some affordable housing.

How Will Your Investments Rate in the Revaluation?

Last week saw the release of the long awaited rates revaluation of all commercial properties in the UK. Although the immediate burden of rates will be borne by occupiers, the impact on rental growth and therefore your investment holdings, should not be overlooked.

Most areas in the UK have benefited from a decrease in valuations for rates. An 11% reduction in the north-east to a 2% reduction in the south-east. London is a different story, with the overall valuations increasing by total of 11% for all asset classes.

So, how will this impact on your current investments? How will it influence your purchase decisions over the coming months and years?

The immediate impact will be felt in new lettings. In theory, the cost of leasing space in London has now increased by 11%. There is a limit to the “pot” that tenants have to pay for occupancy costs, In our opinion, this increased rates burden will limit rental increases. Deals agreed will reflect the new rates burden and, in London especially, rents could show a slowdown in growth. As those open market lettings are the basis for settling rent reviews and lease renewals, the impact of this will be felt through the income received from investments.

Of course the opposite is true in those areas where valuations have fallen. Suddenly the “pot” for occupancy costs has increased. There is a real chance that in strong locations rental values could rise faster than areas where the rates burden has increased.

If you are looking to purchase investments then you may well receive better returns and rental growth outside of London for the next few years. That is not a prediction – just an observation based on the new reality.

However this does not take away from the essential truth. Location is the key to property investment. And there are more better locations in London than anywhere else in the UK.

To check the new valuation of your property click here