How should I best dispose of portfolio held in a UK ltd co?

by Readers Question

14:13 PM, 15th January 2020
About 2 weeks ago

How should I best dispose of portfolio held in a UK ltd co?

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How should I best dispose of portfolio held in a UK ltd co?

I am selling a portfolio of seven houses, some split into flats. The portfolio has been recently valued at around three million. It is held in a limited company that is owned by two shareholders who have held the shares since the eighties and now are looking to dispose of the asset for tax planning reasons.

The properties are unloved and unlovely properties in East London. They are mainly rented to councils via agencies. In many cases the properties receive a guaranteed rent for being available to various local councils to help them manage their statutory duties towards homeless people, but in some cases the properties are rented to private tenants.

I have offered the property to some businesses that specialise in managing large portfolios of this kind. I have cold emailed some national businesses whose business model is to buy commercial portfolios. I have in the past sold through local estate agents and I am contemplating selling by auction, as these properties are not suitable for amateurs going into buy to let investing for the first time.

I do not have any stake in the company, but I have known the owners for many decades. I charge a modest commission for project managing the whole business and for keeping the books but the day to day management is handled by professional agencies. This represents a considerable cost, but is the best solution for the current owners.

The properties are in E7, E12, E13 and E15. The company does own another property in IP33, but that will be purchased back by the shareholders if the company is sold. These areas were historically the cheapest part of the East End but are now becoming increasingly attractive to private buyers who are priced out of areas further west. However, to sell to a private owner occupier would require a considerable investment to bring up the properties to and attractive condition that the current owners are not prepared to make.

The portfolio comprises seven terraced houses 3 split into flats. There is minimal debt in the company (about 6% of the asset value). The owners would be prepared to increase the gearing within the company and take cash out to make the equity a more bite sized piece but this is not so easy to do as it would have to be on a non-recourse basis. The owners are quite elderly.

There is no great urgency to complete the disposal, but some material progress by the end of 2020 is the current target. The sale has been delayed by Brexit uncertainty.

The owners are looking to liquidate some of their assets for tax planning and other purposes. I would like to free myself up from the responsibility of managing the portfolio in the next year or so to free myself up to concentrate on other projects even though the effort of managing it is now very low after some effort on my side to streamline this.



Comments

Mark Alexander

19:26 PM, 15th January 2020
About 2 weeks ago

1) It might be worth forming a subsidiary, transferring the assets to be sold into that subsidiary and then selling that company. Buyers SDLT on the purchase of shares is just 0.5%. It makes the deal more attractive, especially as the company will be clean too.

2) Can you put some numbers around the deal please?

3) Are you willing to split the commission on the selling fees if another intermediary can help to find a buyer? If so, what's the deal?

Austyn at H D Consultants

13:27 PM, 16th January 2020
About 2 weeks ago

Hi,
As these sound quite run down, have you tried contacting a local property developer that may take a view on future prospects for the whole portfolio?

Mark Alexander

13:33 PM, 16th January 2020
About 2 weeks ago

Might the Council be interested in buying them as emergency accommodation?

RoyalVictoria

20:32 PM, 17th January 2020
About A week ago

I’d like to meet you and the owners with view to purchase

Tonu Aboaba

11:39 AM, 18th January 2020
About A week ago

I might be a able to help you dispose of the portfolio. Please get in touch.

Summer

20:10 PM, 18th January 2020
About A week ago

We currently have properties in the areas mentioned and would be happy to take on some of the properties.

Navro18@gmail.Com

15:51 PM, 19th January 2020
About A week ago

We are also interested in purchasing these properties please do get in touch

ec1holdingsltd@gmail.com

22:35 PM, 20th January 2020
About 6 days ago

Hello, I would be interested in acquiring the company. Please contact me if still available. Many thanks.


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