Key Management Issues at Purchase
- The property had been entirely vacant since June 2009 in a difficult local letting market.
- The property had been used intensively and had been left in a poor state of repair by the previous tenant.
- Total estimated capex of about €1m were required to put the property in a marketable state. The works included replacement of the air-conditioning, recladding of the façade and creation of a second staircase to comply with fire regulations.
- Intensive negotiations allowed Rynda to agree a dilapidation settlement of €390,000 with the former tenant.
- Understanding the paucity of development opportunities in central Toulouse, Rynda used their network with local agents to generate multiple offers to buy the building. The cost benefit analysis of the refurbishment showed that a sale to a local developer gave the best risk adjusted return and the building was sold on 18th May 2010 to a local private investor.
- Disposal proceeds including dilapidation payments totalled €2,690,000, a surplus of 14% compared to the purchase price and 77% in excess of the valuation.