Assets and Liabilities Register Greg Wheeler Director savills.com
The Exam Question Why have one at all What should be included How to hold the data Practical implementation Exciting Stuff!!!
Where has this all come from? The C word 12,000 leases (non general needs) On or off balance sheet? Board did not know Nobody knew where to find info Not unique
But is that the whole story? The P Word Return of public purse Social obligations Development RP sector not well liked
Remember HCA Primary Objectives Protect social housing assets and public investment Encourage the supply of housing
So What To Do? HCA Regulatory Framework RP s have a formal assets and liabilities register in place Use this for business plan stress testing Board sign a statement of compliance Greater Scrutiny
Enforcement 2015-2016 In Depth Assessment (IDA) Every 4 years for over 1,000 units Or sooner!!! Strong line!
Guidance Not really!!...top level Not prescriptive Hold info on all assets and liabilities Board is aware Hmmmm!
What Does a Register Comprise A register of all freehold and leasehold land and property assets A register of all development contracts, obligations and penalties A register of all major commercial contracts, obligations and penalties A register of all commercial subsidiary / joint venture agreements and commitments What you have and what are the financial risks
What Does a Register Look Like No one knows!!! One for assets one for liabilities? Think of it as an index, not necessarily a whole list A core list with links A format that can be understood No cottage industry
Liabilities Development contracts Leasing deals for non standard accommodation can be complex and contain penalties Commercial contract often contain onerous penalties for under performance Subsidiaries and JV s, sits outside general governance, management processes The 80-20 rule
Commercial Contracts Field UCRN Details Spec Commitments Performance Termination Detail Contract reference Company name, address Purpose, input/output spec, term If RP to make investment Primary performance spec, non performance triggers, penalties Notice periods, penalties
The Stress Test The stress test is not a forecast. It is not a set of events that is expected, or likely, to materialise. Rather, it is a coherent tail-risk scenario that is designed specifically to assess the resilience of UK banks. When will the business breaks, and why The Perfect Storm
Back to the Assets... What do you own? Think in near transactional quality Related assets What s charged Owned Leasehold Easy?! Manage No Housing Prove it!
A specific... Blocks Relationship of dwellings to block Leaseholders Re-charge Service charges
Assets Register Field UPRN Non-Dwelling Blocks Performance Detail Owned, charged, leased, term of lease, managed by others and term Type, owned, leased Link to dwellings, service charge, leasehold Asset or liability Value for money
Assets or liabilities... Positive or negative return to the business How do you measure this Strategic value The soft issues Its all about the data
What Information is Required to do all of this Group the stock Identify what money goes out Identify what money comes in Consider non financial areas And bring them all together
Understanding Investment SCS Info Your local standard Revenue Investment importance Understanding
Presentation of Info... Summary Easy to understand Easy to monitor Category Element Start Rank Rank Ideal % Reduction Finish Unit Volume Compliance 400,000 5 1 0 400,000 n/a n/a Development 1,000,000 5 1 100 1,000,000 120,000 8 Showers 400,000 5 2 50 200,000 2,510 80 Related Assets 350,000 4 5 50 175,000 n/a n/a External Works 300,000 4 5 50 150,000 750 200 Roofs 150,000 2 4 30 45,000 4,000 11 Doors 200,000 3 3 10 20,000 600 33 Windows 250,000 3 2 5 12,500 2,500 5 Electrics 100,000 3 5 20 20,000 1,000 20 Heating 250,000 2 4 0 250,000 2,400 104 Bathrooms 300,000 2 2 0 300,000 3,000 100 Kitchens 400,000 2 2 0 400,000 4,000 100 Kitchen DH 400,000 1 1 0 400,000 4,000 100 Bathroom DH 300,000 1 1 0 300,000 3,000 100 Heating / Electrics DH 250,000 1 1 0 250,000 2,600 96 Roofs DH 125,000 1 1 0 125,000 4,000 31 Windows and Doors DH 140,000 1 1 0 140,000 3,000 47 Compliance 1,000,000 1 1 0 1,000,000 n/a n/a Revenue 2,000,000 1 1 0 2,000,000 n/a n/a Must link back to core data
Record your assumptions, and group the stock Uprn Address Category Year 1 Year 2 Year 3 Year 4 Year 5... 12345671 Savills str SCS 5,000 2,000 0 1,800 100... 12345671 Savills str Responsive 342 342 342 342 342... 12345671 Savills str Void 200 200 200 200 200... 12345671 Savills str Cyclical 180 180 180 180 180... 12345671 Savills str Asbestos 100 100 100 100 100... 12345671 Savills str FRA 1,000 0 0 0 0... 12345671 Savills str Disabled Adaptations 50 50 50 50 50... 12345671 Savills str Management 1,000 1,000 1,000 1,000 1,000... 12345671 Savills str Total 7,872 3,872 1,872 3,672 1,972... Ease of modelling assumptions
Money In, per prop or group Rent role Target rent assumptions PV etc? Void loss? Relatively easy?
Cash Flow Per Annum By Group Ease of modelling assumptions
Whether to Invest? OK TO INVEST OPTIMISE PROCUREMENT RECOVERY AND IMPROVEMENT PLAN OPTION APPRAISAL
Hidden business or dept capacity? 256M
Hidden business or dept capacity? 256M 256M
Hidden business or dept capacity? 256M 320M 256M
Non Financial Items IMD Score Demand SAP What is important to you Location ASB Measure the return on assets not just financial
Social returns Vs Financial
Social returns V s Financial V s Location
Register Links Deeds GIS Finance Business plan Asset Register Treasury Housing management Asset Management Development
Summary Get your house in order Understand your assets (all of them) Understand your liabilities Keep it as simple as possible Index, log, update, Understand the risks