Valuation and sale – Unit 2, Warmley Business Park, Bristol
Asset Class: Modern Industrial Unit | 2019 build | c8,000 sqft with 2 storey mezzanine flooring – (Freehold)
Acting on behalf of : Rod Coad, Joint Administrator of Oak Flooring Supplies Ltd
THE BRIEF
In early March 2023, PACT were instructed to provide the Administrator of Oak Flooring Supplies Ltd, with a valuation of the company’s freehold premises located on the Warmley Business Park, North Bristol. A mid-terraced modern industrial unit, of c 8,000 sqft, formed part of a 14 unit development by Chancerygate completed in early 2019 and comprised an extensive steel mezzanine installation over 2 floors to the main warehouse area.
Our brief was to value the property and then instructed to sell, undertaking property management during the marketing period
The Challenges:
• Due to the economic uncertainty in early 2023, created by the Liz Truss budget, valuing the property was challenging as all comparative data predated the downturn
• The property incorporated a two storey mezzanine structure increasing the floor area by 3,708sqft, while appealing to some purchasers would be a negative feature to others
• The contractors who had built the mezzanine had ceased trading and warranties given were difficult to obtain
• The property was subject to a first charge with Lloyds Bank in excess of £500,000 – Our approach had the meet the Administrators expectations and satisfy the Bank that their debt would be repaid in full
• Satisfying a growing trend of increasing due diligence by buyer’s lenders to minimise risk of the deal falling through
THE SOLUTION / ACTIONS TAKEN
Securing First Charge-holder (Lloyds Bank) approval
Having valued the property for the Administrators we then had to satisfy the Bank that the property would get full exposure achieving the best price to redeem their charge. It was vital to show experience in the sector and a have a clear understanding of the stakeholders concerns. We were able to draw on previous experience having recently achieved strong results for other properties held under a charge with Lloyds bank.
Maximising exposure
Having first cleared the property of surplus waste products and rubbish in order to present it in its best light, PACT with our joint agents Vickery Holman, launched a regional marketing campaign in April specifically targeting firms that could make use of the additional floor space created by the mezzanine floors. All viewings were accompanied utilising expertise showcasing the positive features of the property – Having generated considerable interest ‘best bids’ were sought in May.
Keeping the sale on track
Increased market uncertainty and associated lenders risks is seeing much greater due diligence being undertaken. By contacting the developers to obtain build details, service charge and other management details we were able to meet the lending Bank’s criteria.
Our proactive approach ensured;
• Prompt responses were given to the extensive ‘Buyer Enquiries’ including researching warranties, estate management and service charges
• Concerns associated with the mezzanine and lack of warranties were addressed with PACT researching and obtaining full plans and “as built” details providing the buyer with a level of comfort
.The buyers offer was conditional upon the vendor removing a timber structure constructed on the ground floor by the previous owners.
• PACT produced a Schedule of Works agreed with the purchaser and competitive tenders were sought.
• Working closely with the successful contractor, buyer and respective solicitors the structure was removed between exchange and completion.
• The works which met the contract agreement were signed off by the purchaser with completion of the sale taking place shortly thereafter
Throughout the sale process PACT worked collaboratively with both the purchaser’s solicitors, Thrings and the Administrators’ solicitors, DAC Beachcroft.
Property Management
During the marketing period PACT provided additional property management support including;
• Assessing Occupiers Liability risk and organising risk mitigation including clearance of hazardous materials, testing of fire apparatus and repairs to intruder alarm
• Serving Torte Notice on the previous owners to remove chattels
• Undertaking bi-weekly insurance inspections
• Ensuring the insurers requirements were met.
THE OUTCOME
Reliable valuation: When decisions must be made by both Administrators and funders a reliable valuation is essential. The property was valued for £750,000, making allowance for the mezzanine. The result was marginally in excess of the valuation provided 8 months earlier.
Equity Secured for the Administrators: Our approach, set out in the detailed sale proposal, provided confidence to the first charge holder. The Bank agreed to leave the sale with the Administrators securing significant equity for the creditors.
Offer in excess of valuation: The marketing campaign generated considerable interest, approximately 10 viewings were undertaken, with ‘Best & Final’ bids securing an offer marginally in excess of valuation
Sale kept on track: Our personalised, hands-on support, working proactively with the purchaser, their lenders and both parties solicitors addressing the extensive due diligence and ensured the sale process stayed on track over a 5 month period.
Buyer’s conditions met: Buyers special conditions to clear the site of a large timer construction was met between exchange and completion to the full satisfaction of the buyer
First Charge Satisfied in full: By ensuring the best price was achieved the Bank was paid out in full with a six figure sum being released to the creditors.
Directors personal guarantee met: When the building was originally purchased a director gave his bank a personal guarantee. The successful sale ensured that the bank was paid in full and the director released of his guarantee.
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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