Conflicts of Interest

10/09/1985

Sep 1985. In a period of ‘retailing revolution’, one wonders how advisers to pension funds can be so confident that the rate of growth essential to justify low initial yield on purchase price will materialise of the review date. Many funds are already becoming increasingly disillusioned with their agents’ failure to achieve the anticipated rental value.

When the same agencies also act for multiple retailers, how do they reconcile their objective for the lowest rental when they may also be acting for the landlord of the adjoining property with a brief to get the highest rent?

This conflict exists for all valuers,, likely to receive instructions to advise landlords and tenants in the same area, but it is surmountable when there is no vested interest in the progress of the investment.

Detailed knowledge of a multiple retailers’ property affairs must be very useful when advising a fund on investment purchase (not to mention on the company’s takeover potential) and the solution appears to aim for a balance, tilted in favour of the landlord, whereby ‘comparable evidence’ to back a recommendation to settle, is presented in such a form as to convince the tenant that the conclusion is indeed the right figure, in line with ‘the market’.

I cannot understand the business philosophy of major multiple retailers who appear unconcerned that their retained advisers actively market a positive involvement in the investment market. Surely it is better to use a selection of different valuers or, at worst, to deal with negotiations internally?

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