Getting The Right Advice After Things Go Wrong

Salloway Associate Graham Bancroft talks about the opportunities and pitfalls of dealing with receivership property disposals.

IT is always unfortunate when a company is declared insolvent and administrators are brought in to manage its affairs and assets.

A failed company's largest asset is likely to be any property that it owned.

That means administrators or receivers need to ensure that they have access to the right property advice at an early stage to assess property values as well as, perhaps, limiting the holding costs.

Holding costs could include empty property rates or securing and protecting the building.

When acting for administrators, the process for disposal should be no different from any other agency instruction that is undertaken.

That said, the public perception attached to properties owned by firms that have slipped into administration makes life more challenging for agents.

As if it were the building's fault that the company failed.

The reality is that, if an owner or the official receiver does not get good advice, then a property can stay stagnant on the market, not sell and have a more real and damaging stigma attached to it.

We experienced this kind of incident on a property we recently dealt with for a receiver on Manners Industrial Estate, in Ilkeston.

The property had been marketed at an artificially high figure and had stuck on the market with no interest for two years prior to our involvement.

When we were asked to come on board we identified that the property was overpriced and marketed it at a correct level.

We were then able to sell the property within about six weeks.

We have great knowledge, experience and success in dealing with these types of properties.

Salloway is currently instructed on the disposal of a 10,000sq ft industrial unit in Loscoe, a 6,000sq ft industrial unit in Mansfield Woodhouse and, more recently, marketing has started on a high-profile 55,000sq ft industrial unit in Chesterfield.

Even in a market where funding can be tricky, we have dealt with a number of seven-figure disposals on behalf of Law of Property Act receivers.

Naturally, although there can be a stigma attached to properties being handled by administrators, there are a significant number of investors and purchasers who are lured out of the woodwork by this type of sale.

This is because there is also a perception that there is a chance that they may be able to pick up a quality property at bargain-basement prices.

I believe that intelligent investors looking for good quality, long-term commercial properties can still find bargains and, key to this, is being fully aware of the market, having funding arranged and being able to move quickly.

Once again, good quality advice is what is needed and investors who have taken this have been able to reap the rewards.

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