Decisions that assume the market will not help.
Every plan looks robust in a rising market. Ours are written to survive a flat one.
- Principles
- Underwrite on today, not on forecast growth
- Specify for the whole hold period
- Keep the capital structure boring
- Deal with occupiers directly
- Review the decision to hold, honestly
Underwriting
An acquisition has to work on the rent a building produces now and the cost of keeping it lettable. Growth, if it arrives, is upside — it is never the reason for the purchase. This rules out deals other buyers will pay more for, and that is the intended effect.
Specification
Because we expect to still own the building, we specify for the hold rather than for the handover photograph. Roofs, plant, windows and services get the attention; the things that will be redecorated anyway get less. This costs more on day one and less across fifteen years.
Occupiers
We deal with tenants directly. It is slower and it means hearing complaints first hand, which is exactly the point — a building's real condition is described more accurately by the people in it than by an inspection report.
Compliance
Fire safety, electrical and gas testing, asbestos management, and the rest of the statutory burden are dealt with on a calendar rather than in response to an event. This is not a differentiator; it is the minimum, and the number of buildings where it is not done properly is the reason it is worth stating.
Holding, and letting go
We review whether continuing to hold beats selling. The failure mode in a long-hold business is defending the original decision past the point at which it stopped being right, so the review is scheduled rather than prompted by an approach.