1
Q
What type of Fund is CREDF III?
A
Commercial Real Estate Debt Fund III
- Structure: Five-year, closed ended comingled fund, structured as a limited partnership.
- Legally an Alternative Investment Fund (AIF)
- Providing short-term acquisition, bridge and stabilisation loans secured against UK real estate.
2
Q
What is the Fund terms of CREDF III?
A
- 5-year fund.
- Frist close was in July 2021.
- 3-year investment period with two 1-year extensions which ended July 2025.
3
Q
What is the target return of CREDF and its actual performance and how is it measured?
A
- IRR
- Annualised Total Return: 8.0%–9.0% p.a net of all fees and costs
- Actual performance: near 7.0%
4
Q
Who is the Fund manager of CREDF III?
A
Octopus AIF Management Limited: Fund Manager
Regulated by FCA & complies with AIFMD regulations
5
Q
How big is the CREDF III fund?
A
£500M
6
Q
What is a PPM?
A
Private Placement Memorandum - the legal document outlining the fund’s strategy, target returns, risk factors, and investor terms.
7
Q
What is IRR?
A
IRR, or Internal Rate of Return, is the discount rate at which the net present value of all future cashflows equals zero.
In simple terms, it’s the annualised rate of return an investment is expected to generate, taking account of the timing and size of cashflows. In other words, taking into account the Time Value of Money.
8
Q
What is loan level IRR and how do you calculate Loan level IRR?
A
IRR is….
- Internal Rate of Return on the single loan facility
- Calculated by discounting the loan’s cash flows (funding, interest payments, principal repayments, fees) to find the rate where NPV = 0.
9
Q
What is fund level IRR and how do you calculate it?
A
IRR is….
- The internal rate of return across all loans in and fund cost of CREDF III.
- It’s calculated using the fund’s net cash flow , combining all loan cash flows, management fees, carried interest, and fund costs, over the life of the fund.
- It’s the rate that makes the NPV of this total cash flow equal to zero.
10
Q
What fund fees are included when calculating fund level IRR?
A
- Annual Management Fee (AMF) - a percentage of committed or deployed capital, typically 1–2% per annum, paid to the fund manager.
- Performance fee / carried interest – usually 10–20% of returns above a hurdle rate, paid to the manager once targets are met.
- Fund operating expenses – audit, legal, compliance, and administration costs of running the fund.
11
Q
In CREDF III do you adhere to industry standard reporting format covering performance, NAV, fees and expenses?
A
- For accounts: International Financial Reporting Standards — a global accounting framework used in the UK and most of Europe
- Returns are reported in line with MSCI/AREF Quarterly Property Fund Index Rules
12
Q
What are the limitations of IRR? What other metrics can be used to complement what IRR tells us?
A
Limitations of IRR
* Measures return but does not capture the risk around loan repayment
* Based on forecasted cash flows, which can be uncertain or inaccurate
Complementary Metrics for Lenders
* Interest Coverage Ratio (ICR): Measures the borrower’s ability to cover interest payments from income—critical for assessing lender risk
* Debt Service Coverage Ratio (DSCR): Shows ability to cover all debt payments, including principal and interest
* Net Present Value (NPV): Indicates the absolute value created or lost on the loan, reflecting profitability in monetary terms
* Loan-to-Value (LTV): Compares loan amount to asset value, highlighting the level of risk exposure
Additional Analyses to Assess Risk and Impact
* Standard Deviation: Measures variability in returns or values, indicating risk level
* Sensitivity Analysis: Tests how changes in key assumptions affect loan value and risk metrics like LTV
* Probability Analysis: Estimates the likelihood of different outcomes to better understand risk under uncertainty
13
Q
What is the difference between client objectives and client instructions/ parameters?
A
- Objectives = strategic aims (returns, risk profile, deployment).
- Instructions/parameters = hard limits (LTV, term, exposure limits).
14
Q
What were your clients’ objectives?
A
- Monthly interest rate between 0.75% - 1.00%
- Loan level IRR 12.00% - 1.25%
- Fund level IRR 8.00% - 9.00% net of all fees
- Full deployment of capital in investment period
15
Q
What were your client’s parameters ?
A
Max 70% LTV
Max 24-month loan term
16
Q
How did your Clients objectives influence underwriting?
A
- Underpinning returns was need for full loan redemption
- Set loan at 60% LTV given stage of development/ residual Market Values sensitivity to input changes
- Set interest rate to target my Client’s loan level IRR
17
Q
Why is reaching full deployment of capital important
A
Avoid cash drag – to achieve target returns, and meet investor expectations
18
Q
Can you explain the difference between Octopus Capital’s role and the client’s (CREDF III)?
A
Simple:
* Octopus AIFM manages the fund.
* CREDF III is the fund that holds the loans and distributes returns to investors.
Complex:
* Octopus Capital is legally just a brand of Octopus Investments.
* Octopus AIF Management Limited (a subsidiary of Octopus Investments) is the regulated fund manager.
* It is authorised by the FCA and acts as the General Partner.
* It is responsible for:
o Managing the fund
o Making lending decisions
o Monitoring performance
o Regulatory compliance
* CREDF III is a closed-ended Alternative Investment Fund (AIF) – the legal fund structure.
* It holds the underlying loans made to borrowers.
* Investors commit capital to the fund and are Limited Partners (LPs).
* LPs are passive and receive returns based on the performance of the loan portfolio.
19
Q
What’s meant by Client’s Credit Committee?
A
The Client’s Credit Committee is a group of five senior employees at my company who makes the final decision on whether to approve or reject a loan, on behalf of the investors in CREDF III.
The role of the Credit Committee is to:
* Assess credit risk
* Decline or approve loans
* Ensure a clear and auditable approval process to comply with AIFMD governance requirements.
20
Q
What the address of the property?
A
115-119 Wallis Road, Hackney Wick, E9 5LN
21
Q
Describe the current property
A
Three warehouse units, built mid 20th century c.1940s
Traditional masonry red brick and block construction with slate roof tiles.
22
Q
What was planning permission for?
A
Mixed use development across two connected blocks with 337 co living units and affordable workspace on the ground floor.
23
Q
Who is your company?
A
Octopus Capital
24
Q
Who was the borrower SPV?
A
Wallis Road MH
25
Who was the DM?
Halcyon Development Partners
26
Who was the borrower’s cost consultants?
Turner and Townsend
27
Who was the client’s consultant?
Gleeds
28
Who was the valuer?
Allsop
29
Who were you lawyers?
Memery Crystal
30
Who were the borrower’s lawyers?
Joelson Law
31
What was the loan purpose?
Refinance existing loan +
* Complete RIBA Stage 3 and 4 design
* Submit Gateway Two Approval
* Appoint a main contractor through competitive tendering
* Raise MOF III for required equity investment
Secure development finance
32
What was the borrower intending to do over the loan term?
* Complete RIBA Stage 3 and 4 design
* Submit Gateway Two Approval
* Appoint a main contractor through competitive tendering
* Raise MOF III for required equity investment
* Secure development finance
33
How much was the borrower planning to spend over the loan term?
£3.31M =
* £2.46M Stage RIBA 3 & 4 design
* £571k DM Fees+
* £40k RoL premium
34
What is RIBA Stage 3 and 4?
RIBA = Royal Institute of British Architects
* It publishes the RIBA Plan of Work: the industry-standard framework that breaks a building project into eight stages (0–7) from inception through to use.
* Stage 0 – Strategic Definition (establish brief, site, objectives).
* Stage 1 – Preparation & Briefing (project objectives, feasibility, budget).
* Stage 2 – Concept Design (initial design, outline proposals).
* Stage 3 – Spatially Coordinated Design (all disciplines coordinate design, planning detail, updated cost plan).
* Stage 4 – Technical Design (full construction drawings, specs, building regs approval, tender pack).
* Stage 5 – Manufacturing & Construction (on-site delivery).
* Stage 6 – Handover (completion, defects rectification, soft landings).
Stage 7 – Use (post-occupancy evaluation, facilities management).
35
Tell me more about Gateway Two?
* Gateway Two is the Building Safety Regulator’s approval stage introduced under the Building Safety Act 2022.
* It takes place, after planning consent but before works start on site.
* Its purpose is to ensure the design complies with building regulations and fire -safety requirements.
* The process: Client/Principal Designer submits application to the Building Safety Regulator.
* The Regulator has 12 weeks to assess and must approve before work starts.
Once approved, construction can commence, moving towards Gateway Three at completion.
36
Tell me about Building Safety Act 2022 ?
Key Features:
* Introduced Building Safety Principal Designer (separate to CDM PD).
* Emphasises “golden thread” of safety info.
* Introduced Mandatory Occurrence Reporting for HRBs.
Focus on:
* Accountability & duties
* Resident involvement
* Enforcement powers
National regulatory framework
37
What did the Building Safety Act (BSA) change about liability periods?
Extended liability for building defects from 6 years (Limitation Act 1980) to 15 years for claims arising after June 2022.
(All buildings)
38
What is a Higher-Risk Building (HRB) under the BSA?
* Building is 18m+ or 7+ storeys
* Must contain 2+ residential units
Excludes: Hotels, military barracks etc
39
What is the Building Safety Levy?
* The Building Safety Levy (BSL) is a charge on high-risk residential developments under the BSA, introduced to fund unsafe building remediation.
* Announced in April 2023; first draft regulations published July 2025.
40
What must HRB be registered with?
The Building Safety Regulator (BSR)
* Set up under BSA 2022
* Oversees building safety and professional competence
* Replaces Approved Building controls inspectors for HRBs
41
Will the Building Safety Levy Apply to this development?
* I spoke with Kevin Berine (company director), who’s been engaging with Government due to implications for his retirement fund.
* As Gateway 2 approval is expected before 1 Oct 2026, the levy won’t apply – not included in my appraisal or Red Book valuation.
However, if for whatever reason regulation changes and it does apply:
* The site is brownfield, qualifying for a 50% discount under the draft regs.
* Hackney’s indicative BSL rate: £35/m² – equating to c.£310,000.
* The appraisal has sufficient headroom to absorb this without impacting viability.
42
Who was the original lender?
Apex Capital
43
When did the original lenders loan expire?
January 2025
44
What was the quantum and finance rate on the existing loan?
* The existing facility:
* 11 months total (Nov 23 – Dec 24)
* 16.7% annual interest
* 2.0% arrangement fee
* £8.7m day-one net loan (53% lTPp)
* £2.0m further advance drawn when received planning in Sep to re-imburse costs(3 month)
* Loan to repay - £12.30m
45
What was the original purchase price of the site?
£16.17m plus £1.6m purchaser costs
46
Why was original loan high interest rate?
Preplanning – higher risk associated with the loan.
My company does not take planning risk for example when providing loans.
47
Talk me through the borrower’s day one sources and uses?
48
Can you talk me through the sources and uses of funds going forward?
49
What do you think of this macro (E9) and micro location, as a lender?
Site is located between Queen Elzabeth Olympic Park and Victoria Park.
Macro Location (E9 – Hackney Wick):
* Zone 2 London location – desirable for young professionals seeking affordable, well-connected areas.
* Excellent transport links – 2 mins to Hackney Wick Overground; 5 mins to Stratford (Crossrail, Jubilee, Central, DLR); 27 mins to Oxford Circus.
* Located in the Olympic Legacy regeneration area, benefiting from ongoing public and private investment.
* Strong rental demand in East London from students, creatives, and professionals.
* Close proximity to employment hubs in Stratford and the City.
Micro Location (Wallis Road):
* Vibrant, up-and-coming area with bars, cafés, and local amenities (e.g. Beer Merchants Tap, Sainsbury’s Local).
* Recent successful schemes nearby (e.g. The Wallis – 39 luxury units sold out in 2023), indicating market confidence.
* Presence of community and leisure facilities (e.g. Eton Mission Rowing Club).
* Well-suited to co-living, given the area's appeal to young, social, and mobile tenants.
50
What are the nearby transport links like?
* Hackney Wick Overground – 2-min walk; direct trains to Stratford (6 mins), Highbury & Islington, Richmond.
* Stratford International – 0.6 miles; access to DLR, national rail, and Eurostar via St Pancras.
* Bus access – 1-min walk to stops with routes into Central London (e.g. Victoria, King’s Cross).
* Road links – Close to A12, providing access to wider London and M25.
* PTAL rating: 2 – Below average but expected to improve with local regeneration.
Public Transport Accessibility Levels
PTAL is a measure, undertaken by TfL, which rates a selected place based on how close it is to public transport and how frequent services are in the area. The PTAL ratings range from 0 (worst) to 6 (best) where the highest value represents the best connectivity.
51
What are the nearby amenities?
* Local shops – Sainsbury’s Local on Wallis Road; Tesco Express nearby across the canal bridge.
* Parks & green space – 5-minute walk to Queen Elizabeth Olympic Park and Victoria Park.
* Leisure & culture – Access to sports facilities, live events, and stadiums in the Olympic Park.
* Food & drink – Bars, cafés, and restaurants within walking distance (e.g. Queen’s Yard).
* Employment hub – Here East Technology Campus nearby, home to tech firms and universities.
52
What was the green spaces in the local area?
Victoria Park
53
Tell me about the demographics of the local area?
Demographics: 62% aged 20–39; 85% rent homes - aligned with co-living profile (Knight Frank: 26–40 yrs, £37k+ pa income, 46% overseas).
54
What was the supply of co-living units like in the local area?
Knight Frank Co Living Report: Hackney ranks 4th lowest London Borough for co-living provision.
Competition: Only 2 approved co-living schemes (Scape, 121 units Kingsland Rd & 212 units Wallis Rd).
55
How does Hackney Wick compare with Maida Vale?
Hackney Wick: Trendy, creative hub with more affordable rents, attracts young professionals and artists; strong regeneration but still emerging market
Maida Vale: Established, affluent area with higher rents; more traditional residential appeal and family-oriented; less emphasis on flexible co-living (PRS - Private Rented Sector)
56
How does Hackney Wick compare with Earlsfield?
Hackney Wick: More urban, industrial vibe with vibrant arts scene; better suited for creative/co-living lifestyle; growing transport links
Earlsfield: More suburban and family-focused; quieter with good transport but less dynamic for co-living concepts
57
Can you list some of the nearby BTR competitors and residential developments?
58
Can you tell me more about the nearby BTR competitors?
BTR Schemes:
Wickside
* Distance: 3-minute walk
* 476 total - 176 BTR units
* Mix of 1, 2, and 3 beds
* Southern Housing (affordable)
* Developer Galliard Homes and O Share Group
* Acquired by Sable Capital
* To complete in 2025
Riverstone Heights (Bromley by Bow)
* 2 tube stops east
* 204 BTR
* Studio, 1-3 beds
* Developer: Long Harbour & operated by Way of Life
* Completion in 2025
Queens Yard
* Opposite Hackney Wick
* Hatton Graden Properties – private property developer (David Pearl)
* 143 BTR homes & commercial space + new theatre.
59
Can you tell me about nearby Residential developments?
Nearby Residential Developments:
The Wallis
* Adjacent
* Sainsburys in bottom
* 39 units – 1-3 beds
* Completed 2020, all sold
* Developer: Dominus New Homes
Stone Studios / (Curie House part of)
* Opposite
* Completed 2022
* 110 apartments + 5000 sqm of creative workspace
* 1-3 beds
* Telford Homes
Hackney Yards
* Next to Hackney wick
* Notting Hill Genesis – RP
* Ardmore Group – contractor
* 190 affordable apartments
* Under construction - to complete 2026
East Wick & Sweetwater
* Across bridge in Olympic Park
* 1,850 homes – phase 1 & 2 completed
* 1-4 bed homes
* Places for People/ Balfour Beatty Investments / The Hill Group
60
Can you tell me about any nearby schemes in planning?
Two nearby co-living schemes have planning consent, both by Scape:
* Kingsland Road, Haggerston: mixed-use scheme delivering 121 co-living units, due to complete in 2026.
* Very close to site - 34–38 Wallis Road: mixed-use scheme with 212 co-living units. Former The Collective scheme, acquired by Scape in 2021, with revised consent granted in April 2024. No evidence of being built out. Much smaller site.
61
Can you provide me some context on London Co Living schemes at the time?
At the time of loan approval London had only 19 operational co-living assets under the sui generis use class and 1,212 beds under construction.
62
How easy is it to find (i) sites (ii) and finance for deals in Hackney?
* Hackney is a highly sought-after area with strong demand for residential and mixed-use developments.
* Available sites are limited and often competitive, especially for well-located plots.
* More importantly sites with planning are difficult to secure as planning can be challenging due to conservation areas and local authority policies aiming to balance growth with community interests.
63
What type of site is the property?
The site comprised previously developed industrial land – brownfield.
64
What is the tenure of the property?
The property was freehold - meaning the owner holds the property and the land it stands on in perpetuity.
65
What is the acreage of the site?
0.9 acres
66
What was the sq ft of the warehouses
39,181 sq ft
67
What was the method of construction of the existing unit?
Use class B2 - General Industrial
* Built pre 1990s
* Traditional masonry (brick and block) construction, typical of former industrial buildings
* Load-bearing walls with no visible structural frame
* Pitched (gable) roof
* Brick-clad exterior with minimal windows and doors,
* Fully hard-surfaced external areas used for access and parking
68
What was previous use of the building?
Occupied by
* a waterproof cloth works
* A button factory
* Confectioning works
* Furniture works and engineering work
* Timber yard
* Various unspecified yards and works
Site had potentially contaminative history
69
What is current use of the building?
Multi-let to creative and charitable organisations
* CELL Studios – provides affordable workspace for artists
* Arbeit Studios – workspace for musicians, DJs, producers, photographers, and designers
* HWFI CDT – circular economy and sustainability-focused workspace for art, engineering, and community projects
* Makeshift garden centre
70
What additional due diligence did the current use suggest/prompt?
* Review of leases– to assess vacant possession risk and notice periods for existing occupiers
* Contamination and environmental checks – especially for asbestos and any residual risks from past industrial use
* Health & safety compliance – ensure current users operate safely, considering the building’s age and specification
* Building Insurance
71
What are the EPCs of the existing units?
115 WR is rated E. 117WR & 119WR are both rated C.
72
What measurement type is 39,181 sq ft in?
* The warehouse floor area was measured on a Gross Internal Area (GIA) basis.
* GIA measures the total internal floor space within the external walls, including circulation and service areas but excluding external walls and open areas.
73
What is the site’s flood risk?
* Site in Flood Zone 3 → higher flood probability.
* EA classification: Low risk (due to flood defences: steel sheet piling + concrete walls, 25-year standard).
* Assessment findings: High surface water risk.
* Mitigation: Ground floor slab raised 600mm above flood level.
* EA approved design.
* Mostly commercial use at ground floor → residential exposure reduced.
74
What is the RICS two key guidance on inspections?
1) Professional Standard Surveying Safely (2018)
2) Professional Standard – Environmental risks and Global Real Estate (2018)
75
What type of inspection did you do?
* External inspection only, limited to visual nature
76
What was the purpose of your inspection?
* To assess the suitability of the property and location for the proposed co-living scheme, in line with the borrower’s business plan.
* To identify any visible physical, locational or environmental risks that might impact the feasibility, deliverability, or marketability of the scheme.
* This inspection formed part of lender due diligence
* Valuer and cost consultant inspections would be undertaken subsequently.
77
How did you prepare for the inspection?
Reviewed relevant RICS guidance: Surveying Safely (2019) (lone working & safety) and Environmental Risks (2018).
* Conducted a dynamic risk assessment remotely using Google Maps.
* Carried out desktop due diligence:
1. Reviewed borrower’s business plan (target market, density, amenity space).
2. Assessed local planning policy, comparable developments, socio-demographics, flood & environmental risks.
3. Investigated historic uses of the site.
* Planned travel to site by train.
* Identified nearby public toilet
4. Planned travel to and from the site.
Lone working protocols:
* Saved emergency contacts and checked phone signal availability.
* Checked in and out with a colleague at agreed times.
* Brought appropriate equipment and food (due to diabetes).
78
Tell me about the loan working principle?
* Under The Health and Safety at Work Act 1974 employers have a legal duty to assess and control risks to lone workers.
* Health and Safety Executive Guidance: Protecting lone workers: How to manage the risks of working alone.
* In my role, lone working typically occurs during property inspections.
Best practices include:
* Risk assessments in advance - carried out prior to all site visits to identify and mitigate potential hazards.
* Check-in procedures with employer - including regular contact via mobile phone or use of lone worker safety apps.
* Staff are trained on lone working protocols - including how to assess risk on-site and respond to unexpected situations.
* Emergency procedures are clearly communicated - ensuring all staff know how to seek assistance quickly if required.
Note. Lone working includes:
* Working at home.
* Working out of hours.
* Driving as part of working day.
79
Where would you find guidance about lone working?
* Section 6: ‘’Lone Working’ of the RICS Surveying Safely (2018) professional standard.
* Health and Safety Executive (HSE) guidance on lone working and risk assessments.
80
What did you bring on the inspection?
* Mobile phone (fully charged)
* Digital camera (for photos)
* Site plans and supporting documents
* Pen and notepad
* Appropriate clothing
* Snacks and water (due to diabetes)
* Bag to carry all equipment
No need for PPE
81
What should you record when arriving at site?
* Date of inspection
* Time of inspection
* Weather at time of inspection – anything I might have missed.
82
What should you look out for when inspecting the local area?
1. Location/Situation: local facilities, public transport, prominence, public/private highway.
2. Competition: comparable evidence, local market conditions, agents’ boards.
3. Risks: contamination (e.g. petrol station, sewage), environmental hazards (invasive species), flooding, power lines, electricity substations.
83
What did you consider on the inspection?
* Method of construction – Identified as traditional masonry (brick and block) with load-bearing walls and a pitched roof, typical of mid-20th century industrial buildings.
* Condition and defects (external only) – No obvious signs of cracking or structural movement observed. External elevations appeared generally sound.
* Cladding – Brick-clad with no combustible materials visible.
* Car parking, access, and loading – Site benefits from a hard-surfaced forecourt, providing functional access and parking for existing uses.
* Contamination – No visual evidence of contamination; however, given the former industrial use took reliance on environmental survey.
* Health & safety risks – Considered overall building safety, access routes, and fire escape provisions, particularly due to multi-user occupation. – Compliant with H&S 1974 Act
84
What hazards did you identify?
* Uneven ground and trip risks from cracked paving.
* Trip risks from overgrown vegetation.
* General risks associated with older, unused industrial buildings (e.g. potential structural deterioration, deleterious material
85
How did you record and report your inspection findings?
* Records taken: Notes and photographs taken on site.
* Site details: Marked up site plan (access, boundaries, condition issues).
* Reporting: Wrote up findings in inspection notes → included as appendix in Credit Committee paper.
86
Did you note anything on your site visit that could indicate contamination?
No indications of present invasive plants or species were noted during our inspection
87
What is the key legislation on contamination?
Environmental Protection Act (1990)
The Act aims to identify and deal with contaminated land that poses a significant risk to human health or the environment.
88
What is the key RICS guidance on contamination?
Professional Standard – Environmental risks and Global Real Estate (2018)
* Framework for managing environmental risks in real estate.
* Focus on contamination assessment during property transactions.
* Best practices for identifying and mitigating environmental liabilities.
* Emphasizes due diligence to reduce financial and legal risks.
Clear reporting and communication of risks required.
89
What are deleterious materials?
Deleterious materials are substances used in construction that degrade over time, potentially causing structural problems and compromising building safety.
Common signs of deleterious materials:
* Brown staining on concrete surfaces
* Issues often found in concrete-framed buildings
* Common in buildings from the 1960s and 1970s
90
What is Japanese Knotweed?
* Fast-growing, invasive perennial plant
* Spreads aggressively via underground rhizomes
* Causes structural damage to buildings and infrastructure
* Difficult and costly to eradicate
91
What is radon?
* Radon is a naturally occurring radioactive gas that comes from the decay of uranium in rocks and soils.
* It can seep into buildings through cracks and gaps in the floor or foundations.
* Long-term exposure to high radon levels increases the risk of lung cancer.
92
How did you consider radon risk in your assessment?
* Gov’t data: 1–3% radon potential at site.
* Classified as low risk → no material impact on value or loan security.
* Compliance with Building Regulations would address radon protection measures (sub floor ventilation).
93
How would you identify contamination by just looking at a building?
When inspecting, visual signs of potential contamination could include:
* Staining or discoloration on walls or floors
* Chemical spills or residues
* Unusual Odors like solvents, fuel, or hazardous substances
* Evidence of previous industrial or commercial use
* Vegetation stress or unusual growth patterns indicating soil contamination
* Signs of fly-tipping or material left in a pile, which may suggest hazardous materials like asbestos that someone has not wanted to move.
* Water pooling – could indicate a leak / poor site maintenance.
As I’m not qualified to assess contamination or advise on remediation, if I have any concerns, I will instruct a qualified professional to conduct a full environmental survey and provide expert advice.
94
What is the main UK legislation for asbestos safety?
Control of Asbestos Regulations 2012 (CAR, 2012)
* Creates a statutory duty to manage asbestos in non-domestic buildings.
* Applies to commercial premises and common areas of residential blocks.
* Non-compliance is a criminal offence
Duty holder is:
* The owner (if vacant)
* The tenant (if holding a full repairing lease)
Legal duties include:
* Identify asbestos (via survey)
* Assess and manage risks
* Maintain an up-to-date asbestos register
* Inform anyone who might disturb asbestos (contractors, staff, etc.)
* All work must be done by a licensed contractor
Note - New buildings have an architect’s certificate to confirm no asbestos.
95
Noncompliance with Asbestos Legislation
Penalties:
* Fines up to £20,000
* Up to 12 months imprisonment (under Health & Safety Offences Act 2008)
Defence:
Must prove all reasonable precautions were taken and due diligence exercised
96
What legislation governs asbestos?
Control of Asbestos Regulations 2012 (CAR)
Supported by:
* Health and Safety at Work Act 1974
* Management of Health and Safety at Work Regulations 1999
* HSE guidance: HSG264 (surveys), HSG227 (management)
* Asbestos Profesisonal Standard (2021)
97
What is asbestos?
* A naturally occurring fibrous mineral used in building materials for insulation and fire protection.
* When disturbed, releases microscopic fibres that cause serious lung diseases (e.g. asbestosis, mesothelioma).
* Safe if undisturbed and in good condition
HSE estimates:
* Over 4 million UK buildings contain asbestos
* Causes 5,000 deaths annually
98
Buildings constructed before what year are likely to contain asbestos?
Before 2000
99
Why was asbestos widely used?
Cheap, strong, and highly resistant to:
* Heat
* Fire
* Electricity
* Chemical damage
Easily mixed with other building materials
100
Types of asbestos (most dangerous first):
1. Blue (Crocidolite) – Pipe insulation (most dangerous)
2. Brown (Amosite) – Ceiling tiles, AIB panels, cement
3. White (Chrysotile) – Roofing sheets, walls, ceilings (most common)
Ban dates:
* Blue & Brown: 1985
* White: 1999
101
What is an asbestos risk assessment?
1. Identify presence of Asbestos Containing Material (ACM) via survey
2. Assess risk (likelihood of disturbance)
3. Develop management plan (e.g. encapsulation/removal)
4. Create and maintain asbestos register and make available to all who might disturb it.
5. Review regularly – every 6 months recommended
I am not qualified to conduct asbestos surveys or risk assessments myself, so I would always instruct an appropriately licensed asbestos professional to carry out these tasks in line with legal requirements.
102
What is the asbestos register?
A legal requirement under Control of Asbestos Regulations 2012
Lists:
1. Location
2. Type
3. Condition of ACMs
* Must be kept accessible and updated
* Supports the asbestos management plan
103
What do The Control of Asbestos Regulations (2012) say are the five steps for the duty holder in managing asbestos?
(1) Assess whether premises Contains asbestos, the location and condition of it.
(2) Assess Risk of it
(3) Create an Asbestos Register
(4) Make that register Available
(5) Review that register regularly.
C-R-R-A-R
104
What are the types of asbestos survey?
1. Management Survey – During normal use/occupation (non-intrusive)
2. Refurbishment/Demolition Survey – Required before major works (intrusive, includes sampling)
105
What is UKNAR and Asbestos SMART?
UKNAR = UK National Asbestos Register (non-profit)
* UKNAR (UK National Asbestos Register) is a non-profit social enterprise that helps duty holders manage asbestos safely and effectively across their properties.
* It centralises asbestos register information, making it easier to keep records accurate and accessible.
* Asbestos SMART is a digital system linked to UKNAR that uses QR codes to give quick on-site access to asbestos register details.
* This means contractors and staff can scan a QR code to instantly see up-to-date asbestos information, improving safety and communication.
106
What does the RICS Asbestos Professional Standard (2021) cover?
* Supports compliance with the Control of Asbestos Regulations 2012.
* Effective from August 2021.
Offers guidance on:
* Summarising relevant UK asbestos legislation.
* Commissioning asbestos surveys.
* Creating and implementing asbestos management plans.
* Defining the roles and responsibilities of property professionals.
Note: It does not provide detailed advice on how to conduct asbestos surveys, instead directing professionals to the HSE publication HSG264 Asbestos: The Survey Guide for that specific guidance.
107
What are common asbestos-containing materials (ACMs)?
* Insulation boards
* Floor tiles
* Cement panels
108
What are the symptoms of asbestosis?
* Shortness of breath
* Persistent dry cough
* Chest pain
* Fatigue
109
What is COSHH?
Control of Substances Hazardous to Health Regulations 2002 - Employers must prevent or control exposure to harmful substances
Applies to:
* Dust, fumes, gases, vapours, mists
* Chemicals (e.g. cleaning products, paints, adhesives)
* Biological agents (e.g. blood, waste)
* Key requirements:
* Risk assessment
* Control measures (ventilation, PPE)
* Training and information
* Monitoring and health surveillance
* Emergency procedures
110
Did you instruct a contamination or Asbestos survey?
Borrower instructed
1) GEA land contamination desk study
2) Savills Ground contamination report
3) Asbestos management survey.
(took reliance on all)
Land contamination:
* Survey done by Geotechnical and Environmental Associates Limited (GEA)
* GEA had previously done a full investigation report in 2018 for a different client on the same site
* Findings from the 2018 report were used in the current study
Asbestos:
* Asbestos containing materials which have been identified are in good condition.
111
What were the findings of the contamination survey?
* The site has a history of industrial and manufacturing uses, including waterproof cloth works, chemical works, and confectionery works. Asbestos was found in 3 out of 5 made ground samples during previous ground investigations.
* PAHs (Polycyclic Aromatic Hydrocarbons) – found in soil.
* Some remedial action needed to safely remove asbestos and contaminated soil.
* Included in demolition cost.
112
Did you include cost of remediation of asbestos in your residual?
* Yes, asbestos remediation costs included in residual valuation
* Covered within overall build costs
* Included in our cost consultant’s reports and Turner & Townsend assessments — I used their Turner & Townsend report for my residual
* Demolition budget (~£400,000 or £29/m²) includes asbestos removal and disposal
* This cost is at the upper end of the BCIS range – I felt was sufficient, considering also 10% contingency included.
* Demolition planned between Dec 2025 and Apr 2026 with asbestos safety measures.
113
Who were the three tenant charities leasing the three units and what were their lease terms?
* CELL Foundation – £30k p.a., short lease, 2-month rolling break.
* ARBEIT Project Ltd – £30k p.a., short lease, 2-month rolling break.
* Hackney Wick & Fish Island CDT – peppercorn rent, break option July 2025.
All three = community-focused, providing affordable creative workspaces & local engagement.
114
What is the 1954 act?
* The Landlord and Tenant 1954 Act
* The act gives most business tenants security of tenure.
* This means they have a statutory right to renew their lease at expiry unless the landlord can oppose renewal on limited statutory grounds (1 of 7 specific grounds - inc breach of repairing, offer suitable alternative accommodation)
* Leases can be contracted out of the Act, removing this protection.
115
What is the significance of the warehouses being leased outside the 1954 act?
* The tenants had no statutory right to renew their leases at expiry.
* This meant the Borrower could secure vacant possession for redevelopment without delay.
* It also avoided the risk of protected leasehold interests inflating costs or obstructing the scheme.
116
What does vacant possession mean?
The property being free of people, belongings and legal interests.
(borrowe can take up occupation without obstruction)
117
What are the stages of planning approval for a scheme like this?
* Pre-application – early engagement with LPA and consultees.
* Submission – application lodged with supporting reports.
* Validation & consultation – statutory/public consultation.
* Assessment & negotiation – officers review, conditions/S106 agreed.
* Decision – by delegated powers or planning committee.
* Post-decision – discharge of conditions, S106/CIL finalised.
* Appeal/JR if refused.
118
What are planning conditions?
Restrictions or requirements attached to a planning permission (e.g., materials, landscaping, hours of work) that must be discharged before or during development.
119
What Planning conditions needed to be discharged?
Number of planning conditions: 75, that were split into pre-commencement (start on site), pre-occupation (PC) and operational (ongoing).
There were 35 conditions that needed to be discharged before construction started including:
* Demolition method & pre-demolition audit.
* Site investigations & contamination remediation.
* Sustainable drainage & flood resilience.
* Gateway 2 approval.
120
What type of planning consent was secured?
Full planning permission for the demolition and redevelopment of the site to deliver a large-scale purpose-built shared living scheme, comprising 337 studios and 1,021 sqm of commercial floorspace and affordable workspace, with associated car parking and landscaping.
121
What’s the difference between full and outline planning?
* Full gives detailed consent for the whole scheme;
* Outline establishes the principle of development, with details (“reserved matters”) like layout, scale, and appearance approved later.
122
What use class is the development?
Current building B2 - general industrial
Co-living falls under Sui Generis use, with ground floor commercial affordable workspace under use Class E.
123
Who was the planning authority?
London Legacy Development Corporation, which transferred to the London Borough of Hackney at the start of 2025.
124
Can you tell me any more information about the planning consent?
The application was submitted in February 2024, approved in September, and the decision notice was issued on 28 November 2024 under reference 24/00021/FUL
125
What is S106?
* A section 106 (S106) agreement is a legally binding agreement or “planning obligation” between a local planning authority and a property owner.
* Pursuant to Section 106 of the Town and Country Planning Act 1990
126
What is CIL?
* Community Infrastructure Levy - is a charge which can be levied by local authorities on new development in their area.
* Introduced by the Planning Act 2008.
* Used to fund transport, schools, health services and other local infrastructure.
127
What is Right of Lights?
A right of light is a private, legally enforceable easement or right to a minimum level of natural illumination.
It is an easement enjoyed by one landowner over the land of someone else, and it can be asserted by anyone with an interest in land.
Rights of Light Act 1959
128
What is PIL (Affordable contribution)?
Payment In Lieu - cash contribution where affordable housing can’t be delivered onsite.
129
Was the S106 signed?
It was signed before loan completion on 17 December 2025
130
What was the CIL charge?
£1.6M
131
What was the S106 charge?
£738K
132
What was the RoL charge?
£681K
133
What was the schemes affordable housing contribution
* £3m payment in lieu — two instalments of £1.5m (start & completion)
* 4,814 sq. ft of affordable workspace
* Leased on 99-year peppercorn rent
* Let to Hackney Wick & Fish Island CDT (local community charity)
134
What are some of the reports you viewed on the planning portal?
1. Land Contamination Studies (January 2024)
2. GEA Land Contamination Desk Study (April 2024)
3. Savills Ground Condition and Contamination Report
4. Right of Light Report
5. S106
6. Access and design statement
135
What was the key items included in the S106 agreement?
Affordable housing contribution – affordable workspace
Highway contribution
Travel plan
Compliance to National Considerate Constructors Scheme
136
What is Gateway 1 and 3 under the BSA?
Gateway 1 - Submitting a fire safety report with the planning application
Gateway 3 - At building completion. BSR will confirm whether building is compliant with building regulations. (Instead of a LA Building Control Inspector)
137
Who was the ultimate parent company of the borrower?
Mitheridge Capital Management
APC - Anna Dujardin
flashcards
Decks in class (34)
# Cards
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1. Ethics - (History - CPD)55
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1. Ethics (Rules of Conduct - Confidentiality)100
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1. Ethics - (Ethics - SOE)56
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3. Communication And Negotiation37
-
4. Health And Safety119
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2. Client Care24
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5. Accouting Principles And Procedures45
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6. Business Planning14
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7. Conflict Avoidance, Management And Dispute Resolution40
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8. Data Management26
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9. Diversity, Inclusion And Teamworking25
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10. Inclusive Environments11
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11. Sustainability72
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12. Financial Modelling102
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13. Inspection113
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14. Investment Management (Including Fund And Portfolio Management)121
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15. Property Finance And Funding139
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16. Valuation225
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17. Development Appraisals84
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18. Purchase And Sale96
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19. Case Study (Part 1)137
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19. Case Study (Part 2)60
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19. Case Study (Part 3 - Val)92
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19. Case Study (Part 4)142
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20. CPD145
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21. Mentioned Legislation & Regulation10
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20. Mentioned CPD9
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21. Key Legislation & Regulation70
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21. Key RICS Documents36
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22. SOE Examples18
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22. SOE Asset Details27
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22. Construction Method10
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23. Hot Topics48
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24. Definitions120
