Cautious Investments Ltd Case Study

Cautious Investments Ltd Case Study

Cautious Investments Ltd (Landlord) have been trading for more than 40 years and own several ‘sub-standard’ small tertiary shopping parades usually located as the sole retail offering on large part private-part public housing schemes around England. Each parade typically comprises terraces of three storey properties built in the 1960s with ground floor retail and two upper floors of residential (either self-contained apartments or maisonettes).Whilst the investment returns have been generally healthy until 2018 (between 9 and 12%), Cautious Investments is becoming increasingly worried about the longer term sustainability of these returns giving rising voids, lowering of returns, improvement opportunities, diversification and other legislative impacts such as the reduction of the payload in slot machines in betting shops.

The investor, your client, wishes to seek your advice on several strategic real estate and operational asset/property management matters.

(a) Critically examine 5 – 6 key tenant covenants found in typical leases of tertiary retail property and develop an asset management strategy that gives the landlord a high level satisfaction to know that landlord returns can be sustained or improved going forward (in this regard you may wish to develop a scoring matrix which covers both quantitative and qualitative aspects) and that tenants will be engaged and encouraged to either renew their tenancies or new tenants can be secured with flexible leasing arrangements.
Suggested word count: 1,000 words 10 Module marks (10%)(b) Develop a strategic/operational model on how the landlord could deal with rent arrears, showing how this would work in practice depending on the amount of arrears and the length of time this has been developing (a flowchart model may assist your thinking and answer).

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