The slow market has led to a shortage of attractive assets, meaning that when investments opportunities arise, a competitive auction scenario is likely.
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For example, the government announced in July 20181 that they intend to sell off over half of their Whitehall buildings – considered to be prime UK Real Estate. The Cabinet Office wants to reduce their properties from 800 to below 200, which will result in a saving of £3.6 billion over a 20 year period. This offers great development opportunities in London and therefore will likely spark a competitive bidding war.

In order to improve your chances of providing a competitive bid, we recommend including insurance cover for Warranties & Indemnities (W&I) alongside the bid. This allows the seller to limit their liability to as little as £1 whilst providing comfort that any breach of warranty will be covered. Just as in the case for private M&A transactions, this solution would allow the seller, in this case, the government, to make a clean exit from the deal, which might be more attractive to them than the other bids that have been presented.

See here for more information on W&I insurance.

Sources

  1. https://www.standard.co.uk/business/government-property-selloff-tipped-to-start-bid-war-from-investors-a3885621.html