Speakers at CFG's Annual Conference 2012

1. Property Management
Christine Janaway Bruton Knowles
Jon Wright, Mencap

2. Contents
Introduction
Charity Commission Guidance
Fitness for Purpose
Keys to success
Quick Guide to property investment
Case Study – Mencap

3. Charity Commission Guidance
Hallmarks of an Effective Charity
Hallmark 5: Financially sound and prudent
“An effective charity has the financial and
other resources needed to deliver its
purposes and mission, and controls and
uses them so as to achieve its potential”

4. To think about …
Property – is it an asset?
• Operational
• Financial
Property – or is it a liability?
• Unsuitable
• Insufficient
• Unsustainable
• Obsolete

5. Not fit for purpose?
Short term
• Identify core property
• Review -SSS
• Identify surplus property
• Assess liabilities/opportunities
Medium term
• Restructure leases
• Realise assets where viable
• Add value to portfolio
• Planned maintenance/development

6. Keys to success
Creating an effective property portfolio
Establish Board/Senior Management
responsibility
Identify necessary resources
• Internal
• External
Set project plan
Implement
Review

7. Quick guide to …..
Property Investment
What is the investor actually buying?
1 - ££££££
2 - ££££££
3 - ££££££

8. Quick guide to …..
Property Investment
 Example 1  Example 2
 Rental income £100k pa  Rental income £100k
 Tenant – say pa
Sainsbury’s  Tenant – say Joe Bloggs
 Value?? Ltd
 Value??

9. Quick guide to …..
Property Investment
What is the investor actually buying?
££££££
Investment yield spread
“junk bonds” “gilts”
Where does property lie on this line?
Is it even on this line?

10. Quick guide to …..
Property Investment
What is the investor actually buying?
££££££
 Example 1  Example 2
 Rental income £100k  Rental income £100k
pa pa
 Tenant – say  Tenant – say Joe Bloggs
Sainsbury’s Ltd
 Yield??  Yield??

11. Quick guide to …..
Property Investment
Yield drives value
Based on –
Covenant (tenant) strength
Rental income
Property type and location

12. Case Study - Mencap
Mencap acquisition of the care homes on sustainable
business model based on the principle that yield
drives value
Background
Existing leases
Landlord’s (ie. Funding bank’s) requirements
Mencap’s agreed terms

13. Case Study - Mencap
Mencap’s perspective
• Rent reduced by almost 30%
• Removal of rental escalator
• Secure and financially sound business model
Landlord’s perspective
• Lower yield
• Long term confidence in the income stream
• Improved capital value – from £15 to £20m
• Better funding terms from bank

14. Questions