Selling a company with real estate portfolio?

by Readers Question

11:07 AM, 17th March 2021
About 4 weeks ago

Selling a company with real estate portfolio?

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Selling a company with real estate portfolio?

I’m a small incorporated landlord with a portfolio of 40 individual real estate units, namely garages. I am now considering liquidation of the company with an obvious route being selling the garages on an auction as individual lots.

Having a naturally inquisitive mind I’m trying to invent other options of achieving the same result. I’m therefore wondering if there is a market to sell my company’s shares instead, effectively transferring the entire portfolio to the new owner avoiding many individual transactions and associated overhead costs.

If details are important, all my garages are: within M25; owned outright; freeholds; tenanted; in good state of repair. I don’t expect any of the individual sales to attract SDLT in the current climate, though some sites are suitable for redevelopment and will fetch more than just individual garages they are comprised of. My current turnover is just below £60,000 and in the past, I was consistently able to raise the rent in line with CPI.

So my questions are:

Is it possible to sell the company as a whole?

How would I value this sale?

Are there any other options I haven’t considered?

I’m not in an immediate hurry but would like to exit in cash within a year.

Stanislav

Comments

Mark Alexander

21:20 PM, 19th March 2021
About 4 weeks ago

Reply to the comment left by alocjtoi at 19/03/2021 - 21:16
It was indeed, for a very successful tool hire business that needed to raise a deposit to buy the building they had been leasing off their landlord

alocjtoi

22:27 PM, 19th March 2021
About 4 weeks ago

Reply to the comment left by Mark Alexander at 19/03/2021 - 21:20
Marvelous, may be I was not looking hard enough.

Mark Alexander

6:32 AM, 20th March 2021
About 4 weeks ago

Reply to the comment left by alocjtoi at 19/03/2021 - 22:27
I’ve long since retired from finance broiling but have a look at lenders who finance other assets such as caravans, timeshare, plant and machinery and you might be surprised what you find.

Guy

9:59 AM, 20th March 2021
About 4 weeks ago

Hi Stanislav,

"Are there any other options I haven’t considered?"
- Regardless of auction route or not, you could split them into batches.
- Do you need to sell them? If they are providing a good, low hassle and sustainable income they might be worth keeping hold of. Might there be other routes to achieve your goals without selling?

I would be interested in looking at them as potential development opportunities if you would like to get in touch.

Kind regards,

Guy
guy@blueinfinityproperty.com

alocjtoi

10:58 AM, 20th March 2021
About 4 weeks ago

Reply to the comment left by Guy at 20/03/2021 - 09:59
Yes, the auctioneers suggested that I split the lot over 2-3 batches which I'll probably do.

The garages are providing healthy income and while low hassle, not totally hassle-free, I still need to deal with viewings, removals and repairs with occasional one-offs like neighbour complains or flytipping. But the main reason to sell is relationship breakdown as it usually happens in such cases.

There are a few sites suitable for development with one particularly promising. I'm waiting for the council to get back to me with pre-app advice on that one before listing it for sale. I will send you a list for a review.

Guy

15:10 PM, 20th March 2021
About 4 weeks ago

Reply to the comment left by alocjtoi at 20/03/2021 - 10:58
Thanks Stanislav, received okay and will come back to you in the week.

Kind regards,

Guy

MARK WIGHTMAN

16:30 PM, 20th March 2021
About 4 weeks ago

Hi Stanislav, have you thought about a Joint Venture on the developable sites? I have some experience with JVs on garage sites in London. Let me know if this is of interest?

Mark

Amjed Khan

18:10 PM, 20th March 2021
About 4 weeks ago

Hi sorry to hear about you having to dispose of your company. Not sure if you could do this but you might be able to split the company in two.

Do you have a pension? Garages are considered commercial property so you could sell your half to your SSAS and then you could sell them of slowly or keep and charge the SSAS a management fee.
You could sell the garages one by one and keep the cash in the company. With your share you could re-invest.

alocjtoi

22:21 PM, 20th March 2021
About 4 weeks ago

Reply to the comment left by MARK WIGHTMAN at 20/03/2021 - 16:30
Mark, I've considered a JV with my friend a while ago and we decided it's not worthwhile.

alocjtoi

22:36 PM, 20th March 2021
About 4 weeks ago

Reply to the comment left by Amjed Khan at 20/03/2021 - 18:10
Thanks Amjed, SSAS looks interesting, but at this point I prefer to withdraw from any business activity and just exit in cash. Don't feel like I want to be involved in real estate any more to be honest.

Yes, I'm aware there will be some tax implications and I'm prepared to deal with them as and when and I'm still young enough to be tempted by the benefits a pension scheme provides.

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