Service Charge Expenditure Report O2 Centre

Transcription

1 Finchley Road

2 Land Securities, meet Landsec Our new brand isn t just a new name and logo, it s founded on a brand idea and a philosophy that moves us on from the idea of placemaking into a focus on customers and experiences. Everything is experience Anchor-Meet 2

3 Anchor-Welcome Welcome to Landsec 3

4 Our deep understanding of consumer expectations of convenience, comfort and entertainment means that our properties are managed to support our retail partners in achieving strong performance Welcome to the Service Charge Reconciliation Booklet for the, Finchley Road. As with previous years, this booklet has been prepared to provide our occupiers with details of actual service charge expenditure over the last financial year. In we transitioned to a new soft services provider, Interserve, on a portfolio-wide contract and, following major blockages at level 2, we improved drainage PPM, whilst embedding our monitoring programme for occupier s grease trap cleaning and maintenance. In September, we launched the Share Your Thoughts portal, where guests can give quantitative and qualitative feedback on all aspects of their visit to the O2 Centre. This feedback is discussed and analysed by the Portfolio and Centre Management teams, and shared with Service Partners, and allows us to make more informed decisions about the things our customers care about, and to track improvement across more than twenty different metrics. In February, we also launched our Rewards & Recognition programme to motivate Service Partner staff to provide excellent customer service. Jason King Centre Manager In we are improving guest services based upon customer feedback, such as the refurbishment of the Ladies toilet, and providing more children s events during half-term. Major repairs on goods lifts, the PAVA system and roof integrity will ensure the Centre s infrastructure meets occupier needs and customer expectations. Landlord expenditure upon a new Family Room, atrium lighting, decor and a mall seating area will all help to raise the standards at the in line with our vision to deliver a premium quality experience to our guests. All these works will help us to increase customer satisfaction and dwell time, and ultimately average spend. I hope you find this booklet useful and informative and, as always, if you have any queries concerning the content then please do not hesitate to contact me. Warm regards Jason King Centre Manager 4

5 Inside this document Certification Our Obligations As a responsible Landlord we have a duty of care to act with professional care, diligence, integrity and objectivity in managing the provision of services within the property. For best practice, we endeavour to provide our Customers with the following key elements; Service Charge Customer Statement Service Charge Expenditure Report Service Charge Allocation and Service Charge Operational Overview of Variances Actuals This report has been produced by Landsec, the Landlord of the property, and relates to the service charge period of 1 April March This service charge statement was prepared on an accruals basis. Royal Institution of Chartered Surveyors (RICS) Code of Practice, Third Edition This report has been produced having regard to the best practice guidelines for service charges in commercial property and endorses the principles set out in the third edition of the RICS Code of Practice. Both Landsec and the Tenant are still bound by the existing lease terms, which take precedence over the Code of Practice but would encourage our occupiers, like ourselves, to be guided by The Code wherever possible. Schedule of Assumptions and Exclusions Empty Unit Voids and Caps - We pay the service charge for any void or empty unit and any service charge contribution which is reduced as a result of any form of concession or capping. Service Charge Exclusions - The service charge costs will NOT include: Initial costs in relation to the original design and construction Setting up costs that are part of the original development Improvement costs above normal maintenance, repair or replacement except where an improvement can be justified to provide benefit to the occupiers Redevelopment costs Costs which relate to individual occupiers Payment of Interest - It is our policy not to apply interest to on-account service charge contributions. However, we do not apply any of our bank charges back to the service charge. VAT The Landlord has chosen to opt to tax. All service charge expenditure is shown exclusive of VAT. VAT will be charged at the appropriate rate on all service charge payments demanded/invoiced by Landlord. Certification Period 1 April 2016 to 31 March 2017 Building, Finchley Road I hereby certify that, the attached statement of reconciled service charge expenditure records the true cost to the Landlord of providing the services to the property for the period 1 April 2016 to 31 March 2017, in accordance with the terms of the lease and, where practicable, the RICS Code of Practice Service Charges in Commercial Property (Third Edition). At year end there are amounts totalling 271, which have been provided for in the service charge expenditure - these allowances have been made to account for expenditure where invoices have not been received. Signed: Andy Williams F.C.C.A Senior Finance Manager Landsec 5

6 Anchor-Schedules Explanation of Schedules 6

7 Explanation of the Schedules Schedules The service charge schedules are set out as follows; ALL DEFINED UNIT Services which benefit all occupiers. This represents the service charge contribution from the supermarket. The cost summaries on the following pages show the actuals for the service charge year and identify the allocation of costs across the various elements of the property (i.e. schedules). Where there is more than one schedule there is a separate column on the Allocation of Costs Summary for each. This is to ensure that costs are appropriately allocated and that customers only contribute toward the services from which they benefit. 7

8 Anchor-Actuals Actuals

9 Actuals - Overview Year Ending 31 March ,749,211 Total Actuals Figures rounded to the nearest decimal point. Management and Insurance 318, % Utilities 176, % Soft Services 828, % Hard Services 300, % Income ( 20,131) (1.2%) Exceptional Expenditure 145, % 9

10 Actuals - Expenditure Summary Year Ending 31 March 2017 Service Charge Expenditure Schedule Management Actual ( ) Budget ( ) Variance ( ) Variance (%) Actual ( ) Management Fees 87,494 87,494 (0) (0.0%) 83,383 Site Management Resources 207, ,368 (24,623) (10.6%) 209,656 Health, Safety & Environmental 16,863 10,453 6, % 9,479 Management Sub-total 312, ,315 (18,213) (5.5%) 302,517 Utilities Electricity 139, ,832 (6,043) (4.1%) 142,112 Gas 28,240 29,408 (1,168) (4.0%) 26,491 Water 8,423 9,000 (577) (6.4%) 5,011 Utilities Sub-total 176, ,240 (7,788) (4.2%) 173,613 Soft Services Security 329, ,766 32, % 310,812 Cleaning & Environmental 373, ,309 3, % 362,807 Marketing & Promotions 125, ,590 (508) (0.4%) 122,095 Soft Services Sub-total 828, ,665 35, % 795,714 Hard Services Mechanical & Electrical Services 130, ,010 16, % 171,690 Lift & Escalators 39,824 25,631 14, % 26,870 Suspended Access Equipment 1,457 1, % 1,089 Fabric Repairs & Maintenance 128,755 84,949 43, % 83,304 Hard Services Sub-total 300, ,682 74, % 282,952 Income Income From Commercialisation (20,131) (14,260) (5,871) 41.2% (20,171) Income Sub-total (20,131) (14,260) (5,871) 41.2% (20,171) Insurance Engineering Insurance 6,593 6, % 8,798 Insurance Sub-total 6,593 6, % 8,798 Exceptional Expenditure Major Works 145, ,000 (24,209) (14.2%) 91,529 Exceptional Expenditure Sub-total 145, ,000 (24,209) (14.2%) 91,529 Total 1,749,211 1,695,025 54, % 1,634,952 10

11 Actuals - Expenditure Summary Year Ending 31 March 2017 Allocation of Costs (1 of 3) TOTAL ALL DEFINED UNIT Management Management Fees 87,494 87,494 0 Management Fees 87,494 87,494 0 Site Management Resources 207, ,745 0 Staff Costs 175, ,571 0 Site Offices/Accommodation 32,174 32,174 0 Health, Safety & Environmental 16,863 16,863 0 Health & Safety 16,863 16,863 0 Management Sub-Total 312, ,102 0 Utilities Electricity 139, ,789 0 Electricity Lighting 131, ,500 0 CRC Electricity 8,289 8,289 0 Gas 28,240 28,240 0 Gas 25,872 25,872 0 CRC Gas 2,368 2,368 0 Water 8,423 8,423 0 Water 8,423 8,423 0 Utilities Sub-Total 176, ,452 0 Soft Services Security 329, ,767 0 Security 329, ,767 0 Cleaning & Environmental 373, ,260 0 Cleaning 251, ,395 0 Waste Management 66,409 66,409 0 Housekeeping / Sundry Costs 25,050 25,050 0 Seasonal Decorations 30,407 30,407 0 Marketing & Promotions 125, ,082 0 Marketing/Promotions 125, ,082 0 Soft Services Sub-Total 828, ,

12 Actuals - Expenditure Summary Year Ending 31 March 2017 Allocation of Costs (2 of 3) TOTAL ALL DEFINED UNIT Hard Services Mechanical & Electrical Services 130, ,259 0 Fire Precautions Maintenance 14,392 14,392 0 Fire Precautions Repairs 4,584 4,584 0 General Engineering Maintenance 73,314 73,314 0 General Engineering Repairs 15,252 15,252 0 Lighting/Electrical Maintenance 3,902 3,902 0 Lighting/Electrical Repairs 10,187 10,187 0 General Machinery 4,192 4,192 0 Heat/Air Con/Comfort Cooling Maintenance 2,450 2,450 0 Heat/Air Con/Comfort Cooling Repairs 1,985 1,985 0 Lift & Escalators 39,824 39,824 0 Lift/Escalator Maintenance 27,669 27,669 0 Lift/Escalator Repairs 12,155 12,155 0 Suspended Access Equipment 1,457 1,457 0 Suspended Access Equipment 1,457 1,457 0 Fabric Repairs & Maintenance 128, ,755 0 Internal Maintenance 102, ,214 0 External Maintenance 26,541 26,541 0 Hard Services Sub-Total 300, ,296 0 Income Income From Commercialisation (20,131) (20,131) 0 Promotional Income (20,131) (20,131) 0 Income Sub-Total (20,131) (20,131) 0 Insurance Engineering Insurance 6,593 6,593 0 Lift/Escalator Insurance 3,255 3,255 0 General Engineering Insurance/Inspection 3,338 3,338 0 Insurance Sub-Total 6,593 6,

13 Actuals - Expenditure Summary Year Ending 31 March 2017 Allocation of Costs (3 of 3) TOTAL ALL DEFINED UNIT Exceptional Expenditure Major Works 145, ,791 0 Plant Replacements 123, ,811 0 Major Building Works 21,980 21,980 0 Exceptional Expenditure Sub-Total 145, ,791 0 Total 1,749,211 1,749,211 0 Defined Unit Account Defined Unit Account 0 (454,795) 454,795 Defined Unit Account Sub-Total 0 (454,795) 454,795 Grand Total 1,749,211 1,294, ,795 13

14 Anchor-Apport Service Charge 14

15 Service Charge Year Ending 31 March 2017 Please note that this apportionment represents the position at 31 March Where there have been changes in apportionment or tenancies during the year then the figures shown are only indicative. Along with balancing invoices/credit notes, we have issued individual statements showing a full breakdown relevant to each tenant. The Service Charge expenditure is apportioned according to gross internal floor area based on the weighted floor area method. Level 0 Level 1 Level 2 The following percentage multipliers apply: Range From (sq. ft.) Range To (sq. ft.) % Weighting 0 and above 35% Range From (sq. ft.) Range To (sq. ft.) % Weighting - 10, % 10,001 15,000 90% 15,001 20,000 70% 20,001 and above 50% Range From (sq. ft.) Range To (sq. ft.) % Weighting - 15, % 15,001 20,000 70% 20,001 and above 35% ALL TENANTS TOTAL 1,749,211 1,749,211 FACTORS ACTUAL Address ALL TENANTS ALL TENANTS TOTAL Defined Unit Contribution 454, ,795 Balance to Apportion 1,294,416 1,294,416 Cinema Level 2 29, , ,883 Unit 2 Levels 0 & 1 37, , ,998 Unit 4, 4a & 4b Level 1 17, , ,368 Unit 5 Level 1 10,287 89,080 89,080 Unit 4c Level 1 2,870 24,853 24,853 Unit 10 Level 2 3,477 30,109 30,109 Unit 3a Level 1 2,848 24,662 24,662 Unit 9 Level 2 2,802 24,264 24,264 Day Care Centre Level 2 4,401 38,110 38,110 Unit 3 Level ,135 3,135 Unit 1a Level 1 1,400 12,123 12,123 Restaurant Pod Level 2 1,592 13,786 13,786 Restaurant Unit C 3,329 28,827 28,827 Restaurant Unit B 3,292 28,507 28,507 Unit 3c Level 1 2,915 25,242 25,242 Unit 3b Level 1 1,990 17,232 17,232 Unit 3d Level 1 2,807 24,307 24,307 Unit 3e Level 1 3,198 27,693 27,693 External seating area o/s unit 8B 199 1,723 1,723 Coffee Shop Level 1 1,523 13,188 13,188 Remote store for Restaurant Pod 133 1,152 1,152 Unit 8d, level 2 4,796 41,531 41,531 Mezzanine Kiosk Level ,005 3,005 External seating area o/s unit 8d 188 1,628 1,628 Unit 7a Level 2 4,301 37,244 37,244 Unit 7b Level 2 3,241 28,065 28,065 Unit 7c Level 2 2,737 23,701 23,701 Sub Total 149,480 1,294,416 1,294,416 Grand Total 149,480 1,749,211 1,749,211 15

16 Anchor-Variances Summary of Variances 16

17 Year Ending 31 March 2017 Service Charge Actuals % Variance against forecast 3.2% (10%) to (5%) (5%) to 0% 0% to 5% 5% to 10% 1,695,025 Forecast ( ) ,749,211 Actuals ( )

18 Year Ending 31 March 2017 There are positive and negative variances contained within the summary schedule, the major financial variances are explained. Management Utilities 330, ,240 Budget ( ) Budget ( ) 312, ,452 Actual ( ) Actual ( ) ( 18,213) ( 7,788) Variance ( ) Variance ( ) Site Management Resources ( 24.6k) Underspend was due to changes in the Centre Management team, including the loss of temporary Ops Manager earlier than expected, and return of our permanent Ops Manager two months later than expected from maternity leave. There were also savings on staff training, bonuses, IT costs and office business rates. Electricity ( 6.0k) A saving on electricity has been achieved by procuring a cheaper electricity rate than initially forecast, and energy demand being reduced as a result of our Centre energy management programme. Health, Safety and Environmental 6.4k Overspend was due to fire risk assessment being undertaken by an external auditor, a fire door survey, an asbestos survey for lifts and escalators, and grease trap inspections for traps on cleaners sinks. 18

19 Year Ending 31 March 2017 There are positive and negative variances contained within the summary schedule, the major financial variances are explained. Soft Services Hard Services 792, ,682 Budget ( ) Budget ( ) 828, ,296 Actual ( ) Actual ( ) 35,444 74,614 Variance ( ) Variance ( ) Security 32.0k Contract Security costs were above budget due to this being set prior to completion of the soft services contract re-tender. There were also additional costs for contract mobilisation, account management, training and equipment. Cleaning & Environmental 3.9k Contract Cleaning costs were below budget due to the contract re-tender, but this was off-set by the requirement for additional hours to segregate tenant waste, plus additional staff training. There were also overspends for additional high-level cleaning and pest control and repairs to waste compaction equipment. Mechanical & Electrical Services 16.2k There were overspends on fire safety repairs due to issues arising with broken fire alarm call points, smoke vents and curtains, and a leak in the sprinkler chamber. Other unbudgeted costs arose from replacement of BMS controller/actuators, repairs to access gate detectors and hydraulics, concourse lighting system repairs, and heating system repairs. Lifts & Escalators 14.2k Overspend was due to replacement of lift motor room extract fan, misuse call-out fees, and insurance actions for installation of toe guards, mains switch isolator, and level indicators. Fabric Repairs & Maintenance 43.8k Overspend was partly due to extensive investigation and use of suction tanker following major blockages in pipework below level 2, causing foul water ingress to occupiers at level 1. There was also additional expenditure on mall redecoration and tiling works, roof leaks and public toilet blockages. 19

20 Year Ending 31 March 2017 There are positive and negative variances contained within the summary schedule, the major financial variances are explained. Income Exceptional Expenditure ( 14,260) 170,000 Budget ( ) Budget ( ) ( 20,131) 145,791 Actual ( ) Actual ( ) ( 5,871) ( 24,209) Variance ( ) Variance ( ) Income from Commercialisation ( 5.9k) Contribution from income was above budget due to the Centre securing 30% more mall promotional bookings than forecast. Major Works ( 24.2k) The underspend was mainly due to savings achieved on the glazing inspections through a portfolio-wide contract, and with fewer issues arising than expected, the contingency amount for remedial works was not required at this time. There was also a saving on the mall heating project. 20

21 Contacts Publication No SCE16/17 Jason King Centre Manager Landsec, 255 Finchley Road, NW3 6LU D/L: +44 (0) Mobile: +44 (0) landsec.com Karen Price Property Accountant Landsec 100 Victoria Street, London, SW1E 5JL D/L: +44 (0) landsec.com Land Securities Group PLC 100 Victoria Street, London SW1E 5JL +44 (0) landsec.com