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Published on: General


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.

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