Which agreement best suits you?
You have the building. We have the expertise and time to run it as a high-end serviced dwelling on your behalf. We already manage a number of properties in various locations in London and are always looking for further rental investments. We offer a range of alternative agreements, outlined below, under which we can operate your building. The main factor to differentiate the agreements is how the risks and benefits are shared between the property owner and Portico Residences. Whichever one you opt for, however, rest assured that we do all the heavy lifting, so you don’t have to.
Management agreement
Portico Residences runs the building on a serviced-apartment basis on behalf of the property owner.
Lease agreement
A tenancy is granted to Portico Residences by the owner of the property, to whom rent is paid monthly.
Partnership
Portico Residences and the property owner establish a company and run the serviced-apartment building together.
Joint venture
The property owner and Portico Residences enter into a commercial arrangement, whereby the risks and rewards are shared in the running of a serviced-apartment complex.
Management Agreement
We operate the building on behalf of the property owner, charging a management fee based on the agreed share of revenue, plus a performance bonus. Compared with going down the assured shorthold tenancy (AST) route, they could expect to see an increase in net income of around 30-40%. Once the agreement is signed, the owner isn’t required to put in any time or effort into the venture; all rental voids, tenant issues, letting/managing agent enquiries, etc. will be dealt with by Portio Residences, who will also provide all financial information on an ‘open book’ basis. The risk of vacancy lies primarily with the property owner.
Depending on the size and location of the property, we would ideally be looking for a minimum term of three years but could potentially be flexible on this. We may also be open to an arrangement whereby, during this period, some apartments are removed and some are added into the agreement.
Lease Agreement
Operating as a standard lease model, we pay rent to the property owner and operate the residence as a serviced-apartment building. Portico Residences assumes the risk of vacancy, as well as the potential increase or decrease in revenue associated with managing the building. For a Lease Agreement, we would be looking for a lease of between three and seven years, paying rent monthly. In this scenario, the property owner would not share in any increase in revenue. It should be noted that if a property owner wants to benefit from better finance/refinance options, the Management Agreement would be better suited to them than the Lease Agreement because there is no tenancy involved. With such arrangements, many lenders will offer a higher loan-to-value ratio (LTV) and lower interest rates. A tenancy allows for some form of buy-to-let mortgage.
Partnership
A commercial arrangement is entered into between Portico Residences and the property owner, which is designed to offer each party an appropriate share of both the risks and rewards of running a serviced-apartment building. The agreement can be shaped to suit different circumstances and we are open to suggestions that might involve a combination of elements from both a Management Agreement and a Lease Agreement.
Our growth strategy involves working in partnership with property developers and investors to secure more buildings in prestigious locations across London. We plan to create meaningful relationships and work closely with them to design and build properties that will become high-performing assets in the serviced-apartment sector. A complete alignment of interests and working towards the same common goal will be key factors in achieving our joint aim of creating a strong-performing trading asset, which will enhance its capital value in the long run.
Joint Venture
Similar to the Management Agreement, a Joint Venture is a more formal arrangement in which Portico Residences and the property owner establish a company together, and run the building on a serviced-apartment basis. Both parties share the risks and profits in line with their respective shareholdings.
In such an arrangement, Portico Residences assumes responsibility for all aspects of the running of the building as a service apartment business including marketing, promotion, maximising revenues, dealing with enquiries, guests management, etc. All revenues and expenses go through the Joint Venture company and the Owner has access to all financial information, although we would nonetheless provide detailed financial information on a quarterly basis.
The arrangement would need to last for a minimum of three years.
+44 (0)330 900 1 500
enquiries@porticoresidences.co.uk