Administrator's duty when selling property
Discussion
I'm looking at renting an industrial unit from a company that is in administration. The place is currently in a state and needs work (incentivisation has already been mentioned by the letting agent without prompting). Despite the issues it will be almost an ideal place for us when repaired. I am considering putting in an offer to buy the property or to lodge an offer which would involve renting for X number of years and owning the place at the end of the rental period.
My question is, what guidelines would an administrator of a company that has went into administration follow when looking at selling an industrial unit in disrepair? Do they have any obligations to get a decent price for it or can they do as they like to the point of putting themselves in the position where they practically give the building away?
My question is, what guidelines would an administrator of a company that has went into administration follow when looking at selling an industrial unit in disrepair? Do they have any obligations to get a decent price for it or can they do as they like to the point of putting themselves in the position where they practically give the building away?
Alpinestars said:
Their legal obligation is to maximise proceeds for the creditors. It'd be a very dangerous game for an Asministrator to sell something at undervalue.
That's understandable and I'm sure there's rules they need to follow to prevent any sort of corruption through vested interests. In the context in which I'm looking at this unit, I'm not sure where the true value lies. It has been vacant for a number of years (at least 3, probably 5+), it looks like rats are regular visitors, it needs modernisation and there are 2 other units on the very same street in the same situation (so about 25% of the units in this specific area). The unit needs work and is essentially unlettable at the moment. I was thinking of offering quarter of its value in good condition. I'd still rent the place if they aren't interested but figure it's worth asking as it could be a very good opportunity if I can buy it very cheap.
AyBee said:
What's the situation with the other similar units?
been vacant for years and although one doesn't need much done, the other needs gutted as it's full of crap and the office built inside it would be condemned if inspected. They're about 1,200 sq ft each and the warehouse I want is 2,425ModernAndy said:
AyBee said:
What's the situation with the other similar units?
been vacant for years and although one doesn't need much done, the other needs gutted as it's full of crap and the office built inside it would be condemned if inspected. They're about 1,200 sq ft each and the warehouse I want is 2,425My business works almost exclusively for Insolvency Practitioners (property & non-property assets) - I accept they often put fees first but in my 20 years/1,000s of cases experience, they NEVER undersell an asset with reasonable value unless there is some unusual politics going on
However with properties, what they will do is differentiate between a hoped for price with 12 months of marketing and a realistic asking price that won't take more than a few months to achieve
It would be unusual but not unheard of to spend significant money improving a property before selling it, even if the likely outcome was 'profitable'
We have sold sites only fit for redevelopment and achieved stunningly high prices at times - ultimately there should be no major difference between what a property being sold for an IP raises and what a non-insolvency property raises, other than the fact that the IP is very much looking to get the sale done, rather than speculatively marketing
If there is a mortgage, the bank may have an unrealistically high minimum but they tend to be fairly philosophical about these things.
If there is a lot of interest in the property, they will put people to best and finals plus, ensure they only accept a bid from someone with proof of funding. If there is very little interest, they will be more negotiable..........it really is little different to any other property sale
Persuading an administrator that you have the cash and there is no chain, plus very little if anything in the way of conditions, is very powerful when persuading an IP to sell - they will often go for a bid that isn't quite as high if they think there's a much higher chance of completing
However with properties, what they will do is differentiate between a hoped for price with 12 months of marketing and a realistic asking price that won't take more than a few months to achieve
It would be unusual but not unheard of to spend significant money improving a property before selling it, even if the likely outcome was 'profitable'
We have sold sites only fit for redevelopment and achieved stunningly high prices at times - ultimately there should be no major difference between what a property being sold for an IP raises and what a non-insolvency property raises, other than the fact that the IP is very much looking to get the sale done, rather than speculatively marketing
If there is a mortgage, the bank may have an unrealistically high minimum but they tend to be fairly philosophical about these things.
If there is a lot of interest in the property, they will put people to best and finals plus, ensure they only accept a bid from someone with proof of funding. If there is very little interest, they will be more negotiable..........it really is little different to any other property sale
Persuading an administrator that you have the cash and there is no chain, plus very little if anything in the way of conditions, is very powerful when persuading an IP to sell - they will often go for a bid that isn't quite as high if they think there's a much higher chance of completing
Edited by jonby on Monday 24th August 15:38
AyBee said:
ModernAndy said:
AyBee said:
What's the situation with the other similar units?
been vacant for years and although one doesn't need much done, the other needs gutted as it's full of crap and the office built inside it would be condemned if inspected. They're about 1,200 sq ft each and the warehouse I want is 2,425I don't understand why the administrator hasn't put the properties up for sale if they aren't prepared to fix them so they're in lettable condition as I just don't see them getting rented out when there are so many other decent properties nearby. I am obviously hoping this puts me in a better position regardless of whether I want to buy or rent.
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