action plans - anz note

Reproduced with permission

Introduction
    1. Purpose
The purpose of this Business Focus element is to explain the role of the Member in providing Property Action Planning services to clients.

    1. Scope of this Business Focus Element
This Business Focus element applies to Members providing Property Action Planning services to clients covering any opportunity, threat or problem associated with property.

    1. Definition
Property Action Planning is the provision of suitable and adequate information and sound advice in response to the needs and objectives of a client relevant to any opportunity, threat or problem associated with property.

    1. A Form of Consultancy
Property Action Planning is a form of consultancy which enables Property Professionals to focus their property and market knowledge, apply their research, analytical and technical skills and use balanced judgement in providing sound advice in response to clients’ property opportunities, threats and problems. It may relate to purchase or sale of  real estate, the development or redevelopment potential of property, or financial management and property planning activities. It can include involvement in purchase and marketing strategies, security risk analysis and risk minimisation, performance analysis and improvement,
negotiation and expert representation, project feasibility and sensitivity analysis, potential identification and rezoning.

The range of Property Action Planning consultancy services which Members can offer is very broad given the dynamics of property and their ability to tailor services to a client’s particular needs and objectives. Annexed to this Business Focus element is a list of some Property Action Planning scenarios.

Establishing the Client’s Needs and Objectives
    1. Develop a Clear Understanding
It is fundamental to develop from the outset a clear understanding of the client’s specific needs and objectives. Assuming the initial consultation is in person, this will involve listening to what the client has to say and asking appropriate questions.This will be particularly necessary  where the client is a new client or is unsure as to what is required. This process should extend beyond the actual issue to establish the context in which the consultancy is to be carried out. While it may involve developing some understanding of the client’s financial arrangements, it
should not attempt to supplant the role of a financial planner. A basic understanding of other property assets and longer term objectives of the client will be important in many instances. Other circumstances may need to be considered. The property action plan needs to suit this
particular client as well as the property.

It is an action plan for the client, not just for the property.

    1. Confirm in Writing
At the initial consultation, as much information as possible should be taken down at the time in note form. When it appears that the subject has been well covered, summarise the position with the client to ensure you clearly understand his needs and objectives. It would be beneficial to confirm this in writing for the client as well as indicating what plan of action you propose, what type of report you consider appropriate and the basis of your fee. Provide an extra copy of this letter for the client to sign and return as acknowledgment.

    1. Personal Consultation
If initial instructions are received ‘in writing’, you should arrange an initial personal consultation or if not practical, make verbal contact with the client to help personalise the relationship and open up lines of communication. Any additional information obtained should be noted on file and where appropriate confirmed in writing along with the other matters as referred to above.

    1. The Importance of Communication
Consultancy will often require frequent communication with the client especially if the task is complex, has many phases, involves other experts or involves a development project. If the task will take some weeks or months, it is important to keep your client informed of progress even if no problems are being encountered or you need no additional information from your client. A brief letter every one or two weeks just to let the client know that the Property Action Plan is progressing will do much for the client’s peace of mind and your reputation. Of course, it may also be wise to schedule further meetings especially where alternatives need to be considered before progressing the plan.

    1. Obtaining and Relying on Other Experts Reports
Where it is considered that other expert’s reports are necessary, you should obtain your client’s written approval and an undertaking on payment of the fee (or a confirmation letter signed by the client).You should explain to your client that you will rely on the information provided in arriving at any assessments or recommendations in your Property Action Plan.

    1. An Opportunity to Extend Your Service
At times you may be contacted to simply provide a valuation report, however as you communicate with the client, you may find that the need may actually be for a Property Action Plan. Many clients may not realise just how much assistance you can provide. By letting them know you can increase the benefits you provide and your relevance to them.

Content of Property Action Plans
    1. What Issues to Address
Property Action Planning covers a very broad range of property-related issues addressing clients’ needs and objectives.The possible issues to address will therefore be numerous, but by focusing on the subject, the purpose and the client, you will be able to decide what issues to address.

    1. Detailed Report
More often than not, the overall report will be detailed. That is not to say that all sections of the report will need to be detailed. For example, if the client knows the property well and is primarily interested in development alternatives, planning and timing, then the report on his Property Action Plan should not need a detailed description of the property. It would however, be prudent to include a statement to the effect that ‘the property is understood to be well known to the client and for the purpose of the plan is not considered to warrant detailed description, but rather is briefly described as follows’. (Similarly in other cases where only brief or limited detail is provided, some comment should be made as to why this amount was considered adequate.) The report could be expected to be detailed in relation to the specific issues important to the client’s needs and objectives.

In the above instance, development alternatives, planning and timing and any related assessments, feasibility studies and sensitivity analyses would be detailed. With detailed reports, it is beneficial to
provide a very good summary which would probably run to between two and five pages. It should give your client a good overview of the main aspects of the report and the Property Action Plan. As a guide, it should be capable of almost standing on its own as a Summary or Shortform Style Report.

    1. Summary Style Report
Where specifically required by a client, a summary style report can be provided. This could take the form of the first two sections of a detailed report (i.e. summary and client detail) but without a table of contents. In such cases it is recommended that the client section include note of this limitation.This could be to the effect of ‘We are instructed to provide a Report Summary only which we are informed is adequate for our client’s current requirements. A comprehensive report can be obtained if further and better particulars are subsequently required’.

    1. Checklist
Annexed to this Business Focus element is a short checklist of headings which may be useful as a prompter in the initial consultation. You can use it to decide what the Property Action Plan report will include and the order in which points will appear. In Business Focus 2 [BF 2], there is a Report Compilation Prompter which has a series of
dot points as content prompters for each report heading and sub-heading. By no means is the list intended to be exhaustive nor is it intended that you would need to address every point under any selected heading. Use it to help you decide (or remember) what points to address under the headings you select. You decide the order as well.

    1. Valuation Techniques Applicable but Not Always Required
Consultancy and Property Action Planning is not divorced from property valuation. Most, if not all of the techniques used in valuation studies are also applicable to the analyses performed in consulting and Property Action Planning.

However a Property Action Plan may not require any valuation, or it may use one or more valuations as part of a broader analysis.

    1. Maintain Objectivity and Support Findings
Although the tools common to valuation and consulting may be used differently in each Property Action Planning assignment, Members should at all times maintain their objectivity and support their findings with facts extracted from competently conducted research. By their nature, Property Action Planning assignments are often more subjective than valuation assignments. Therefore, a Member undertaking a Property Action Planning Assignment should identify and evaluate both facts and judgments and then relate findings to the financial decisions under consideration.


Annexure 1

Property Action Plans

A Property Action Plan is tailored to a client’s situation and objectives. It may cover one, or a combination of several, of the following property action plan scenarios involving property, development and construction
projects, investments and markets.

Sale Price Maximisation and Marketing Strategies
Purchase Price and Purchase Risk Minimisation
Property Investment Analysis, Assessment and Recommendations
Property Aggregation Potential and Strategy
Property Dis-Aggregation to Optimise or Expedite Realisation
Investment Opportunity Identification and Portfolio Suitability
Property Portfolio Performance and Composition Review
Comparative Investment Property Yields and Income Volatility
Development Alternatives, Planning and Timing
Re-Development Profit Potential and Risk
Extension and Refurbishment Cost-Benefit Analysis
Changing Technology and Regulations Impact Assessment
Change of Use Potential and Process
Re-zoning to a more Profitable or Beneficial Use
Development Consent to Enhance Marketability or Undertake Project
Highest and Best Use Potential Identification and Capitalisation
Project Feasibility,Timing and Finance
Security Risk Analysis, Risk Minimisation and Equity Outlook
Equity Recovery Maximisation Strategy
Purchase and Development Funding to Leverage into Opportunities
Operating Cost Reduction to Improve Return and Add Value
Holding Cost Minimisation Pending Opportunity Capitalisation
Specialised Trading Property and Business Opportunity Analysis
Improving Tenancy Mix to Secure Income and Increase Value
Public Authority Acquisition Compensation Maximisation
Property Partition to Resolve Partnership Problems
Lease Terms and Conditions Advice, Assessment and Negotiation
Dispute,Tribunal Hearing or Litigation Expert Evidence Presentation
Insurance Adequacy Advising and Assessment.

The range of potential services Members of the API can offer is broad given the dynamics of property and their ability to tailor services to a client’s particular needs and objectives.

Property Action Plan

Prepared by a Member of the API for OWNERS Sale
Development Analysis
Performance Optimisation
Property Action Plans provide relevant, concise and timely advice to meet the needs and objectives of a Client.
Property Action Plans identify and analyse property-specific Strengths,Weaknesses, Opportunities and Threats.

A Report sets out recommended client actions to enhance and capitalise on property strengths and opportunities and to minimise and reduce weaknesses and threats. It may also identify areas of uncertainty or concern, recommending specialists reports or production of documents prior to, or as a condition of, any binding agreements. Where warranted, the report also provides appropriate assessments of Market Value or rent.

A Property Action Plan can address such issues as:

Marketing Strategy
Purchasing Strategy
Market Analysis
Risk Minimisation
Property Suitability
Specialists Reports
Highest and Best Use
Operating Cost Reduction
Tenancy Mix
Yield Analysis
Holding Cost Minimisation
Profit Analysis
Income Volatility
Development Options
Timing
Insurance Adequacy
Development Consent
Change of Use
Cost-Benefit Analysis
Sensitivity Analysis
Re-zoning

BUYERS

Purchase
Investment Analysis
Opportunity Identification
Broad Vision, Balanced Judgement and Sound
Members of the API look objectively at individual or portfolios, initial concepts or development projects.They research and analyse market data and bringing broad vision, balanced judgement and advice to your Property Action Plan.
Maximise Profit and Returns
Reduce Risks and Expenditure
Capitalise on Opportunities
Consult a Member of the API for your Property
Action Plan