Real Estate Advisory
We help clients to address complex financial real estate challenges and manage costs in response to rapidly changing market dynamics.
Real estate commonly represents the second highest expense for businesses after people costs and is a critical component of the balance sheet for investment companies. While physical infrastructure can be slow and complicated to adapt and transact, occupational requirements across all real estate sectors are changing rapidly in response to the shift from physical to online retailing, the growth of agile and hybrid office working patterns accelerated by the Covid-19 pandemic and the explosion in demand for logistics space in response to these changes.
Businesses are under increasing pressure to ensure that they have the right physical infrastructure in the right locations, while addressing the substantial costs associated with operational real estate. Meanwhile, property investors and lenders are confronted with the impact of changing occupational patterns and pressures on rents on both their income and the capital values of their assets.
Teneo’s Real Estate Advisory team works closely with occupiers, investors and lenders to help them evaluate their options and develop strategies in response to specific operational or financial challenges, particularly financial distress. Our capabilities include:
Latest Financial Advisory Insights
Teneo Insights Series UK: What is Ahead for the Consumer in 2023?
The UK narrowly avoided recession in 2022, and the most recent forecasts for 2023 suggest a shallower recession than was anticipated last November. Although inflation is forecast to fall, the UK economy still faces a number of challenges, including rising interest rates, wage pressures driven by inflation and a tight… Read More
2023 UK Economic and Consumer Outlook
The UK narrowly avoided recession in 2022, and the most recent forecasts suggest low/stagnant growth, with the UK ultimately avoiding a technical recession that appeared inevitable in November when the country was still reeling from the impact of the previous Government's "mini budget." While inflation is forecast to fall, we… Read More
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The UK private healthcare market has seen a rebound in 2021 and 2022 post-Covid-19, driven in part by a surge in self-pay patients. A record number of people are opting to pay for their treatment privately to avoid long wait times in the NHS and access the quality and expertise… Read MoreContingency Planning
Providing technical real estate input to commercial and legal reviews of a business’s financial position to establish a fallback plan for the company or one or more of its stakeholders.
Restructuring Support
Working seamlessly with Teneo’s restructuring specialists to evaluate options and develop strategies to support the real estate aspects of any restructuring process such as CVA, Restructuring Plan or administration and receivership. This extends to directing the real estate workstreams of major administrations and managing the disposal of valuable assets to maximise realisations for creditors.
Stakeholder Engagement
Communicating effectively and credibly with key stakeholders, particularly landlords, internally and externally to communicate strategy and deliver consensual solutions wherever possible. This also includes managed exits where insolvency options are not available or appropriate.
Due Diligence
Providing technical and commercial real estate due diligence in support of rapid, complex M&A transactions or sales of non-performing loans. Reviewing the costs and benefits of post-merger property portfolios or asset management and business plans. Identifying opportunities to rationalise and optimise a combined estate and advising on the size and structure of any combined real estate management function.
Cost Reduction
Developing operational real estate cost reduction and portfolio rationalisation strategies for business clients in support of distressed and turnaround situations.
Footprint Optimisation
Using our bespoke proprietary location planning software to help consumer businesses identify their optimal footprint.
How We Support You
We can support a business at any point of their lifecycle through our extensive service offerings:
Performing
| Our applicable offerings | Company support | Lender support |
|---|---|---|
| Real Estate Target Operating Model |  |  |
| Operational Real Estate Cost Reduction | | |
| Tenant & 3rd party supplier strength | | |
Distressed
| Our applicable offerings | Company support | Lender support |
|---|---|---|
| Occupier advisory | | |
| Advanced Contingency Planning | | |
| Core Restructuring | | |
Insolvency
| Our applicable offerings | Company support | Lender support |
|---|---|---|
| Enforcement | | |
| CVA / Restructuring Plan | | |
| Company side support | | |
| Lender support | | |
Underperforming
| Our applicable offerings | Company support | Lender support |
|---|---|---|
| Performance improvement and target operating model | | |
| Tenant Strength | | |
| Real Estate Reviews | | |
| CVA Rent Model | | |
We have developed a series of proprietary tools to accelerate the analysis of common real estate challenges, enabling clients to respond quickly and efficiently to complex situations and changes in circumstances.
Case Studies
Tenant and supplier strength analysis:
Led by restructuring experts, our Credit Risk service has a strong track record of helping management teams to identify and minimise the impact of financial credit risk in their third-party networks whether this applies to suppliers or tenants.
Our work is always structured to meet specific client needs. Assessment scopes cover financial health assessment for high risk parties, contingency / continuity planning and procurement support to assess credit and contract risks.
Where a third party is identified as being at risk of failure, we can deploy situational experts to quickly assess financial viability, identify a preferred action plan and support in effective engagement with stakeholders to minimise disruption.
CVA rent model:
We combine our real estate and restructuring capabilities within a bespoke methodology that helps businesses to model and understand the potential implications of the CVA process. This allows them to anticipate outcomes and seek to optimise the portfolio footprint of occupiers to ensure any “go forward” physical estate is future proofed.
We are regarded in the landlord community, including the BPF (the industry body and voice of the landlords) as best in practice. Our approach on New Look has been described as “unprecedented” by the BPF and landlords.
Teneo footfall model
Teneo has the capability to deploy multiple data sources including cell tower data and government open-source data to develop models to help clients understand footfall patterns. We can determine UK population movement, footfall and journeys, on an hour-by- hour, day-by-day basis, segmented by purpose and core demographics and use this to develop models to help consumer facing businesses optimise their location decisions and strategies.
Occupier
The Situation
As a result of the Covid-19 lockdown restrictions and gyms remaining closed, Virgin Active faced an imminent liquidity shortfall due to the ongoing rental charges it faced.
Our Involvement
Lead advisor to Virgin Active in the implementation of its Restructuring Plans and provision of relevant alternative analysis. This involved designing and implementing a holistic restructuring solution using a Part 26A Restructuring Plan to bind secured and unsecured creditors through a single process.
Results
The sanction of the Plans allowed the Group to secure concessions from its creditors and obtain the new money it required to address the liquidity shortfall and position it for recovery from the pandemic. This is the first financial and operational restructuring involving a leasehold estate to be delivered using a Part 26A restructuring plan.
Investor
The Situation
Appointed Administrators over the holding company of a UK property group with over £800m of debt.
Our Involvement
Revised property/asset management agreements with the incumbent asset manager to minimize the operational disruption. The Solvency of underlying Propcos was maintained to facilitate either share or asset sales. We carried out a detailed tax review to minimise liabilities and advised on the optimal realisation strategy for each asset, including immediate sales, holding strategies and joint ventures.
Results
Asset properties were sold on an individual basis above market value.
Accelerated M&A
The Situation
We initially advised the Group regarding its options and were subsequently appointed as administrators, managing the UK operations during the Covid-19 pandemic.
Our Involvement
We performed a complete restructuring of their lease portfolio and led all the initial negotiations with landlords to secure the survival of the business. This encompassed negotiating both short-term rent and long-term property strategies, as well as conducting sales processes.
Results
This allowed for a fast-track M&A process, which led to a JV partner being identified to rescue the business.
