1E - Property Management - Christine Janaway & Jon Wright

Property Management Christine Janaway Bruton KnowlesJon Wright, Mencap

Introduction

Charity Commission Guidance

Fitness for Purpose

Keys to success

Quick Guide to property investment

Case Study – Mencap

Contents

Hallmarks of an Effective Charity Hallmark 5: Financially sound and prudent

“An effective charity has the financial and other resources needed to deliver its

purposes and mission, and controls and uses them so as to achieve its potential”

Charity Commission Guidance

Property – is it an asset?• Operational• Financial

Property – or is it a liability? • Unsuitable• Insufficient • Unsustainable • Obsolete

To think about …

Short term • Identify core property • Review -SSS• Identify surplus property• Assess liabilities/opportunities

Medium term• Restructure leases• Realise assets where viable • Add value to portfolio • Planned maintenance/development

Not fit for purpose?

Creating an effective property portfolio

Establish Board/Senior Management responsibility

Identify necessary resources• Internal• External

Set project plan

Implement

Review

Keys to success

Property Investment

What is the investor actually buying?

1 - ££££££

2 - ££££££

3 - ££££££

Quick guide to …..

Property Investment

Example 1

Rental income £100k pa

Tenant – say Sainsbury’s

Value??

Quick guide to …..

Example 2

Rental income £100k pa

Tenant – say Joe Bloggs Ltd

Value??

Property Investment

What is the investor actually buying?

££££££

Investment yield spread

“junk bonds” “gilts”

Where does property lie on this line?

Is it even on this line?

Quick guide to …..

Property Investment

What is the investor actually buying?

££££££

Quick guide to …..

Example 1

Rental income £100k pa

Tenant – say Sainsbury’s

Yield??

Example 2

Rental income £100k pa

Tenant – say Joe Bloggs Ltd

Yield??

Property Investment

Yield drives valueBased on –Covenant (tenant) strengthRental income Property type and location

Quick guide to …..

Mencap acquisition of the care homes on sustainable business model based on the principle that yield drives value

Background

Existing leases

Landlord’s (ie. Funding bank’s) requirements

Mencap’s agreed terms

Case Study - Mencap

Mencap’s perspective• Rent reduced by almost 30%• Removal of rental escalator • Secure and financially sound business model

Landlord’s perspective• Lower yield• Long term confidence in the income stream• Improved capital value – from £15 to £20m• Better funding terms from bank

Case Study - Mencap

Questions