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Q&A with Nina Johnston, Managing Director, Equiom

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In this Q&A with Nina Johnston, Managing Director, Equiom, to discuss the role that Isle of Man Fiduciary Service Providers play in the Commercial Property space. Nina, also discusses the benefits of utilising the Isle of Man for ownership structures and what we can expect next in a post-pandemic world. 

What is the role of Isle of Man Fiduciary Service Providers in the UK Commercial Property space?

The Isle of Man fiduciary sector has a long and successful track record of providing services to both private and corporate clients with an interest in real estate, often becoming involved on the boards of the respective owning companies.  This carries significant responsibility and experience built up over a number of years in order to manage the assets with the care and diligence expected from professional directors or trustees.

Why do people choose the Isle of Man for their ownership structures for high value real estate?

There are several benefits.  Many entrepreneurs may wish to pool their resources to make a larger investment – our ability to create collective investment vehicles for under 50 participants under the ‘Exempt Schemes’ rules is a big attraction.  Choosing a jurisdiction with strong regulation and governance without creating an unnecessary burden in terms of reporting requirements is a huge positive for clients.  In addition, most commercial property investments benefit from a VAT registration, and Isle of Man Customs & Excise are able to process registration requests within a matter of days.  Returns are processed efficiently which creates cashflow benefits particular on original acquisition where VAT on purchase price can be returned within weeks as opposed months which can be the case in other jurisdictions.  Given the high value of many transactions in this space, bank lending can be necessary to fund acquisitions/developments and our creditor protection and insolvency laws make us an attractive option for lenders where they have the ability to influence the structuring options.  We have also seen interest in The International Stock Exchange (TISE) in providing efficient funding solutions through listed debt products which has brought business to the Island.

The last 18 months have had a profound impact across all sectors – how specifically has the UK commercial real estate sector been impacted

I would actually take things back a few years more.  I remember being in London on 23rd June 2016, the day of the EU Referendum vote….there was a resounding feeling from the professionals that I had met during the day that the whole thing was a storm in a teacup and we would wake up the next day and get on with life with a NO vote…… how wrong could we all have been?

The YES vote triggered a chain reaction and a shift in confidence by investors in the commercial real estate sector after having rallied for a period of time post credit crunch. 

Whilst uncertainty continued as Brexit negotiators tried to agree terms, the UK Government introduced CGT of the disposal of commercial property held by Non Residents which was another detractor for international investors in this asset class.  January 2020 saw a new dawn with Brexit terms agreed and certainty returning for investors and then, yes you guessed it the pandemic hit.

All stakeholders were impacted one way or another by the crisis – rents across the majority of sectors were under pressure with tenants closing their doors, banks found themselves in a position where breaches of covenant were occurring in relation to interest cover and landlords were agreeing to rent breaks or deferrals putting immense pressure on cashflows.  This is where the experience of the directors has been essential to negotiate alternative arrangements with lenders to ensure ongoing support and dealing with the myriad of reverberations with tenants and other suppliers.

It has certainly been a rollercoaster of a ride – what do you think will come next?

Current deal volumes are extremely encouraging and evidence of the return to confidence.  The industry is expecting a bumper Q4 with foreign investment driving the interest.  Demand is high in the industrial and logistics sectors with strong capital values and rental growth being achieved.  As for the Isle of Man, we continue to provide a first class service in the industry thanks to first class framework and highly experienced personnel.  We are ready for whatever comes next.

Find out more about why the Isle of Man is the natural choice for Excellence in Finance.

 

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