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Asset Transfer – 6 Top Tips

Posted on November 16, 2010

I read with interest the great interest shown in Asset Transfer.  In my day job as a Chartered Surveyor, I am increasingly coming across organisations who have taken consultancy advice which has recommended getting into property!  Also as a Board Member of a Development Trust (Headingley) I am in the midst of finalising lease and licence documents for an asset transfer which we have completed.

Any organisation which is considering an asset transfer can consider the following points as part of the checks (due diligence) that it undertakes.  Some of these are quite basic and I make no apology for this

1. Location – generally asset transfer occur in to local organisations already active in that area – this can give one a “rose tinted” view of the asset.  It is critical to ask what will future users make of the location and the attributes of the asset.  If your aiming to have conferencing facilities how easy is it to find and is it on a main road?

2. Condition – assets coming out of a Local Authority will more than likely suffer from “maintenance back-log”.  Ask questions regarding the condition of the property and in particular what problems there have been.  If you can find the caretaker it is essential to have a word and this is likely to be revealing.  You must factor in prospective costs of maintenance and refurbishment which can be significant.

3.  Suitability – is the building really suitable for the uses you intend.  How much adaptation work is needed?  What specialist works will be required to adapt the building – aspects such as the Disability Discrimination Act needs to be carefully considered and your design advisor can assist with this.  Internally will the spaces be of the appropriate size and configuration – will offices have natural light?; can the spaces be divided up without losing lots of floorspace to corridors (these will need heating and lighting); will the end users find it attractive and want to pay you rent!.

4.  Legal – what is proposed as part of the transfer – a lease; long leasehold or freehold.  All of these will have implications in terms of your ability to borrow against the asset and your obligations to a landlord if you go down a leasehold route.  This requires firm negotiation and must be fit for purpose for your organisation and its long-term objects.  Under this heading I would also recommend discussions with Planning Officers as it is likely you will require change of use planning consent and the range of acceptable uses needs to be checked.

5. Demand – its is absolutely essential to undertake specific research to explore the demand for the uses you will be putting the spaces too.  This ultimately means researching the competition and how they perform and indeed speaking to lots and lots of people.  The more research you do the more confident you will be and this will be critical in funders’ decision making.

The elements above will enable you to assess the prospects of an asset and whether you should proceed.  It will also underpin the business plan that you will need to prepare – to satisfy yourself and then to satisfy everyone else.

It is also worth bearing in mind that at the current time Local Authority Treasurers will be coveting prize assets for sell off and raising capital.  This brings be to my 6th tip which is about bringing a wide section of the community together to support the project and to lobby the Council and its members.  We have been told that in Headingley this was decisive.  being able to mobilise a community will help and hopefully it will also enable you to raise much need funds too.

Securing the services of trusted advisor that will work with you will be important as you go forwards beyond the feasibility stage I have discussed above. Better still is to find some of this capacity locally and see if they will join the Board!

Should you have any questions do get in touch.