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Better asset management means better returns from your land

Nick Woolley, FRICS, is one of the UK’s leading project and asset managers.  Having started out as a joint tenant on a 400 acre mixed farm, he went on to manage portfolios of farms and estates before becoming Chief Land Agent to the Prudential in 1979, managing 85,000 acres.  He set up Newmarket-based  Woolley & Co in 1995.   In this article he explains how adopting the discipline of asset management can help landowners optimise the value of their land

“Why are you here?” sounds a profound question – but it’s one that I’m always asking.   Or put it another way:   “Why do you own this land?”   To which the response is often that “it’s been in my family for generations.”   “Yes, but why do you own it NOW?”  I counter.

Every landowner I know wants to extract more value from their assets.   In asking these questions, I’m not just being pedantic.  All landowners are different.  Their real motivations for owning land and their idea of what constitutes ‘value’ can be equally at odds.

Some will want simply to make a good revenue return from farming.  Others will regard enhancing wildlife habitats as a priority.  Many will be looking for opportunities to sell off parts of the overall holding for the development.  The point is that, before deciding which of the many options to take to optimise value, it’s important for a landowner to be clear what their real objectives are.  And when they’ve worked this out, they need to secure the type of advice which will help them achieve their goals.

Landowners work with managing agents, whose primarily role is to manage the daily running of the estate or farm.  This model works successfully at the day to day level but, after three decades in this business, I’ve come to the conclusion that support from a managing agent alone is not ususally enough to guarantee that the landowner will always extract the maximum value from their assets.  It’s not the fault of either party but a relationship that is rooted in the minutiae of daily estate management can get bogged down and lose track of the bigger picture.  The old adage about woods and trees is particularly apt!

This is why we set up a separate asset management team in the Prudential back in the 1980s – and it worked.   An asset manager is a highly qualified and experienced professional, experienced in running large portfolios and in clinical financial analysis, who will take a ‘helicopter’ view of the estate and who works purely at a strategic level to translate the landowner’s objectives into the activities which will most cost effectively deliver them.

In doing so, the asset manager, of course, works in partnership with the managing agent but his position, ‘one step removed’ from day to day issues, gives him the objectivity and degree of detachment which enables him to remain focused on the ‘bigger picture.’   His strategic focus also enables him to remain abreast of overall market developments so that he’s well placed quickly to identify and exploit opportunities which could emerge from many directions and which could help the landowner more effectively optimise his assets.

Of course, agents have been known to treat asset managers with some suspicion.  But I’m heartened to see this attitude changing.  True, it falls to the asset manager to review the agent’s plans to ensure they are indeed optimised and cost-effective – and it has been known for them to challenge an agent’s proposed fees!  But, as in all things, the most effective relationships are those built on positive teamwork and enlightened agents view asset managers as a valuable additional resource – as fellow professionals, with an experienced eye, who can provide useful feedback on their management plans, provide fresh input, challenge them where necessary and support them in discussions with the landowner on difficult points.

Indeed, I’ve witnessed numerous occasions where the asset manager has acted as a bridge between the visions of a perhaps unrealistic landowner and his long suffering agent and helped forge a stronger and more constructive relationship between them.

And, before you ask, neither is it necessarily more expensive nor ‘yet more outlay on professional fees.’   In my experience, the asset manager has invariably more than covered their costs  – and often significantly increased overall returns – because of the high level of input and analysis they’ve been able to provide – and actually a ‘busier’ property means higher fees for the agent, as well as an improved performance for the landowner.

So, if you want to make 2008 the year when you truly start to realise the potential of your land, take my advice and take a long, hard look at the level of support you’re currently receiving.  It might be time to call on the services of an asset manager.

Anglia Farmer | February 2008

February 5th, 2008
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