Portfolio - Case Study 5

Inverurie to Hastings Abacus Estates Limited

Schedules of Dilapidation

We were appointed by Abacus and a number of sister companies to review their property portfolio comprising some 60+ units nationally. These inspections were intended firstly to build a knowledge base of the portfolio and also to look at the manner in which their Tenants were occupying the sites as well as looking for potential development opportunities.

Our initial inspections revealed a number of properties in disrepair and in turn we prepared Schedules of Dilapidation for serving upon those Tenants. The Schedules were served through our Client’s Scottish and English legal advisers and varied considerably in value. We identified in excess of £1.5 Million of outstanding remedial works which could legitimately be required of the Tenants under their lease agreements. Subsequently we monitored the Tenants and on completion re-inspected those properties to ensure that the works had been satisfactorily completed. This process took a number of years from inception as it is not always possible to expect a Tenant to act immediately and as diligently as you might wish. Nonetheless we have now completed the exercise.

This portfolio displayed a wide variety of tenant, building and lease type, from ground lease through to fully repairing obligations including in some cases “to put and keep” clauses. What is very clear from this type of exercise is that if a Landlord does not pro-actively protect his interests a Tenant will most certainly default on their repairing liabilities, especially if they do not expect to be held to account. Careful management of any portfolio must include periodic visits to all sites by someone capable of commenting upon the sufficiency of the manner in which a property is being occupied when related to the incumbent lease.

Footnote

We have through negotiation with many Tenants and their Surveying Advisers arranged for significant improvements to the manner in which our client’s portfolio is being maintained and continue to monitor the portfolio for the client.