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MediFinancial - Property void rates
Property void rates
Void rates can be key to income-growth potential - The unoccupied proportion of a property portfolio, or the 'void rate', can be crucial when examining the performance of property funds and their potential for income growth.

Unoccupied property

Any level of void-rate seems bad. After all, unoccupied property brings in no rental income. Nor does it provide the service charges needed to meet the bills for maintenance and general upkeep. The cost of property taxes, insurance and security still need to be met for unoccupied assets.

With tenants typically a key source of income for property funds, working to minimise void rates would seem to be a key duty of the fund manager. The lower the void rate, you would think, the better. And for much of the time, you would be right.

Strategic voids to boost rents

A high void rate could inidicate a portgolio of poor-quality properties in difficult-to-let locations. Alternatively, it may point to a poor tenant base. However, property managers sometimes deliberately keep properties empty. Philip Neil (AIPT), points out that within a portfolio there can be what he calls "strategic voids". He adds: "These are properties whose unoccupied status now will, we believe, allow us to make much better returns in the future - these are voids that give us the opportunity to add value".

When void rates indicate 'value add' opportunities

A quarter of the AIPT portfolio targets one investment theme - value-add property assets. These assets offer the prospect of strong income growth over the long term through intensive active management such as property redevelopment. Such opportunities lead to periods when assets are at least partially vacant, creating strategic voids.

One of the value-add assets in the AIPT is an office building in Soho Square, London, next to what is due to be a Crossrail station at Tottenham Court Road by 2018. Philip says: "This is a refurbishment opportunity with huge potential. Currently, rents stand at about £45-55 psf. One of our other funds have developed the former Football Association building a few doors down and is now getting more than £70 psf on some of that space. And we would expect to see huge income growth from our building".

Difficult comparisons


Rising void rates may indicate a property portfolio in decline or one with much income-growth potential. As Philip says "We are on the lookout for opportunities to add value and this means that inevitably our void rates will fluctuate from time to time". While void rates can be important when analysing property-fund performance, the underlying reasons behind the rate are likely to be instructive than it's size or direction.
Posted by: Anne Barker on 31 Jul 2014
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General Buyer Terms

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
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  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
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