LPA Receivership Appointment – Mixed use investment property
The Property: The Snooty Fox, St Marychurch, Torquay
Acting on behalf of : Major high street bank
The Brief
Following enforcement action taken by the local fire authority the borrowing company had gone into liquidation forcing the bank to appoint LPA Receivers under their fixed-charge. The property, which was held as an investment, comprised a 4 Storey building with a Public House on the ground floor and 7 apartments on the upper floors, located in St Marychurch a district of Torquay. The ground floor Public House was let to a local landlady with the seven apartments being managed separately, however, as a result of the enforcement notice all the apartments were vacant.
The brief from the bank was to minimise risks broughout about by the enforcement notice and maximise recovery in the shortest period.
The challenges
• Due to the fire enforcement notice all 7 flats were vacant with some damaged by outgoing tenants
• The works required to comply with the enforcement notice were extensive
• Without substantial works the upper floors could not be occupied for residential purposes
• The landlady of the ground floor was in arrears with her rent payments
• The borrower was in liquidation and wanted nothing to do with the property
• The bank required a quick resolution.
The Solution / Actions taken
The Receivers carried out a cost assessment of the works to the upper floors and provided options to the bank including
1) Undertake the required works to the upper floors, let all units and sell as an investment
2) Obtain vacant possession of the ground floor public house and re-let prior to sale
3) Sell in its current state at the earliest opportunity.
The Receivers obtained partial settlement of the arrears and rescheduled the rent payments for the pub, thus creating a more attractive proposition for potential buyers.
Due to the bank’s wish to exit the situation as quickly as possible, the cost of the works and the project risk, the decision was made to sell the property in its existing state at the earliest opportunity. The Receivers sought the views of three national and local auctioneers instructing a national auctioneer with strong regional presence. Working together the receivers and auctioneers generated considerable interest from a variety of national and regional developers.
Outcomes
The eventual sale price, by auction, exceeded the auctioneer’s estimate achieving 20% above the guide price and recovering most of the debt for the bank. The Receivers actions ensured a sale in the shortest possible time minimising the risks and costs presented by the enforcement notice.
Back to Property Debt Advisory (LPA / Fixed-Charge Receiverships)
Lead Director: Chris Price MRICS NARA
Chris is an RICS Registered Property Valuer & LPA
Receiver, with 30 years experience in the corporate
recovery / asset debt recovery sector