From complexity to informed decisions
For specific hold/sell decisions, the challenge is often not a lack of information, but a lack of time and capacity to bring it together on a consistent basis. Business plans, valuation reports, financing data and market indicators are available, but often rely on different assumptions. This makes it difficult for the relevant committee to compare realistic options on a reliable basis.
At the same time, the pressure to act is increasing: valuation adjustments, upcoming debt maturities and liquidity needs are converging in a market where buyers are increasingly selective. Asset managers need to identify a viable course of action in good time, limit downside risk, justify any additional capital commitment and present a clearly supported recommendation to the relevant committee.
Identifying the highest expected present value is not enough. The key question is which option delivers the greatest value to the fund after accounting for risk and capital requirements, and can be implemented within its strategic and regulatory constraints.
How BDO adds value: We bring information and assumptions together within a common decision framework. Within a few days, we identify viable options, the assumptions and thresholds that drive the decision, and the actions that need to be taken immediately. The client receives a committee-ready assessment with clearly documented risks and next steps.
One approach, two engagement options — available separately.
The Asset Quick Check addresses an urgent decision on a single critical asset. Within a few working days, we review the available data and decision requirements, form a preliminary view on the preferred course of action, and identify critical thresholds and outstanding issues in order of priority. Where sufficient data is available, a substantiated provisional recommendation follows shortly afterwards.
The Portfolio Decision Programme is designed for clients with several critical assets or a need for a common decision standard. Within a few weeks, it delivers substantiated recommendations across a range of asset situations, together with a reusable hold/sell framework. It can build on an Asset Quick Check, but can also be commissioned directly.
1. Hold/sell analysis by BDO
How we carry out the analysis
We start with the assets in question and the decisions required. We consolidate financial performance, letting activity, investment needs, valuations, financing terms and key deadlines into a consistent dataset. Depending on the starting point, we review and adapt an existing model or develop a new one.
We compare only options that are financially viable and achievable within the available timeframe. Alongside the impact on the individual asset, we assess the implications for liquidity, distributions, the remaining portfolio and fund financing. Each option is also assessed against the fund’s strategy, term and governing investment provisions, as well as applicable regulatory and sustainability requirements.
Real estate expertise: Where required, property valuers help validate the asset-level and market assumptions underpinning the options. The focus is on market rents, letting prospects, exit yields and the potential effect of investment and repositioning on value. We assess existing valuations and indicative purchase prices against the assumptions used in the financial analysis, grounding the comparison in the characteristics of each property and its market.
A simplified example: an office asset under refinancing pressure
An office asset has a carrying amount of €100 million, an indicative purchase price of €85 million, capital expenditure requirements of €12 million and a loan maturing in 18 months. The carrying amount is an accounting reference only; the decision is based on the expected net cash inflows from each option. The option values below are illustrative present values after capital outlays, transaction costs and holding costs. Expected values are weighted by the assumed scenario probabilities.
Key takeaway: Investing the full amount immediately offers greater upside, but exposes the fund to significant downside risk. A phased investment approach limits the initial capital outlay and keeps the option of a sale open. In this example, the value of the information gained over six months exceeds the additional holding and financing costs and any potential loss in value during the assessment period.
Analysis: Repositioning in a single stage has a higher expected value than an immediate sale at a probability of success of approximately 48% or more, but carries greater downside risk. The phased approach limits the initial capital outlay and achieves the highest expected value, at around €90.5 million, even after a €2 million deduction for the effects of the delay. This depends on withholding further investment if there is no evidence of success after six months and initiating the sale process in good time.
Illustrative portfolio assessment: A recommendation for an individual asset may change when viewed in the context of the portfolio. Suppose repositioning generates a positive expected value for each of three properties, considered separately. The fund, however, has limited liquidity and is already heavily concentrated in offices. A comparative portfolio analysis indicates that additional capital should be allocated primarily to the asset with the highest risk-adjusted value contribution, a second property should be retained for now, and a third should be sold despite its positive stand-alone prospects. The decision depends not only on individual asset returns, but also on capital requirements, liquidity effects, concentration risk and the stability of the remaining portfolio.
2. Scope of services and next steps
Analytical support from BDO
We support clients who need additional capacity at short notice and a documented second opinion. We combine asset, fund, financing and transaction perspectives, objectively review key assumptions, and prepare recommendations, risk assessments and next steps for board or committee approval. Decision criteria, responsibilities and differences of view are clearly documented; the final decision remains with the relevant investor or governing body. Before accepting an engagement, we conduct a project-specific independence and conflict-of-interest review.
Modular service offering
The following specialist modules can be selected to suit the decision at hand. The engagement options below set out how they are delivered, including scope, timing and application across individual assets or a wider portfolio.
Option 1 | Asset Quick Check
From immediate pressure to a clear course of action: the Asset Quick Check supports decisions on investment, sale, refinancing or repositioning for individual assets at short notice. BDO organises the available documentation, reconciles the business plan, valuation, financing and market assumptions, and identifies the parameters that determine how the options rank. The client receives a recommended course of action, with sensitivity analysis, key risks and immediate priorities. We distinguish information gaps from substantiated findings, enabling the committee to make informed decisions under time pressure.
Option 2 | Portfolio Decision Programme
From individual asset decisions to a reusable portfolio framework: the Portfolio Decision Programme applies the Asset Quick Check methodology to several assets selected to represent a range of situations. It tests the approach across stable assets suitable for continued ownership and cases involving repositioning, refinancing or disposal. Within a short timeframe, each asset receives a model built on a common methodology, a comparable assessment of options and sensitivities, a clear recommendation and a committee-ready decision paper. Criteria, key performance indicators, thresholds and approval points are then consolidated into a reusable hold/sell standard. This accelerates subsequent decisions, improves comparability and reduces repeated coordination.
Focused client involvement, reduced internal workload: The client appoints a main contact, provides available documentation and confirms the decision objectives, parameters and constraints. BDO takes the lead in delivering the work: we structure the data, consolidate assumptions, develop scenarios, document information gaps and coordinate technical queries. The client focuses on prioritisation, validation and approval. This keeps the internal workload predictable, while providing clearly documented analysis and results that can be reused internally.
