What is Lifecycle Management?
Q1.What is Lifecycle Management? How does this differ to disposal management of Properties? List the aspects that good lifecycle management covers in its plan.
Q2.Explain how a typical Property Lease differs from many other forms of contracts. List the major items that would be captured in a lease register and explain the importance of each for the Property Manager?
Q3.What systems are available in the market to manage the finical aspects of Property Management? List the most popular and explain how they differ from one another. Give an example of how poor accounting practices have affected a Property Portfolio and explain what could of been done better to avoid the damage?
Q4.List the key risks faced by Property Managers and the various risk mitigation strategies available to them. List the various laws and regulations provided for in your State or Territory or Country to ensure proper Occupational Health and Safety practices are applied to Property and Asset Management?
Q5.For a 100,000m2 office building, how long would it typically take to plan a relocation to the other part of town with similar fit out? List the stages and explain the importance of each. Are there any systems available for space planning in commercial office buildings? Please name and list their functions?
Q6.For commercial properties, is there a prescribed contract or lease, or parts of a lease, that MUST be used. That is, are they governed by law? Please provide commentary on your answer – including any examples and recommendations?
1. The “lifecycle management (LCM)” is identified as the concept which defined with the flexible approach as per the business which is responsible for drawing the principles as per the lifecycle thinking (LCT) to help with the various types of the needs of business. These items are further seen to include the activities of the “manufacturers, retailers, financial, professional”. The LCM is seen to be benefit the business financially by assisting in terms of reducing the cost of resources such as “electricity, gas, water and b1”.
In case of the disposal management of properties the property holdings should be kept to a minimum required for meeting the current and the planned needs. However, this decision is depicted to be flexible in case of LCM. It has been further seen that in case of disposal management the public bodies should consider the asset disposal as per the less than the market value. However, there is no such consideration which needs to be followed in case of the LCM (Lifecycle management, 2018).
How does Property Disposal Management differ from Lifecycle Management?
Some of the main items included under the life cycle management is depicted to include raw materials and end to life products. It is important for the manufacturing organizations to include the various types of the products which seen to include “electricity, gas, water and materials” (Property Management Life Cycle, 2018).
2. There have been several instances of in which the property lease differs from many other forms of contracts. In general, unlike a lease agreement, there is no transfer of interest possible in leave and lease agreement. It has been further depicted that lease agreement is transferable and heritable, it is also seen to different from the management of the other contracts such as License agreement where the sub category cannot be transferred or inherited or sub-created as per the favour of the third party (Gov.scot, 2018). In addition to this, the license and the leave agreements also entails the dissolution in case the owner wishes so and discontinued in case the “lessee has died but in the case of a lease agreement, death does not terminate the lease”. Unlike a lease agreement the licence agreement does not permit the power to make changes or alter the construct as specified. Moreover, a tenant’s interest is protected in case a property is sold during a contract period of “Leave and License agreement”. In such a situation the contract must be renewed even if the property is sold (Sell et al., 2018).
The main types of the lease register incudes Fixed-term tenancy or tenancy for years, Periodic tenancy, lease deed and the lease. The importance of the lease deed is depicted to be pivotal for the getting the lease registered in case it exceeds one year. The fixed tenancy terms setting the time for the leased property which needs to be included in a certain case. The importance of including the fees paid is seen to be discerned with future reference (Lease Deed, 2018).
3. The finance aspect of the property management is seen with knowing about the operating expenses and budgeting. This information is seen to be necessary to determine the appropriate rental rates of the property. The well-known systems which are available in the market to manage the finical aspects are depicted with sensitivity analysis, scenario analysis and Monte Carlo Simulation.
The implication of the sensitivity analysis on the property management needs to be seen with identifying how sensitive is the NPV to the changes as per the variable assumptions. This method typically begins with computing the NPV and then changing the various set of assumptions. The NPV is recalculated to determine the sensitivity of the NPV as per the changes in the assumptions. Based on the confidence the financial risk of the property is determined (Emeraldgrouppublishing.com, 2018). The use of scenario analysis can take a step further to the sensitivity analysis. Instead of the consideration of the NPV, the scenario analysis begins with the best-case scenario and worst case. The probabilities are assigned respectively to arrive at the expected value. Due to the simplicity of this system it is widely used in the context of property management to evaluate the risk of the project. The Monte Carlo simulation is recognised as the best alternative to the sensitivity analysis. It considers the infinite calculations of a particular given number of the constraints. The selected set of the constraints generate random variables of the input to evaluate the NPV. The system not only generates the iterations, rather it repeats the process several times. The numerous results are used to determine the expected value.
What are the aspects of good lifecycle management plan?
The instance of poor accounting practices that have affected a Property Portfolio are depicted with implementing generalized Financial Statements. This situation can be improved in terms of comparing the prices of the different properties of same area. The non-understanding of the Reflexivity/Interactivity of the financial Statements is also seen to be a major problem. In the recent times the analysts are understanding the procedure of changing the accrued liabilities which may affect the operating expenses on the income statement and include the factors that includes the cash flows from operations (Jason Voss, 2015).
4. The key risks faced by property managers officers and the director’s liability, Business income, loss of rents and extra expense. Some of the various types of the other risks are depicted with the “tenant discrimination and builders risk insurance”. The directors and the officers need to maintain liability for insurance for the property which may lead to risk of seizure of the property. Typically, D & O insurance, this will be able to cover risk such as breach of “fiduciary duty, assessment disputes, discrimination, by-law litigation”.
The business loss of rents needs to be maintained by combination of the coverages into one group known as business income. The tenant discrimination is depicted that acting in good faith may not always have enough former tenant or former tenant to feel like discriminated against the tenant. (Callahan & Rice Insurance, 2014). The builders risk insurance needs to be also mitigated by taking control for any “claim settlement and can receive claims checks directly from the insurance company”.
The various risk mitigation strategies available to the managers are seen with characterising the primary causes of the risks and quantifying the same in the early phase of such risk. Secondly, the managers should determine the risk interactions along with the rationale for the same. The third stage should consist of the mitigation strategy of the risk and methods used for the major risks. Fourthly, the managers need to prioritize the various nature of the risk which are depicted to be based on defining the alternative mitigation strategies and formulate the alternatives accordingly.
The main regulation for ensuring proper Occupational Health and Safety practices in UAE are depicted with “HSE legislation at federal level”. As per the “Federal Law No.8 of 1980 – UAE Labour Law”, the workers can be held responsible for the breaches in health and safety. In addition to this, “Federal Law No.3 of 1987” comprises of the applicable detainment and financial penalties on breach of health and safety practices (Fahr.gov.ae, 2018).
How does a typical Property Lease differ from other contracts?
5. In order to construct a 100,000m2 office building, it will typically take 1 year to plan a relocation to the other part of town with similar fit out. The main form of the stages involved along with the importance of each are depicted with
- Drawing up the contract- This is seen to be prepared as per the seller’s solicitor
- Submitting the contract- This is seen to be important for the sending the “draft contract along with relevant title documentation”. This stage is pivotal in terms of matters relating to the maintenance and insurance of the building. The landlord will be asked for the providing the information associated to the ground rent.
- Approval of the draft contract- The buyer’s solicitor deals with the transaction. It is checked with the draft and making of the changes which is considered to be important for the return made to the seller’s solicitor and also agree with the amendments.
- Local searches- This is important for carrying out the buyer’s solicitor duties on recept of the contract papers
- Miscellaneous searches- This needs to be considered for the carry out some additional searches
- The mortgage offer- This is significant for the probability of its arrival
- Getting a survey- The validation of the survey is arranged for the valuer for carrying out a comprehensive survey on the property at the time of the mortgage valuation
- Exchange of contracts- This includes the additional enquiries which are answered for the “local authority search obtained”
- Final formalities- The parties are able to get a better understanding of the “transfers legal ownership of the property on completion and the mortgage deed and stamp duty form” process
- Completion- This is necessary for the completing the balance required payments to the seller’s solicitor by the electronic bank transfers and the CHAPS payment.
- Registration- The buyer’s solicitor will be considered with the registering of the property and buyer’s name in the registry of the land (The Law House Family Law Solicitors, 2018).
6. The main standard for the prescribed contract or lease, or parts of a lease, that must be used in the UAE needs to comply with the applicable tenancy laws, “Dispute Resolution Authority, Leases that can be registered, Registration Fees, Fees to attain the standard contract certification, registration location and Effects of non-registration”. The tenancy law needs to be in compliant with the “Umm Al Quwain Law no. (3) of 2008 regulating the Relationship between Landlords and Tenants in the Emirate of Umm Al Quwain as amended by Law No. 2 of 2011”. The dispute resolution authority has been discerned with the lease agreement which is made as per the contract for residential use are usually between 1 to 5 years. The registration fees are depicted to vary between “2% of the rent value pertaining to the contract which is payable in cases of residential lease agreement; 10% of the rent contract value per annum and the commercial lease agreement”. The fees obtained with the standard contract is seen with the “Umm Al Quwain Municipality register the residential lease agreements” (Al Tamimi & Company, 2018).
References
A Guide to the Process of Moving House – The Law House Family Law Solicitors, London & Peterborough. (2018). The Law House Family Law Solicitors, London & Peterborough. Retrieved 20 June 2018, from https://www.thelawhouse.com/guides/guide-process-moving-house/
Emerald | Journal of Financial Management of Property and Construction information. (2018). Emeraldgrouppublishing.com. Retrieved 20 June 2018, from https://www.emeraldgrouppublishing.com/products/journals/journals.htm?id=jfmpc
Fahr.gov.ae. (2018). [online] Available at: https://www.fahr.gov.ae/Portal/Userfiles/Assets/Documents/24402517.pdf [Accessed 12 Jul. 2018].
Five Risks Every Property Manager Has Experienced. (2014). Callahan & Rice Insurance. Retrieved 20 June 2018, from https://www.callahanrice.com/208/
Gov.scot. (2018). Property: Aquisition, Disposal & Management . [online] Available at: https://www.gov.scot/Topics/Government/Finance/spfm/PropertyManagement [Accessed 20 Jun. 2018].
Jason Voss, C. (2015). The Top Five Accounting Mistakes Analysts Make. CFA Institute Enterprising Investor. Retrieved 20 June 2018, from https://blogs.cfainstitute.org/investor/2015/05/12/the-top-five-accounting-mistakes-analysts-make/
Lease Deed / Rent Agreement : Registration & Other things you should know. (2018). Retrieved 20 June 2018, from https://www.onlinepropertyregistration.com/lease-deed-registration.html
Lifecycle management. (2018). Sustainability.vic.gov.au. Retrieved 20 June 2018, from https://www.sustainability.vic.gov.au/Business/Efficient-business-operations/Lifecycle-management
Property Management Life Cycle | DoResearch. (2018). Doresearch.stanford.edu. Retrieved 20 June 2018, from https://doresearch.stanford.edu/training/cardinal-curriculum-level-1/overview-research-and-regulatory-environment-dor-1102/rr-property-management/property-life-cycle
Registration of Short Term Tenancy Contracts in the UAE | Al Tamimi & Company. (2018). Al Tamimi & Company. Retrieved 20 June 2018, from https://www.tamimi.com/law-update-articles/registration-of-short-term-tenancy-contracts-in-the-uae-part-ii/
Sell, B., News, L., Views, N., us, a., & us, c. et al. (2018). Different Types of Rent Agreements: License Vs Lease Agreement. Makaan.com. Retrieved 20 June 2018, from https://www.makaan.com/iq/rent-property/landlords-corner-did-your-tenant-claim-ownership-of-your-property
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