Fees: everything we charge and what it is for

Why there is no single fee table

Each syndicate buys one building, and the work involved differs by building. A single-let industrial unit on a long FRI lease needs little intervention from one year to the next. A multi-let retail parade with rolling renewals, consents and service charge administration needs a great deal.

So the terms are set per syndicate and stated in that syndicate's marketing document. That is also where a reader finds the actual figures. Anyone comparing two of our syndicates should compare the two marketing documents rather than assume the terms carry across.

At acquisition

A fee is charged for sourcing, appraising and acquiring the building, and it is taken at the point the syndicate is formed rather than spread over the hold.

The practical consequence is that the total subscribed is larger than the purchase price of the property. Acquisition costs, the acquisition fee and any working capital sit in the difference. A yield calculated on the property price alone is not the yield a holder receives, and the marketing document shows the reconciliation.

Annual management

The Trust Deed incorporates a resolution for Colenso Property Services LLP to act as managing agents on behalf of the syndicate. The management fee is charged as a percentage of the passing rent, and that percentage is stated in the marketing material for each syndicate.

For an initial period the fee is included in the syndicated purchase price and paid by Helmsley Securities Limited under the Trust Deed, so it is not deducted from distributions during that period. The date to which it is prepaid is stated in the marketing material. After that date the fee is deducted from rental income before the quarterly distribution is made, so it is taken before a holder sees the money rather than invoiced separately.

It covers rent collection and credit control, tenant liaison, insurance administration, service charge administration where the building is multi-let, instructing and overseeing contractors, the annual independent valuation and the reporting that reaches holders through the portal.

One point to be clear about. Once the prepaid period has ended the charge is taken whether or not the rent arrives. A tenant in arrears reduces the distribution, and management work usually increases at exactly that moment.

Transactional work

Some work is occasional and is charged when it happens rather than sitting inside the annual charge. Lettings and re-lettings on a void unit. Rent reviews. Lease renewals. Licences and consents, such as assignment, sub-letting or alterations. Dilapidations negotiation at expiry.

Sometimes we carry out this work ourselves. Sometimes, where it falls outside our area of expertise, we appoint an external chartered surveyor. Which of the two applies depends on whether we are best placed to do the work.

Each of those is chargeable, and the basis is set out in the marketing document. All fees are set out and agreed in advance of the work taking place.

This is the part holders most often underestimate. A quarter in which a unit is re-let will carry the letting fee, the legal costs and often an incentive to the incoming tenant, so the distribution for that quarter can be materially lower than the one before it. The income from a single building is lumpy by nature and the fee profile follows the events.

A share of uplift on sale, where one applies

On a syndicate bought with an asset management plan, we may take a share of the profit on a sale once that plan has been carried out. It does not apply to every syndicate. A holding bought for long income on an institutional lease will commonly carry no profit share at all.

Where it applies it is documented in the Trust Deed and the split is stated in the marketing material for that syndicate, so it is known before anyone commits. Ask which of the two you are being shown, and ask for the split in writing rather than in conversation.

Where a share applies, three details determine what it actually costs a holder. The hurdle the uplift is measured against. Whether costs of sale and of the original acquisition are deducted before the share is calculated. And the point at which it becomes payable.

A profit share aligns us with the outcome on sale. It also reduces net proceeds to holders when the outcome is a good one, and we would rather state both halves of that.

Developments

Developments are a separate route rather than a variant of a syndicate, and they work differently. Each is managed through a separate LLP which we manage day to day on the directions of the investors, typically 10 to 15 of them contributing upwards of £50,000 each. There is a project management fee and a profit share, set out at the outset of each project.

Where you find the numbers

The marketing document for the syndicate in question, before you commit. After completion, the executed documents sit in the documents area of the client portal alongside the holding, so the terms remain available rather than being something you have to request.

Tax treatment of fees and of distributions depends on your own circumstances, including whether you hold through a pension arrangement or a company. That is a question for your own adviser and your pension provider.