Jen Hicks-Jones, Head of Property and her commercial property team are specialists in handling disposals of multi-let freehold estates, and successfully completed a £6million sale of a local family-run trading estate in the Black Country.
Our client, whose property had been passed down through the family for several generations, instructed us to deal with the sale after the family felt it was time to “step back”, and enjoy a well-earned retirement.
One of the first challenges was collating and preparing the necessary information to provide replies to enquiries to the buyer, who were a very large pension fund based in London.
The estate had been run successfully for many years based on a paper system, with most of the information being in hard copy form. The family were rightly proud of everything that they had achieved, but initially found the prospect of digitalising the documents for the due diligence process a daunting task.
A great deal of time was spent unpicking years of information and records to satisfy a demanding buyer, which involved supporting our client who inevitably found the sale of the family business an emotive process. Emma built a strong relationship with our client by demonstrating empathy as well as offering practical support, solutions and guidance.
Our client was very forward thinking in terms of energy efficiency, and a significant proportion of the estate had PV panels (solar panels) on the roofs of the units. Whilst fantastic for energy consumption, this proved to be an additional factor to consider when assigning over the equipment, airspace and feed in/export tariffs to the buyer.
In addition, a number of the tenants had been in occupation for many years on an informal basis. Whilst the client had excellent day to day relationships with the tenants, the records and structure of the estate in its existing form were unacceptable to a very risk averse buyer, and their international firm of lawyers.
We had to come up with a solution where the buyer could be satisfied from a risk perspective that they had legal documentation in place which covered the annual rent, repair obligations and service charge recoverability etc for the 25+ units at the estate. We needed to balance this with the time and cost to the seller of putting such documentation in place, and also consider the likelihood of the tenants signing up to new terms considering that they had been occupying the various units for many years with no issues.
It was agreed that a short form “smart lease” would be put in place for an agreed percentage of the tenants at the estate. It was important for the buyer to recognise that it may not be possible to get 100% sign up from all of the tenants, and for a balance to be struck between getting the deal across the line and the commercial reality of running a busy trading estate on a day-to-day basis.
The team worked closely alongside the agent who was appointed to market the estate in order to foster good relations with the tenants. This resulted in the vast majority of tenants signing up to the “smart lease” which satisfied the conditional contract and allowed the sale to go through smoothly and without fuss.
Our clients were absolutely delighted with the result, and kindly took the time to provide feedback on the transaction.
