With the recent release of Mary Portas' final proposal to the Government for the regeneration of Britain's 'vacant high streets' and the continuation of figures being released; 'over 14% of Britain's high streets are currently unoccupied' (The Local Data Company); surplus property and vacant sites are hot topics.
Removing the risk
Smith & Williamson has been working with a surplus property specialist, Legacy Portfolio, who help businesses to limit the financial and management risks of their surplus property which no longer meet their changing needs.
Vacant and non-required property is a huge burden on senior management and inhouse property teams in UK corporations. Legacy Portfolio offers a complete solution to this problem, enabling businesses to focus on properties which are part of their future business strategy. They take both the financial and management obligations of unwanted property, removing the related balance sheet volatility and creating the best environment for accelerated elimination of the related risk.
Tax considerations
We work with the Legacy Portfolio team to advise on the tax and accounting implications for such transactions. Typically that involves achieving VAT and corporate tax symmetry which is central to our client's pricing model and financial projections. We always need to construct a user-friendly, tax-efficient and operational structure, with free finance flows. As importantly, we can work with the counter parties on potentially removing leases/property provisions off balance sheet but obviously subject to their own auditor's approval.
Wolseley UK and Virgin Media
In June 2010 Legacy Portfolio acquired a portfolio of 177 surplus properties from Wolseley UK, a FTSE30 company. The portfolio was spread widely across the UK and was predominantly made up of retail space. We were able to work together with Wolseley and their advisers so that objectives for both sides were achieved. In just 12 months, Wolseley was able to take the portfolio related risk off their balance sheet as a result of Legacy Portfolio eradicating this risk through a hard working surrender program.
Smith & Williamson also recently acted as tax advisers for Legacy Portfolio on the Virgin Media leasehold liability transfer. The transaction incorporated the transfer of risks and obligations from Virgin Media's surplus properties to Legacy Portfolio.
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