What are the challenges in dealing with UK commercial real estate transactions?
J-P Bisson, Manager – Real Estate, Equiom Guernsey
There are a number of steps involved in administering UK commercial real estate structures and they all have their challenges. Once a suitable investment opportunity with value has been identified, be it a shopping centre, retail park or other commercial asset, our Guernsey Real Estate team’s first step is to appoint a group of professionals, including an asset manager, a property manager, a UK lawyer, a Guernsey lawyer, a tax advisor, a VAT agent, auditors and bankers.
The challenges start with the financing of a commercial real estate acquisition which can be a mix of an external bank loan, a shareholder loan and share equity. In any case, significant time is required to give due consideration to review, comment and agree the draft paperwork.
Being part of a commercial real estate team requires a large number of transactions to be dealt with on an ongoing basis and these may require the engagement of further specialist advisors. At Equiom, we liaise with the asset manager or property manager who usually acts as the ‘go-between’ with the tenant. The transaction is formalised by the drafting of documentation by the appointed lawyers acting for the Guernsey Company, as landlord. Transactions are varied and examples include leases, side letters, rent reviews, licences to alter, deeds of variation, applications for planning permission, licences to occupy, deeds of release, under-leases, JCT minor works contracts, wayleave agreements and lease assignments. We review the documentation and draft suitable resolutions for consideration by the board. As many transactions are time critical, it is important to manage expectations of all parties to allow due consideration of the documents and this is usually done via the lawyers.
We also handle payments for real estate expenses and professional fees and liaise with the appointed advisors to ensure the quarterly VAT returns, annual UK tax returns and financial statement audits are completed in a timely manner, particularly when the corporate client group or fund has its own regulatory deadlines to meet.
The final transaction is the sale either as an asset or via share sale, which is as challenging as the initial purchase, and we are in constant contact with the team of professionals, dealing with queries raised by the purchasers’ lawyer through our UK lawyer through to completion.
Every transaction is different in the world of commercial real estate so it’s important to stay on top of regulations and consider how any changes impact on each individual situation.
For more information on this topic contact J-P Bisson.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.
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