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spunko2010

Here We Go. Construction Company Goes Under

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Don't get too excited it's not Bellway, but a smaller construction company dealing in mainly commercial sector.

http://www.kentonline.co.uk/canterbury/news/cardy-construction-files-for-administration-99603/


A construction firm is set to fall into administration, putting about 220 jobs at risk.

The news that Cardy Construction Limited, based in Canterbury, has fallen into trouble comes as the construction industry continues to be impacted by the Brexit vote.

The firm, founded in 1946, filed a notice of intent to appoint administrators yesterday as uncertainty around the economy affects forward orders in the industry.

Brexit is, of course, the cause.

PS: I have noticed on Rightmove in the past week or so some really big drops on Commercial property, too. One was reduced from £1.1m to £800k today for example.

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Don't get too excited it's not Bellway, but a smaller construction company dealing in mainly commercial sector.

http://www.kentonline.co.uk/canterbury/news/cardy-construction-files-for-administration-99603/

Brexit is, of course, the cause.

PS: I have noticed on Rightmove in the past week or so some really big drops on Commercial property, too. One was reduced from £1.1m to £800k today for example.

The sale/rental prices on commercial properties make domestic sale & rental prices seem positively sensible in a lot of cases, which might have a bit more to do with this company failure than Brexit - although since when did most of the MSM let the truth get in the way of a good story?

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The sale/rental prices on commercial properties make domestic sale & rental prices seem positively sensible in a lot of cases, which might have a bit more to do with this company failure than Brexit - although since when did most of the MSM let the truth get in the way of a good story?

The return on commercial is better than on residential - typically 6%+ with no voids and no repairs/maintenance etc (and commercial leases are longer term and insist on a guarantor and have built in upwards only rent reviews built in the contract) - some of the smart money has jumped ship from BTL and is looking at commercial instead

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The return on commercial is better than on residential - typically 6%+ with no voids and no repairs/maintenance etc (and commercial leases are longer term and insist on a guarantor and have built in upwards only rent reviews built in the contract) - some of the smart money has jumped ship from BTL and is looking at commercial instead

+1

This Commercial property is not cheap but about sane considering the low rates.

Residential is a magnitude more overpriced.

However you need to know your stuff with commercial I remember almost buying a cafe rouge site in an auction narrowly getting outbid......then a reorganisation and they out of there.

You not only have the risk of default but also the strength of covenant of the tenant for example if a Bank does not renew your going to struggle to find another as strong as this will affect the value/leverage even if the rent stays the same.

Edited by Fromage Frais

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You not only have the risk of default but also the strength of covenant of the tenant for example if a Bank does not renew your going to struggle to find another as strong as this will affect the value/leverage even if the rent stays the same.

I don't understand, surely the guarantor adds security and they are also for longer terms

But I do agree, that they can take an age to shift/rent out/agree terms and are a far more illiquid asset than residential

Edited by knock out johnny

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The return on commercial is better than on residential - typically 6%+ with no voids and no repairs/maintenance etc (and commercial leases are longer term and insist on a guarantor and have built in upwards only rent reviews built in the contract) - some of the smart money has jumped ship from BTL and is looking at commercial instead

No voids???? Have you seen the amount of empty shops in most high streets these days?

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No voids???? Have you seen the amount of empty shops in most high streets these days?

There's high streets and then there's high streets

Location, location, location - seriously

But when you do find a tenant it's unlikely to be for 6 months on ast terms

Edited by knock out johnny

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There's high streets and then there's high streets

Location, location, location - seriously

But when you do find a tenant it's unlikely to be for 6 months on ast terms

Agree with you re location - but for me a big part of the reason there's loads of empty shops & other business premises is because the landlords are trying to screw as much rent out of their tenants as possible without regard to what is sustainable (bit like the BTL types in residential). The odds are if a commercial landlord gets a void, its going to be a long one as the terms of a commercial lease mean anyone considering renting a business premise has to think very carefully about what they're taking on.

In those circumstances its not that surprising that a builder of commercial property has gone kaput.

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Barratt leads housebuilders down on Brexit fears

New worries about slowdown in housing market hit UK builders. But housebuilders, which have been falling sharply on fears that the Brexit vote will hit the UK economy (and thus the housing market) hard, are under pressure again. Part of the reason is that analysts at Deutsche Bank have slashed their price targets albeit they are still positive on the sector. They say:

Reflecting Brexit uncertainty we have reduced our forecasts for the UK Housebuilders to reflect a possible moderate downside scenario (-10% in volumes and pricing). Government policy remains pivotal. Since 2007 new house building has been a key policy for the UK government, identifying it as a driver of economic growth, with government targeting (and reiterating since Brexit) 1m new homes 2015-2020. This target has been reiterated by government since the Brexit vote. With this in mind we see government policy as the key upside risk in our sector. The key policy which could provide upside we believe is Help to Buy equity loan where we believe a temporary increase in the equity stake taken by government to 30% (still remaining short of the 40% in the London Help to Buy product) could provide meaningful support to volumes, as could a short term stamp duty holiday at the lower end of the house price scale.

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PS: I have noticed on Rightmove in the past week or so some really big drops on Commercial property, too. One was reduced from £1.1m to £800k today for example.

It will not just be commercial, I know of a large residential property that is about to transition between those exact figures.

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I invested some money in funding circle, thankfully not ended.

There were 2 or 3 construction type companies in my small portfolio that were struggling n the last 6 months.

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The return on commercial is better than on residential - typically 6%+ with no voids and no repairs/maintenance etc (and commercial leases are longer term and insist on a guarantor and have built in upwards only rent reviews built in the contract) - some of the smart money has jumped ship from BTL and is looking at commercial instead

it's better if you can get a tenant.Cities like Leicester have shed loads of empty CRE,except that is for the telephone of the charity they've installed to fend of the business rates

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It will not just be commercial, I know of a large residential property that is about to transition between those exact figures.

High end resi is very exposed as it's buyer less if you're relying on 60% LTV plus salary multiples.

Edited by Sancho Panza

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In January I ditched all commercial property from my pension as it was clear to me that it was in for a fall. In Peterborough there is normally about 10% of office space empty. Today about 10% of the office space is being converted to residential flats. 5 projects in Priestgate alone. Conversion to residential is seen as a panacea by CP landlords at the moment. Some of them have been without a tenant for at least 5 years so the ponzi pretence that the value is linked to rental prices was clearly not going to run for much longer.

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it's better if you can get a tenant.Cities like Leicester have shed loads of empty CRE,except that is for the telephone of the charity they've installed to fend of the business rates

Agreed, the sword of business rates dangling over the head of a commercial property owner with no tenant is squeaky bum time

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