There's profit hidden in your surplus leasehold property, and it can be difficult to identify ways to exit the situation in a profitable manner. In this presentation, we'll show you how.

1. PROFITFROMSURPLUSLEASEHOLDPROPERTY

2. There’s a profit in your
surplus leasehold property.
We’ll help you to realise it.
”
“
£

3. PROFITFROMSURPLUSLEASEHOLDPROPERTY
What’s the issue?
Organisations typically exit from a lease liability as part of a rationalisation
of the business
Accounting rules require you to record a provision for your surplus
leasehold properties
Capital and human resource is re-allocated to the core parts of the business
where it can be more effectively employed
Surplus leasehold property is too often ignored and left to work itself out
over the remaining term of the lease.
“A provision has been recorded so there is no need to do anything else
with the property?”

4. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Why does this matter?
Lease commitments remain a cash drain on the business as contractual liabilities
still need to be paid
Contractual lease obligations are not dealt with effectively, adversely impacting
the assumptions that underpin surplus leasehold property provisions
No new capital is allocated to the properties which materially reduces
the likelihood of delivering a successful exit from the liability
Properties are not properly maintained or managed and they become neglected,
vandalised or derelict, increasing projected future liabilities for dilapidations and
re-instatement costs

5. PROFITFROMSURPLUSLEASEHOLDPROPERTY
The Greenhills Solution
Greenhills will implement a real estate led strategy to deal with all aspects
of your surplus leasehold property portfolio
The benefits of adopting the Greenhills Solution include:
Realise a profit from your surplus leasehold properties
Permanently extinguish lease liabilities
Generate cash savings across the portfolio
Free management time, human resource and capital from
all aspects of your surplus leasehold property

6. TENANT
- FTSE 100
AGENT - NATI
ONAL
FUNDER
-
RETAILBANK
LANDL
ORD-LOCAL
INDIVIDUAL
£
Legal
Optimisation
Physical
Refurbishment
Financial
Restructuring
£
TRIDENT
TM
REAL ESTATE
EQUITY
CAPITAL
STAKEHOLDER ISSUES
MANAGEMENT
RESOURCE
PROFITFROMSURPLUSLEASEHOLDPROPERTY
The Greenhills
Process

7. REAL
ESTATE
EQUITY
CAPITAL
STAKEHOLDER
ISSUES
MANAGEMENT
RESOURCE
PROFITFROMSURPLUSLEASEHOLDPROPERTY
Greenhills unique Trident Process allows us to examine
the microeconomics of each property
Physical refurbishment
Legal optimisation
Financial restructuring
Identify a range of strategies for each individual property
Agree and implement the optimum strategy for each property
A property issue requires
a property solution
”
“

8. REAL
ESTATE
EQUITY
CAPITAL
STAKEHOLDER
ISSUES
MANAGEMENT
RESOURCE
PROFITFROMSURPLUSLEASEHOLDPROPERTY
Greenhills Solution requires a thorough understanding of both
the property and the respective position of all stakeholders
Using our stakeholder matrix we can adopt a collaborative
approach with all stakeholders to ensure our business plan
will be acceptable to all parties
Opportunity to facilitate “win-win” outcome for all stakeholders,
increasing chance of successful outcome
Stop thinking like a tenant if you want
to exit your surplus leasehold property
”
“

9. REAL
ESTATE
EQUITY
CAPITAL
STAKEHOLDER
ISSUES
MANAGEMENT
RESOURCE
PROFITFROMSURPLUSLEASEHOLDPROPERTY
We get that organisations don’t want to invest their own valuable
capital into surplus leasehold property
However, investing capital into surplus leasehold properties
materially improves the likelihood of a successful exit from
the liability
Greenhills will invest its own equity into a transaction in order
to underwrite the business plan strategy
This helps deliver a successful exit strategy and ensures a proper
alignment of interests between the organisation and Greenhills
Investing equity facilitates a successful
exit from surplus leasehold properties
”
“

10. REAL
ESTATE
EQUITY
CAPITAL
STAKEHOLDER
ISSUES
MANAGEMENT
RESOURCE
PROFITFROMSURPLUSLEASEHOLDPROPERTY
We understand that managing surplus property is often
viewed as a waste of management time and resource
Our process transfers managing all aspects of your surplus
property to Greenhills within pre-agreed operational and
financial parameters
Specialist team to deliver all aspects of the business plan strategy
Surplus property is all we do
– motivation won’t be an issue
”
“

11. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Grosvenor Gardens
11,300 SQ FT
£500K PA
4 YEARS UNEXPIRED
£2.5M
£400K +
£1.6M
FLOOR
AREA
TOTAL
OUTGOINGS
LEASE
EXPIRY
ASSESSED
GROSS LIABILITY
DILAPIDATIONS
LIABILITY
BUSINESS PLAN
PRICING
£

12. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Grosvenor Gardens
Legal
Optimisation
Physical
Refurbishment
Financial
Restructuring
£
TRIDENT
TM
Period 11,000 sq ft office building over 5 floors.
Tired condition with corporate branded reception.
Refurbishment required to re-let.
Floors could be split but with capital expenditure.
Property over rented in existing condition.
£42 psf to ERV £35 psf.
Lease outside security of tenure provisions.
Significant residential potential.
REAL ESTATE STRATEGY - SUMMARY

13. FREEHOLDER
Grosvenor - very long term view.
HEAD LESSEE’S AGENT
Regional based solicitor acting
for Ukrainian.
HEAD LEASEHOLDER
Ukraine national. Hands off.
No direct contact.
TENANT
FTSE 100 company. No scope
to spend capital on the building.
SUB TENANTS
Potentially embassies and advertising
agencies. Remaining lease to short
for most to commit.
PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Grosvenor Gardens
STAKEHOLDER ANALYSIS - SUMMARY

14. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Grosvenor Gardens
EXIT STRATEGY - SUMMARY
Disposal Option Exit Summary
Full surrender to landlord £2.5m Priced to term but offshore landlord
unwilling to take re-letting risk.
Assignment of whole to term Lease outside security of tenure
provisions so no renewal rights for
potential assignee.
Subletting of whole £1.6m Relatively short term for single occupier
to fit out.
Subletting of part £1.8m Mitigation strategy to term.
Capital required to subdivide.
Alternative arbitrage strategies
Surrender and new letting
with landlord participation
£1.3m Secure new tenant for the whole building.
10 year plus term. Back to back surrender
with the head lessee.
Acquisition of head lease and
on sale with VP to freeholder
£1.0m Significant residential potential.
Consolidate all interests and seek
possible change of use.
£ PROFIT FROM SURPLUS
LEASEHOLD PROPERTY
The property was successfully re-let as
a whole on a new 10 year term and a
simultaneous surrender agreed with
the head lessee. Transaction executed
at better than our business pricing
generating a saving of £1M plus.
Tenant completely off risk
at completion.
Greenhills injected its own capital
to refurbish the building.
Deal required consent of all
stakeholders and planning consent.

15. Case Study - Leamington Spa
20,000 SQ FT
£145K PA £850K
£500K +
£495K
FLOOR
AREA
TOTAL
OUTGOINGS
TO LEASE
EXPIRY
ASSESSED
GROSS LIABILITY
DILAPIDATIONS
LIABILITY
BUSINESS PLAN
PRICING
PROFITFROMSURPLUSLEASEHOLDPROPERTY
£
2.25 YEARS

16. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Leamington Spa
Legal
Optimisation
Physical
Refurbishment
Financial
Restructuring
£
TRIDENT
TM
20,000 sq ft industrial unit on 1 acre site
in prosperous town.
Property had been vacant for over 5 years
and on the market with national agent.
Sunk costs of over £650,000.
Property had been broken into, stripped
and vandalised numerous times.
No prospect of subletting in existing condition.
Significant dilapidations liability of £500,000+.
REAL ESTATE STRATEGY - SUMMARY

17. AGENT NATIONAL
Given up.
FUNDER - RETAIL BANK
Leveraged against covenant.
LANDLORD-LOCAL INDIVIDUAL
Bought for £900,000 and debt funded
assuming tenant would renew.
TENANT
FTSE 100 but building too small in
isolation to warrant management time.
PROFITFROMSURPLUSLEASEHOLDPROPERTY
STAKEHOLDER ANALYSIS - SUMMARY
Case Study - Leamington Spa

18. PROFITFROMSURPLUSLEASEHOLDPROPERTY
EXIT STRATEGY - SUMMARY
Disposal Option Exit Summary
Sublet as a whole £650,000 Unlettable condition and lease to
short term.
Assignment with renewal rights £650,000 Condition too bad for any assignee.
Full surrender to landlord £750,000 Not possible in isolation – debt issue.
Run off £650,000 Significant dilaps risk –
possible S18 mitigation.
Alternative arbitrage strategies
Acquisition of freehold £450,000 Buy in and sell on with vacant possession.
Sale with VP and simultaneous
surrender
£400,000 Agreement with freehold owner to sell
with VP and simultaneous surrender.
£ PROFIT FROM SURPLUS
LEASEHOLD PROPERTY
A joint sale of the site, with vacant
possession, was agreed with the freeholder
to an owner occupier for £400,000.
On completion of the sale, we
simultaneously surrendered the tenant’s
lease for a premium of £400,000.
Surrender was full and final – tenant
completely off risk at completion.
Outcome ahead of business plan
and generated £450,000 of savings.
Deal required a collaborative approach
between Greenhills, landlord and
owner occupier.
Case Study - Leamington Spa

19. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Track Record – Surplus Leasehold Property
Government Department/ FTSE 100
Major Properties Minor Properties Total
Gross Liability £43.4m £11.6m £55.0m
Floor Area 418,000 sq ft 129,000 sq ft 547,000 sq ft
Number of Properties 7 18 25
Greenhills BP Exit Pricing £21.1m £7.0m £28.1m
Greenhills Actual Exit Pricing £20.6m £6.2m £26.8m
Profit Achieved £1.3m
Saving v Gross Liability 51%

20. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Track Record – Asset Management
No of Deals Bought and sold
Assets bought and sold 223 £2.2billion
No of Deals Income Secured Sq ft
Asset management 466 £51.9million 2.7million
No of Projects Project Value
Major Capital Projects 20 £50.7million
Our partners

21. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Transfer of management and execution risk
A key objective of the Greenhills Solution is to free the occupier’s management
time, human resource and capital from all aspects of your surplus property
This is achieved using a Management Agreement which is put in place between
Greenhills and your organisation
All aspects of exiting the liability move to Greenhills within pre-agreed legal and
financial parameters
Delivery of the business plan strategy
Appropriate resourcing
Negotiations with landlords/ other stakeholders
Capital expenditure, dilapidations and re-instatement obligations
Cash payments

22. Alignment of interests and fee structures
Greenhills will invest its own equity into your surplus leasehold portfolio
Underwrite the business plan strategy
Ensure there is an appropriate alignment of interests between us and you
Fee structures are transparent and are linked to defined measurable performance
Sharing of profits above a pre-agreed hurdle
Reward outperformance and penalise underperformance
Encourages further alignment of interests – “we do well, you do well”
PROFITFROMSURPLUSLEASEHOLDPROPERTY

23. Communication and Governance
Regular contact between Greenhills and your organisation
Clearly defined controls and reporting procedures are put in place at the
outset of the contract
Regular appraisal of the corporate structure
Flexibility to respond to changes in circumstances
PROFITFROMSURPLUSLEASEHOLDPROPERTY

24. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Our Team
Greenhills Asset Management specialises in working with organisations to help
them exit from their surplus leasehold properties, and we have over 100 years
of combined experience in the UK commercial property market
We are a highly skilled team of chartered surveyors and accountants who have
been together for 15 years and possess a complementary range of property,
finance and restructuring skills
STEPHEN JOBBURN
CHIEF EXECUTIVE
Age 50
SIMON RHOADES
FINANCE DIRECTOR
Age 48
MARCUS RICHARDSON
PROPERTY DIRECTOR
Age 47
TIMOTHY BROOK
PROPERTY DIRECTOR
Age 46

25. PROFITFROMSURPLUSLEASEHOLDPROPERTY
APPENDIX1-CASESTUDIES

26. Case Study - Royal Bow
185,000 SQ FT
£2.7M PA
9 YEARS
£24.8M
£1M +
£8.6M
FLOOR
AREA
TOTAL
OUTGOINGS
TO LEASE
EXPIRY
ASSESSED
GROSS LIABILITY
DILAPIDATIONS
LIABILITY
BUSINESS PLAN
PRICING
PROFITFROMSURPLUSLEASEHOLDPROPERTY
£

27. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Royal Bow
Legal
Optimisation
Physical
Refurbishment
Financial
Restructuring
£
TRIDENT
TM
Purpose built 185,000 sq ft distribution warehouse
on an 11-acre site with 300 car parking spaces.
Non-standard loading, high office content and
significant M&E within main warehouse restricting
stacking height.
Inner London location. Some access restrictions.
Passing rent of £8.42 psf over rented
for standard distribution.
S106. Significant issues with parking provision
and use with restrictive 106 personal to Royal Mail.
(Issue arose post completion of transaction).
REAL ESTATE STRATEGY - SUMMARY

28. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - Royal Bow
PLANNING AUTHORITY
London Borough of Newham. Significant unemployment issues
within the Borough.
LANDLORD AGENT
International firm with asset management brief. Had acquired
the investment and continued to value for the fund.
LANDLORD
Major hands off Institutional landlord. Risk averse and acquired
the investment based on the strength of the RMG covenant.
TENANT
RMG held a lease over the whole until 2022 (9 years unexpired)
at a passing rent of £1,563,500 per annum. They were risk
averse and undergoing significant change. For a number of
reasons they could not sub-let or assign to a competitor.
SUB TENANTS
The potential market was significantly reduced with the Royal
Mail placing restrictions of any letting to a ‘competitor’. This
effectively ruled out a large proportion of the distribution
market. We therefore had to consider uses outside the normal
distribution operation.
STAKEHOLDER ANALYSIS - SUMMARY

29. PROFITFROMSURPLUSLEASEHOLDPROPERTY
EXIT STRATEGY - SUMMARY
Disposal Option Exit Summary
Full surrender to landlord £13m Institutional landlord. Risk adverse.
Likely surrender cost uncommercial.
Assignment of whole to term £8.6m Likely to be covenant dependent and deal over
potential dilapidations with assignee.
Subletting of whole with break
(5 year break)
£14.2m Potential to sub let whole but with 5 year break.
Option priced assumed break exercised and
property then remains vacant to term.
Subletting in part £12.9m Assumed that the property is sub-divided into
at least 2 units at a cost of £0.5M to split the
unit and services.
Alternative arbitrage strategies
Surrender and new letting with
landlord participation
£7.1m An opportunity potentially existed to secure a
longer term letting of 15 years. Depending on
the covenant this would have the potential to
significantly increase the investment value.
Acquisition of freehold with
simultaneous letting and disposal
£5.1m Given our access to investment capital we
considered the potential to acquire the landlord’s
existing interest and reposition with a new tenant
on a 15 year term. In this way the full benefit of the
investment arbitrage could be passed onto RMG.
£ PROFIT FROM SURPLUS
LEASEHOLD PROPERTY
The property was successfully assigned
to Sainsbury’s in line with our business
plan projection generating a saving of £16m.
To deliver the assignment we had to achieve
the following prior to execution:
• Amendment to the S106 to secure
relaxation of parking and access
• Obtain a certificate of lawfulness to
confirm property had B8 use. RMG
occupying under Sui Generis use.
• Secure planning consent for Sainsbury’s
proposed alterations
• Obtain landlord’s consent to both
assignment and alterations
• Successfully negotiated landlord’s
consent without RMG giving an AGA.
At completion RMG completely off risk
Case Study - Royal Bow

30. Case Study - St Albans
PROFITFROMSURPLUSLEASEHOLDPROPERTY
57,490 SQ FT £570,000
FLOOR
AREA
LEASE
EXPIRY
DILAPIDATIONS
LIABILITY
AUGUST 2018 £5.1M
ASSESSED
GROSS LIABILITY
£
£520,000 PA
SUB TENANT
INCOME
£940,000 PA
HEAD LEASE
RENT
14,400 SQ FT
VACANT
FLOOR AREA
2014 TO 2017
SUB TENANT
EXPIRY
7
NO. OF
SUB TENANTS
£3.1M
BUSINESS PLAN
PRICING

31. PROFITFROMSURPLUSLEASEHOLDPROPERTY
Case Study - St Albans
Legal
Optimisation
Physical
Refurbishment
Financial
Restructuring
£
TRIDENT
TM
The building is in a recognised office location
and occupier market. Car parking, public
transport and proximity of facilities are good.
The rent being paid by the tenant is £16.50 psf
which compares favourably with the current Grade
A space levels of £20 – £22psf.
The vacant space of approximately 14,400 sq ft
is well configured but requires a cosmetic
refurbishment to re-let for the remainder
of the term.
The expiry of and the rental levels being paid by
the subtenants are not aligned with the tenant’s
interest.
There is a current shortfall of £420,000 p.a.
REAL ESTATE STRATEGY - SUMMARY

32. DEBT FUNDER
Landlord will have secured third party debt funding
against this asset and the tenant covenant. This funding
will contain restrictions on what landlord may do when
dealing with the asset which will relate to income and
value. In particular most funding agreements will
require the funders consent to surrender.
LANDLORD
Landlord acquired the building for £10.1M. They
will have acquired this based on the current certainty
of income from tenant and the potential
reversionary value.
GOVERNMENT TENANT
Tenant hold a lease over the whole building for a term
of 4.5 years and wish to extinguish their liability.
SUB TENANTS
There are a total of 7 sub tenants with interests in the
building ranging from terms of 6 months to 4 years.
Equally the rents paid vary widely from £8 psf to £24psf.
PROFITFROMSURPLUSLEASEHOLDPROPERTY
STAKEHOLDER ANALYSIS - SUMMARY
Case Study - St Albans

33. PROFITFROMSURPLUSLEASEHOLDPROPERTY
EXIT STRATEGY - SUMMARY
Disposal Option Exit Summary
Full surrender to landlord £4.4m Institutional landlord. Recently acquired
on the back of a Government covenant.
Would ignore sub tenant income.
Assignment of whole to term Property already partly sublet.
Subletting of whole Property already partly sublet.
Sub tenant collaboration
and re-letting
£3.1m Property sub let in part to 7 tenants on
9 leases. Utilize breaks, lease expiries
and reviews to consolidate and align sub
leases with head lease. Refurbish and re-
let 14,400 sq ft at a cost of £150,000 and
re-let to term at passing rent of £16.50
psf.
Alternative arbitrage strategies
Joint refurbishment and re-letting
strategy with the landlord
£2.6m On expiry landlord expected to carry
out full refurbishment and seek rent
of £22 psf +. Possible opportunity to
agree joint strategy to refurbish vacant
space to higher specification and agree
early exit.
£ PROFIT FROM SURPLUS
LEASEHOLD PROPERTY
Project completed approximately £500,000
ahead of business plan pricing.
Refurbished 14,400 sq ft of vacant space
on time and on budget.
Re-let all in two suites at passing rent
of £16.50 psf to term of head lease.
Taken early surrender of 13,500 sq ft from
sub tenant paying £11 psf with 2015 expiry.
Simultaneous re-let as two suites
at £16.50 psf to term of head lease.
Total sub tenant rent now £930,000 p.a.
Uplift of £410,000 p.a.
Case Study - St Albans

34. 50 Grosvenor Hill, London W1K 3QT
Email: sj@greenhillsam.com or sr@greenhillsam.com
Tel: +44(0)20 7182 1001 or +44(0)20 7182 1002
www.greenhillsam.com