One of the first steps is evaluation and gaining a better understanding of their existing portfolios, to make the best of what they’ve got – given constraints on availability of finance.  Typically the portfolios are older, B grade and ripe for opportunity.

Strategic Asset Planning provides short, medium and long term views on minimising cost, managing risk and maximising returns through continued due diligence.

There is a positive trend towards this approach starting with understanding baseline data in terms of condition, performance and environmental and regulatory compliance in such a way that is cost effective, meaningful, useable and enduring.  It is vital to know what data needs to be collected and how it should be best used and managed for maximum effect.

The benefits of such strategic planning are instrumental to growth and can assist in improving the portfolio in terms of presentation, efficiencies, positioning, leasing, sales and returns.  Such planning is likely to include the following:

Napier & Blakeley form partnerships with property owners and managers to provide commercially oriented strategic asset management plans across all property sectors.

Our clients include:

• Aviva
• BlackRock
• Brookfield Multiplex
• GE Capital
• Local Government Super
• Motor Accident Commission

Contact 

 Our strategic, cost effective advice will best position your property for the future.

Call Napier & Blakeley today if you want further information or regarding any other Napier & Blakeley services:

Melbourne - Rob Howells            03 9915 6300             rhowells@napierblakeley.com
Sydney – Gavin Peach                02 9299 1899              gpeach@napierblakeley.com

Napier & Blakeley Services:

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Accredited NABERS Ratings
• Accredited CBD Tenancy Lighting Assessments
• Property Depreciation

Over the past few years,

“Risky” has taken on a whole new meaning in the last few years and as we’ve talked about before you could have the best site in town, with an award winning design and 100% pre sales – but this in some instances still proved too risky for the banks in an uncertain market going forward.

To be fair to the banks, we are seeing increased lending activity in some sectors of the market, generally not large builds but certainly in the up to $20m market and more recently to a limited extent in the $20m to $100m sector with some isolated builds over $100m, so some of the banks, at least seem to have a developing appetite for deals.

A significant issue raised by a number of banks, is the quantum and quality of equity being put forward by developers with lenders wanting to see “real dollars” as a means of mitigating their risk further.

Obviously there are significantly differing market risks at play as we speak, with property markets across the country varying greatly in terms of rise or fall in value.

Melbourne has been pretty steady in terms of new development for us over the last two years.

Sydney has been through a substantial quiet time but now appears to be gaining some momentum with some lenders realising opportunity exists in certain physical areas where development has been scarce in recent years and as a result market pricing has held up and rental pricing has increased significantly.

South East Queensland is still problematic with the banks still holding many “difficult” loans on their books that may take some time to realise any value, let alone return on investment. General market sentiment, in particular business investment, remains weak as a result of a continued lack of confidence and the perception of a lack of credit in the system.

Now that the banks have started to relook at property lending in a more energetic way, there will also no doubt be some property workouts and possibly more developers placed in administration or receivership, with the banks now able to dissect their problems more analytically than over the past two and half years where there were so many problem parts of the economy, not just property.

There are (and always have been) other forms of capital available in the marketplace in the form of equity from private investors, large investment houses and in some cases offshore funds. We have also seen an increase in equity partnerships being offered by the larger contractors as a means of securing workload and as an attempt to avoid a competitive tender situation.

These sources of capital are traditionally more expensive to borrowers, but these lenders/equity participants traditionally enter into these markets as they see significant potential upside in some deals, not just on the debt/equity terms but also in the potential take out in markets that desperately need new property stock.

Where to now in terms of construction costs?

We will over the next few weeks release our updated construction cost data cards, looking at how costs have changed over the last 12 months and where they might be expected to go from here.

Contact 

Our strategic, cost effective advice will best position your property for the future.  Call Napier & Blakeley today if you want further information or regarding any other Napier & Blakeley services:

Melbourne - Craig Smith           03 9915 6300               csmith@napierblakeley.com
Sydney – Peter Hammond         02 9299 1899         phammond@napierblakeley.com
Brisbane - Paul Cosker             07 3221 8255            pcosker@napierblakeley.com 

• Quantity Surveying
• Capital Expenditure Planning 
• Technical Due Diligence
• Accredited NABERS Ratings
• Building & Sustainability Consulting
• Property Depreciation
• Accredited CBD Tenancy Lighting Assessments
• Strategic Asset Management

 Property Tax Deductions are available as follows:

• Depreciation of plant – such as air conditioning and mechanical ventilation, some electrical items, lighting, carpets, lifts, furniture and fittings.
• Building Structure (Capital Allowances) for investment properties constructed after July 1982, or for refurbishment, renovations, additions alterations after that date.

Now answer these questions…

1. Have you got a current depreciation schedule? If not Napier & Blakeley are qualified to establish values for the depreciating assets that you own.
2. Have you bought an investment property throughout the tax year?
3. Have you altered, renovated or added to your existing investment property throughout the tax year?
4. Have you demolished all or parts of your investment property?
5. Have you changed, added to or thrown out any items of fitout or FF & E during the financial year?

The establishment of a compliant depreciation schedule allows you to calculate your entitlements to Depreciation and Capital Allowances deductions and to manage the process of change to your asset. 

Many investors simply do not claim deductions and therefore – often unwittingly – forego benefits to free cash flow they generate.

Napier & Blakeley were the first to introduce Property Tax assessments to the Australian market in 1985 and are still the leaders in this field.

We can give you an estimate of your likely levels of deduction on your investment property with no charge or commitment, simply to show you the benefits that you may be entitled to.

We are confident that you will then elect for a compliant schedule to be completed, enabling your accountant to incorporate for you to generate and defend all claims that you make.

The payback period for our fees is usually a number of months of your initial claim, so it’s true value for money – so please give us a call and we’ll help you from there.

Contact Call Napier & Blakeley today for assistance with your tax deprecition schedule or any other Napier & Blakeley services at any of our offices below:

Melbourne - John Mathew         03 9915 6300             jmathew@napierblakeley.com

Napier & Blakeley Services

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation 

Transitional Provisions Ending this Year

The current transitional provisions of the CBD program that require only a NABERS base building energy rating to be disclosed will end on 31 October 2011, with full mandatory disclosure requirements commencing on 1 November 2011.

From 1 November 2011, the Building Energy Efficiency Disclosure Act 2010 (BEED Act) requires corporations selling, leasing or subleasing certain large (>2000sqm) office spaces to register a full Building Energy Efficiency Certificate (BEEC), not just a NABERS rating.

What is a BEEC ?

The BEEC is comprised of three parts:

1.   NABERS Energy base building rating
2.   Tenancy lighting energy efficiency assessment
3.   General energy efficiency guidance for building owners and tenants

The BEEC may be valid for up to 12 months, however will only be valid to the date of the expiry of either Parts 1 or 2 whichever occurs first, as Parts 1 and 2 individually may be valid for up to 12 months but may be completed at different times.

At the time of disclosure, the BEEC will need to be valid, current and registered on the publicly accessible registry on the CBD program’s website.

Importantly, both the NABERS rating and new tenancy lighting assessments take a significant amount of time to complete the assessment and certification process, so need to be undertaken and certified well before a need to disclose for advertising may arise to avoid the risk of non-compliance with the legislation.

What’s the difference?

The required BEEC now incorporates a tenancy lighting assessment. A CBD tenancy lighting assessment of a building is based on a methodical survey of the general lighting system installed in the tenant office spaces of a building (the system that is reasonably expected to be left in a tenant space when the tenant leaves and the tenancy fitout removed).

The NABERS base building rating requirements remains the same as the current transitional provisions, and still requires a full 12 months of building operational data to provide a valid accredited NABERS assessment. Note that a NABERS estimate or non-accredited assessment has no credibility in terms of the BEEC, it requires a current certified NABERS Energy base building rating.

The general energy efficiency guidance will be provided as part of the BEEC when issued.

Accredited tenancy lighting assessments

For a lighting assessment to be valid under the BEED Act, it must be performed in accordance with the new CBD Tenancy Lighting Assessment for Offices Rules, by a CBD accredited assessor.

The tenancy lighting assessments may be completed for all of the building, in which the total office space NLA is assessed, or for a selection of tenancies only within the building. Typically, an all building assessment would be undertaken if the building is being prepared for sale. Assessments of tenancies typically would be undertaken if these areas are to be advertised for lease or sub-lease.

The lighting assessment measures only the energy used by the lighting on an area basis. It does not assess or measure lighting output, quality or suitability of the lighting for use in offices.

Penalties for failure

Failure to disclose may result in civil penalties of up to $110,000 for the first day and $11,000 for each subsequent day may be imposed by a Court for each breach of a disclosure obligation. Alternatively, the Secretary of the Department of Climate Change and Energy Efficiency can issue an infringement notice of up to $11,000 for the first day and $1,100 for each subsequent day of non-compliance.

Further penalties may apply for various breaches of the CBD. Refer to the website for further information with links to the Act and subordinate legislation: www.cbd.gov.au

Have you got a CBD action plan?

Napier & Blakeley are experts in the provision of strategic property advice and can assist in getting your property ready for the demands of the full disclosure requirements.

Meeting the requirements for a BEEC in obtaining an accredited NABERS rating and tenancy lighting assessment for your building is time consuming and intensive, which many people underestimate, so be pro active and plan ahead.

The CBD accreditation and training process for performing tenancy lighting assessments is underway. It is expected that tenancy lighting assessments and hence full BEECs will be available from July 2011, so don’t leave it to the last minute to meet your mandatory disclosure requirements and organise a BEEC with a CBD accredited assessor.

Contact 

Our strategic, cost effective advice will best position your property for the future.

Call Napier & Blakeley today to ensure you are ready for the upcoming changes to this legislation on 1 November 2011 or if you want further information on the Commercial Building Disclosure, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - Rob Howells            03 9915 6300             rhowells@napierblakeley.com
Sydney – Gavin Peach                02 9299 1899              gpeach@napierblakeley.com

Napier & Blakely services:

• Accredited CBD Tenancy Lighting Assessments
• Accredited NABERS Ratings
• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

It’s here again, the end of the financial year,

Napier & Blakeley are the original experts in property depreciation deductions – we will make sure that you do muscle up and receive the maximum benefits available to you through depreciation and capital allowances.  Our experience is second to none in the market place and our track record speaks for itself.  So let us wrestle on your behalf.

It’s at this time every year that we provide an update of the legislative goings on in the accounting area of property depreciation and over the past 12 months there have been a few.

Firstly the much anticipated Green Depreciation Consultation paper was launched, Napier & Blakeley briefed on this paper when it was released in December. The paper provided allowances for “Green” related works that take a building of a 2 star NABERS rating or below to 4 star NABERS rating or above.

Essentially the scheme outlined was overly complex and did not provide any immediate relief to the tax payer, instead over burdening them with red tape. Submissions were to be provided at the beginning of the year and unsurprisingly the overall weight of submissions did not have anything favourable to say about the proposals. As a result the Government has delayed the scheme until 2012.

Other depreciation news relates to the an announcement in this years budget extending the value at which assets may be written of for small business to $5,000. There have also been some minor changes to the classification and effective lives on specific asset categories.

A major change not widely publicised is the requirement now for all Quantity Surveyors providing tax depreciation schedules including those carrying out inspections to be registered tax agents. Before this recent change there has been no requirement for a Quantity Surveyor to have any formal registration before providing a report of depreciation allowances. The tax practitioners board is yet to agreed the level of education and experience a “Suitably Qualified” individual requires to be engaged in the provision of tax depreciation schedule. Discussions on this subject are ongoing though you should be aware that all individual providers of depreciation schedules should be registered otherwise their reports may not be accepted by the ATO.

Napier & Blakeley’s main tax tip for the 2010/11 tax year is to not forget about your capital expenditure. The works that have taken place over the past 12 months can be many and varied whether it’s refurbishment of common areas or landlord owned contributions there’s almost certainly opportunities to increase the value of depreciation claim for this financial year. All too often though these costs are incorrectly treated, write off’s go unclaimed and end up living on you depreciation schedules for all eternity.

Don’t miss out on the benefits, contact Napier & Blakeley and let the industries trusted advisors help you to maximise your return this financial year.

Contact

If you want further information on tax depreciation, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - John Mathew    03 9915 6300           jmathew@napierblakeley.com

Napier & Blakeley services

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

Below is an example of a depreciation schedule, a client asked Napier & Blakeley to provide a health check on, with regard to the dollar value of their depreciation claims.

This property relates to a strata property purchased in a capital city CBD area, the building was a number of years old.

The numbers below are the actual figures.

Over a 5 year period, Napier & Blakeley increased this client’s depreciation claim by 45% or in cash terms based on a 30% company tax rate - the client received an additional $51,000 cash over a 5 year period. 

So is there something about this year’s depreciation claim that you should be concerned about?

Needless to say the client was very happy with the result, but there were a few grey edges to this silver lining.

Don’t forget that essentially, depreciation cannot be claimed retrospectively if you have already submitted tax returns for a tax period.

The only way of claiming any missing allowances is by re-opening past accounts. The re-opening of accounts is an exercise that very few people are willing to do, so what can you do and what else should you be looking out for.

1. Start off on the right foot; engage a specialist Quantity Surveyor with a proven track record for all acquisitions, construction projects and refurbishments.
2. Get a health check done on your existing depreciation schedules.
3. Claim the write off for demolished assets.
4. If keeping track of assets is important to you, get an asset register that relates to your depreciation schedules.
5. Claim for landlord owned fit outs.
6. Get your depreciation schedules updated annually by the Quantity Surveyor.

Most accountants recognise that using a Quantity Surveyor saves you time and money and puts you in the driving seat when it comes to good asset management; ask yours how they are making the most of the opportunities available to you.

Napier & Blakeley is the most relied upon Quantity Surveying firm in the matter of maximising the benefits that Tax Depreciation can provide to the bottom line make them part of your good asset management.

 Contact

If you want further information on tax depreciation, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - John Mathew    03 9915 6300           jmathew@napierblakeley.com

Napier & Blakeley services

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

Damage to property and buildings

Notwithstanding the substantial number of properties that suffered as a result of the recent floods, the most common building disaster in Australia is fire, so it is important to be prepared. Luckily we have only had one earthquake in recent history and although the chances of these occurrences are low, the devastation they can do has been clearly seen in Christchurch.Napier & Blakeley’s property reinstatement cost assessments determine the amount a property needs to be insured for to cover the possibility of damage or complete destruction from a disaster. This should include the demolition of the remaining component of the property followed by the reconstruction and all associated fees, such as design, management and permit fees.

In conjunction with recent meteorological events construction markets nationally have gone through significant changes in cost in recent years. A number of years ago costs increased significantly and in some markets in more recent times costs have gone backwards. So it is now more important than ever to accurately update insurable costs.

Fire or disaster can have a direct impact on business operations within a building and many building owners do not adequately factor items such as loss of profits or business interruption into the building insurance equation, leaving themselves under insured.

Over insurance can also be detrimental to business performance. Insuring a property for more than its true worth provides no tangible benefit and may increase the building’s outgoings unnecessarily.

Our reports ensure that you are insured for the right amount and the assessments we provide take many factors into account in determining the cost of reinstating property.  Our quantity surveyors are experts in determining the true demolition and reconstruction costs of a property.

Valuers value, architects design and builders build, but none are real cost experts.

A qualified quantity surveyor is the only qualified construction cost professional capable of determining construction costs of buildings.

Related Topic on Napier & Blakeley Blog  
Property Depreciation and Natural Disasters

Contact

If you want further information on Property Reinstatement Cost Assessments, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - Craig Smith                   
03 9915 6300                           
csmith@napierblakeley.com 

Sydney - Peter Hammond                
02 9299 1899                    
phammond@napierblakeley.com 

Brisbane - Paul Cosker                     
07 3221 8255                           
pcosker@napierblakeley.com

Napier & Blakeley services: 

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

In the last year Napier & Blakeley

It’s rare to find nothing that would be considered problematic for an incoming owner, but the last few years there have been a few issues that have become commonplace through either lack of ongoing investment and maintenance or as a result of new market legislation.

The GFC brought substantial financial constraints to the entire economy but for property owners it brought pressures through loan to value ratios (LVR’s), reductions in value and rental income. This created a catch 22 situation where many knew they had to keep maintaining and spending capital to keep their assets compliant, relevant and therefore rentable, but were unable to directly fund or borrow funds to do so.

We recently re-analysed an asset that we had prepared due diligence and capex forecasts for a few years ago, and the list of items that we identified in our initial report were almost completely the same as now. Nothing had been fixed, maintained or repositioned. So, many years down the track the asset has fallen deeper into redundancy and therefore costs more to rectify.

The other more recent trend that has pretty well become standard during due diligence is the of analysis of energy consumption and modelling future asset potential to reduce energy. This trend is driven by rent, NABERS disclosure legislation and also with the future cost of energy in mind.

Over the last 2 years the federal Government ran the Green Building Fund initiative which provided up to 50% of the expenditure required by an owner to sustainably retrofit their asset.

This initiative was worth approximately $120m so therefore an overall value of retrofitting projects of $240m. We estimate conservatively that there could be well in excess of $2b worth of retrofit requirements, especially when you consider that 35-40% of the rental marketplace are Government type tenants that require minimum 4 to 4.5 star NABERS rated assets to lease. As an example, there are many Premium and A Grade commercial offices that are substantially below that level of rating, some hovering at around a 1 star NABERS rating.

Contact

If you want further information on due diligence and capital expenditure forecasts, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - Rob Howells            03 9915 6300             rhowells@napierblakeley.com
Sydney – Gavin Peach                02 9299 1899              gpeach@napierblakeley.com

Napier & Blakely services:

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

The purpose of the Premises Standards (and corresponding changes to the Building Code of Australia and State / Territory Building Law) is: 

• To ensure that dignified, equitable, cost-effective and reasonably achievable access to buildings, and facilities and services within buildings, is provided for people with disability, and
• To give certainty to building certifiers, developers and managers that if standards are complied with they cannot be subject to a successful complaint under the DDA in relation to those matters covered by the Premises Standards.

1.  General Application

The Premises Standards will apply to all new buildings and to extensions or additions to existing buildings.

In most circumstances it will also be necessary to provide an accessible path of travel from the principal public entrance to the new or modified part of an existing building.

2.  Physical Elements

Physical revisions or changes will be made in certain areas including:

• Access and egress
• Signage
• Lift installations
• Sanitary and other facilities

3.  Exemptions

There are exemptions to compliance with the Premises Standards such as in cases of unjustifiable hardship.

Unjustifiable hardship is not defined in the Act or in the Premises Standards and therefore is dependant on the specific circumstances in each case.

The Premises Standards provides a list of factors that may be taken into account in determining whether there is an “unjustifiable hardship” including cost, loss of value, and impact on revenue, technical building factors and benefits of access.

It is highly unlikely that the mere imposition of additional cost is sufficient to find an unjustifiable hardship.

4.  Compliance

Compliance will be achieved principally through the normal building certification process and therefore if buildings are designed and constructed according to the requirements of the revised BCA, compliance with the Premises Standards and the Act should be achieved.

5.  Non Compliance

The Premises Standards do not specifically set out penalties or consequences for failure to comply. However, there are likely to be a number of serious consequences including:

• Inability to obtain building approval if non compliant with the Premises Standards; and
• Where the premises is constructed, the possibility of a claim of discrimination.

Contact

If you want further information on how these new Disabled Access Standards will apply to your new constructions, building works or alterations, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne – Rob Howells
03 9915 6300
rhowells@napierblakeley.com

Sydney – Gavin Peach
02 9299 1899
gpeach@napierblakeley.com

Napier & Blakeley services:

• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation