Questions to Ask your Ground Rent Fund Manager
- Are any commissions / fees paid to you or any associates when assets are purchased or sold?
- What are the basis and procedures for valuing the freehold assets you purchase? Do you have an independent survey performed upon purchases? How are long-leased freeholds marked to market, and how frequently?
- Are any commissions / fees paid to you or any associates when leases are extended or enfranchisements take place?
- Are lease extensions or enfranchisements only acted upon at the leaseholder’s instigation or do you actively promote lease extensions?
- Are fees for collecting and managing all aspects of the ground rent / freehold (e.g. rent collection, legal enquiries, consents to assign / alterate, credit control, etc.) paid to you or do they accrue to the Fund?
- Does 100% of all ancillary income / fee streams associated with the owning of freehold accrue to the Fund?
- Do you receive insurance profit / commission and are these paid to you or do they accrue to the Fund?
- Do all the benefits from freeholder’s right to appoint / nominate the property’s managing agent accrue to the Fund?
- On which valuation basis is the fund manager rewarded – historic or current? I.e.
are you rewarded for reversionary value as it accrues over time (which is in effect a reward resulting simply from the passage of time), or does the manager add quantifiable value through careful asset selection?
- Does your investment vehicle have a redemption timing procedure for redemptions that matches property assets?
- Is there clarity in the pricing of the Fund for purchases and redemptions with regard to acquisition and sale costs of the assets?
- Are your information technology solutions resilient and is there a disaster recovery plan in place?