Global Restructuring Group West Register (GB) Policy & Procedures Manual April 2011 The Information Classification of this document is INTERNAL GRG West Register (GB) Policy & Procedures Manual Contents 1. Glossary .........................................................................................................................................................5 2. West Register Property (Great Britain) .......................................................................................................6 2.1. Mission statement.........................................................................................................................................6 2.2. Aims and Objectives.....................................................................................................................................6 2.3. Governance and Oversight Structure...........................................................................................................6 2.4. Team Structure .............................................................................................................................................7 2.5. Process Overview and Case Lifecycle .........................................................................................................7 2.6. Housekeeping and team administrative requirements .................................................................................8 3. Pipeline Cases Process ................................................................................................................................8 3.1. Case Introduction and Review......................................................................................................................8 3.1.1 Net Present Value..........................................................................................................................................8 3.1.2 The Property Advisory Unit............................................................................................................................9 3.1.3 NPV Acceptance............................................................................................................................................9 3.1.4 Management Information Requirements .......................................................................................................9 3.2. Lapsed Cases.............................................................................................................................................10 3.2.1 NPV too low .................................................................................................................................................10 3.2.2 Unsuccessful bids ........................................................................................................................................10 3.2.3 Process for WR to decline to make an offer ................................................................................................10 3.2.4 Management Information Requirements .....................................................................................................10 4. Asset Acquisition Approval Process ........................................................................................................11 4.1. APP Production ..........................................................................................................................................11 4.2. APP Sighting Forum and APP Submission ................................................................................................12 4.3. APP Approval .............................................................................................................................................13 4.3.1 APP Committee ...........................................................................................................................................13 4.3.2 Sanctioned Facilities and WR Finance ........................................................................................................13 4.4. APS Approval .............................................................................................................................................14 4.4.1 APS Approval for asset acquisition..............................................................................................................14 4.4.2 APS Approval for costs and realisation expenses.......................................................................................14 5. Bid Submission Process ............................................................................................................................14 5.1. Integrity of Bid Process...............................................................................................................................14 5.2. Bid submission prerequisites......................................................................................................................15 5.3. Appropriate West Register entity................................................................................................................15 5.3.1 West Register (Realisations) Ltd (“WRR”)...................................................................................................15 5.3.2 West Register (Property Investments) Ltd (“WRPI”) ...................................................................................15 5.3.3 West Register (Hotels Numbers 1 & 3) Ltd..................................................................................................16 5.3.4 Additional Entities ........................................................................................................................................16 5.4. Management Information Requirements ....................................................................................................16 6. Asset Acquisition Process .........................................................................................................................16 6.1. General Protocol for Acquisition of Asset...................................................................................................16 6.2. Pre-Completion Documentation Required..................................................................................................18 6.3. Documentation Required Upon Completion...............................................................................................19 6.4. Management Information Requirements ....................................................................................................20 6.4.1 Information required during the due diligence process................................................................................20 6.4.2 Information required upon deal completion .................................................................................................20 7. Asset Management Processes...................................................................................................................21 7.1. The SCR Process (replaces Asset Reviews) .............................................................................................21 7.1.1 SCR frequency.............................................................................................................................................22 7.2. APS Approval Process ...............................................................................................................................22 7.3. Asset management checklist......................................................................................................................23 7.4. Insurance Review .......................................................................................................................................23 7.5. Management Information Requirements ....................................................................................................24 West Register Author: Ben Deacon Page 2 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 8. External Suppliers .......................................................................................................................................24 8.1. Supplier Approval Process .........................................................................................................................24 8.2. Supplier Appointment Process ...................................................................................................................24 8.3. Contractor Appointment Process ...............................................................................................................25 8.4. Contractor Review Process ........................................................................................................................25 9. Joint Venture and Subsidiary Creation Process ......................................................................................26 10. West Register Finance ..............................................................................................................................26 10.1. Invoice Approval & Review Process.........................................................................................................26 10.1.1 Invoice Approvals Process ........................................................................................................................26 10.1.2 Classification of Costs................................................................................................................................27 11. Management Accounts Review Process.................................................................................................27 12. Facility Amendment Process ...................................................................................................................29 12.1. How do I amend the sanctioned Capex or Opex for a case?...................................................................29 12.2. How do I request further funds for a case? ..............................................................................................29 13. Value Capture ............................................................................................................................................30 13.1. How is ‘additional value’ determined? ......................................................................................................30 13.2. How is ‘Price to Beat’ determined? ..........................................................................................................30 13.3. How is Value Added reported?.................................................................................................................30 13.4. Management Information Requirements ..................................................................................................30 14. Fair Value Process ....................................................................................................................................31 15. Data Stewardship and Security................................................................................................................31 16. Dealing with the Media..............................................................................................................................31 17. Complaint Handling...................................................................................................................................31 18. Health & Safety Compliance.....................................................................................................................32 18.1. Personal Health & Safety Requirements..................................................................................................32 18.2. Health & Safety Training Log....................................................................................................................33 18.3. Site-Specific Security Requirements ........................................................................................................33 18.3.1 Site Enclosure Measures (SEM)................................................................................................................33 18.3.2 Site Protective Security (SPS) ...................................................................................................................34 18.3.3 Initial Security Review Process..................................................................................................................34 18.3.4 Subsequent Security Review Process.......................................................................................................35 18.3.5 Periodic Security Review Process .............................................................................................................35 18.4. Management Information Requirements ..................................................................................................35 19. Asset Disposals Process..........................................................................................................................36 19.1. General Procedural Guidelines ................................................................................................................36 19.2. Internal authorisation required to dispose of an asset .............................................................................36 19.3. ‘Know Your Client’ (KYC) requirements ...................................................................................................36 19.4. APS approval required to dispose of an asset .........................................................................................36 19.5. Disposals Review Process .......................................................................................................................37 19.6. Management Information Requirements ..................................................................................................37 20. Management Information Reporting Process.........................................................................................38 21. Appendix ....................................................................................................................................................39 21.1. Team Structure.........................................................................................................................................39 21.2. Authorised Signatories .............................................................................................................................40 21.3. Directors of West Register Entities...........................................................................................................40 21.4. Directors of GRG Strategic Property Group Committee ..........................................................................40 21.5. Invoice Signatories ...................................................................................................................................41 21.6. REMIT Case Classifications .....................................................................................................................41 21.7. Guidance on Information Sharing with Recoveries ..................................................................................42 West Register Author: Ben Deacon Page 3 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 21.8. West Register Specific Risk Assessment and Controls ...........................................................................43 21.9. Procedure Map .........................................................................................................................................50 21.10. Process Maps.........................................................................................................................................51 21.9.1 End to End High Level Processes .............................................................................................................51 21.9.2 Case Introduction and Review................................................................................................................52 21.9.3 Asset Acquisition and Approval Processes ............................................................................................53 21.9.4 Bid Submission Process.........................................................................................................................54 21.9.5 Asset Acquisition Process ......................................................................................................................55 21.9.6 SCR Process ..........................................................................................................................................56 21.9.7 External Suppliers ..................................................................................................................................57 21.9.8 Invoice Approval and Review Process ...................................................................................................58 21.9.9 Management Accounts Review Process................................................................................................59 21.9.10 Facility Amendment Process ................................................................................................................60 21.11. REMIT Training Slides............................................................................................................................61 21.12. West Register UK Corporate Structure Chart ........................................................................................95 21.13. West Register UK Directorships .............................................................................................................96 21.14. APS Guidance Notes..............................................................................................................................97 22. Document Governance ...........................................................................................................................100 22.1. Document Information ............................................................................................................................100 22.2. Versions..................................................................................................................................................100 West Register Author: Ben Deacon Page 4 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 1. Glossary ACH AMO APP APS / APA AUM BRG Capex CDM CRU DD DETM ERV EV ExCo GDV GRG RM H&S HSO IP JV NPV Opex PAU PCM PPE PRisM RBS / RBSG REMIT RMP / RMPS RRMB SCR SEM SIG SPGC SPS SPV TOGC VAT WR WRPI WRR West Register Author: Ben Deacon Asset Class Head Asset Management Objective Asset Purchase Proposition Asset Protection Scheme / Asset Protection Agency Assets Under Management Business Recovery Group Capitalised Expenditure Construction (Design & Management Regulations) Corporate Restructuring Unit Due Diligence Deal Execution Team Member Estimated Rental Value Expected Value GRG Executive Committee Gross Development Value GRG Relationship Manager Health and Safety Health and Safety Officer Insolvency Practitioner Joint Venture Net Present Value Operating expenses Property Advisory Unit Primary Case Manager Personal Protective Equipment GBM Risk Management System Royal Bank of Scotland Group Real Estate Management Information Tool RM Platform (Strategic) - UK (sub-GBM) and Ulster credit risk management workflow tool for proposing, recording and approving credit limits RBS Restructuring and Risk Management Board Strategy & Credit Review Site Enclosure Measures Strategic Investment Group GRG Strategic Property Group Committee Site Protective Security Special Purpose Vehicle Transfer of Going Concern Value Added Tax West Register Property (Great Britain) West Register (Property Investments) Ltd West Register (Realisations) Ltd Page 5 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 2. West Register Property (Great Britain) 2.1. Mission statement “To acquire property from distressed situations where taking ownership is determined to be the best way to maximise recovery and to create additional value through active asset management with a view to exiting when market conditions are more opportune.” 2.2. • Aims and Objectives To fully comply with the Asset Management Objective (AMO) (where relevant) as set out by the Asset Protection Agency: “The AMO requires us to maximise the expected NPV of Protected Assets, including by minimising losses and potential losses and maximising recoveries and potential recoveries in respect thereof. NPV to be assessed on a risk-adjusted basis using a discount rate corresponding to the Treasury’s cost of funds. “Risk-adjusted” is equivalent to the “Expected NPV” (“EV”) which means the probability-weighted NPV of different possible scenarios for a given strategy.” • • • • • • • • To formulate, in a timely manner, recommendations for purchase of property from distressed debt situations. The bid price is to be based on asset specifics, taking cognisance of the longer term value of the asset and utilising NPV calculations using the approved Gilt discount rate. To create increased recovery for the Bank through: o Active involvement in the bidding process stimulating market demand; o Keeping bidders “honest” by under-pinning bids; o Bringing the insolvency process to an end by buying in the residual assets. Once approved, effect the acquisition in a timely and efficient manner undertaking the appropriate level of due diligence taking into consideration that RBS already has the economics in the deal but gaining sufficient information about the asset to produce an appropriate asset management strategy. Full adherence to the health and safety protocol on all owned assets. Work within all RBS Group policies. Undertake high quality asset stewardship ensuring that all cash is captured and budgets / facility limits are adhered to with assets and asset strategies reviewed on a timely basis. Preserve and create value through active and entrepreneurial asset management utilising “best in class” outsourcing where appropriate. Devise / implement strategies either on an asset specific or portfolio basis to maximise recovery. 2.3. Governance and Oversight Structure The RBS Restructuring and Risk Management Board, GRG Executive Committee and Senior GRG Committees The RBS Restructuring and Risk Management Board ("RRMB") has delegated operational and risk authority to the GRG Executive Committee ("Exco") which includes setting the overall risk appetite for the West Register ("WR") businesses, with the GRG risk and capital framework underpinning the delivery of the GRG and WR strategies. WR reports monthly through the Committee hierarchy through to the RRMB in its review of the monthly GRG Executive pack. EXCO ensures that implementation of WR strategy and operations are in line with the agreed risk appetite. On behalf of Exco, the GRG Strategic Property Group committee ("SPGC") operates as a committee of the EXCO with full authority delegated by EXCO to act on all risk and control matters across WR activities, including, but not limited to, credit risk, market risk, operational risk, compliance and regulatory risk, enterprise risk, treasury and liquidity risk, reputational risk, insurance risk and country risk. The SPGC authority is derived from the GRG Executive Committee and from Delegated Authorities confirmed to it from time to time by subsidiary companies. The responsibilities and authorities of the SPGC extend to RBS NV. SPGC has approval authority over decisions affecting the risk and/or financial position of RBS NV, subject to specific conditions for RBS NV as West Register Author: Ben Deacon Page 6 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy Procedures Manual stipulated under Quorum and Decision Making Process set out in its Terms oi Reierence, and in accordance with tile requirements as specified in tire Higti Level Cnrilml Document ior RES NV Risk Management West Register operates under deiined operating guidelines (policy a procedures) as approved by the SPGC Members or SPGC are listed in Section 21 4 Tire APP Committee is a sub-committee oi SPGC lt recommends and approves lsub)ect to delegated autnonty irom SPGC) limits, policies, processes and procedures to enable tne eiiective management oi risk across tne activities oiWR its remit includes all credit risk, market risk, operational risk, compliance and regulatory risk, enterprise risk and country risk aiiecting or likely to aiiect GRG All property acquisitions, disposals and increases to limits must be approved by tile relevam APP Commiuee - eacn approving committee must include 2 directors oi tne subsidiary company acquiring Idisposing oi, or increasing iunding ior tne asset 2.4. Team Structure The team is structured along the lines oiasset class witn tne majority oi staii situated in London and tire rest in Edinburgn See appendix ior latest detailed team structure cnan -- an overview is provided below When managing cases, a team approacn is encouraged and it will sometimes be more appropriate ior teams to manage asset classes Global Head ni Wear Reglsler lan Robens Head ni Wear Reglsler damea Romney WR Business Manager Deal ream JV Head ol Ed nburgn Team Residential Asser class Cammemlnl Asset Class Holels Leisure Assel class Head ni Complex rransauions auild ream t. ooeraiions -- 2.5. Process Overview and case Lifecycle rtiere are several key inter-related processes embedded witnin WR vmicn cover tne liiecycle oi a case A map oi tne WR-specific procedures is included in tire appendix and snow which processes are applicable at wnicn point in tile case liiecyde The key pans oi tne case liiecyde are Stag. Relevant Dates Primary awn-r Pipeline Cases 2; Acquisition Approval introduction -- APP Approval GRG RM 2; PCM Bid Submission Approval -- Documents Received PCM, DETM Asset Acquisition Documents Received -- PCM, DETM Asset Management Completion -- Sale PCM Asset Disposal Sale -- Review PCM em; RM GRG Relationitiio Managar PCM anary case Manager DETM Deal Execution ream Member Beiore a property is purcnased by WR, tne case is owned by ttie relevam GRG team bandling that case During ttiis period, all managementiniormaiion is maintained on tile RMP or platiorms This is used to track credit exposure and case-specific iniormation, tnougn its propeny-speuflc iniormation is limited Once a case is being stiadowed by WR (I all die way irom case introduction tnrougn to subsequent purcnase or lapse), management iniormation irom a WR perspective is reponed via tne REMIT system (the Real Estate Management lniorrnation rool) within two weeks oi)oining This material is included in Section 21 it is advised tnat all WR employees should read the REM IT training guide At eacn suge in the case liiecycle, various levels oi iniormation are required to be filled in to REMIT by ttie Primary Case Manager (PCM) to allow management iniormation (Ml) to be reported in a timely and eircient manner The requisite iniormation at eacti point is included under the Management iniormation Required' section, along witn any otner Ml requirements Wear Register Autnor Ben Deacon Page 7 Di lot rne iniormation classitiaation ol inie document is INTERNAL Aonl zotl GRG West Reg ter (GB) Policy Procedures Manual Another process that is embedded throughout the entire case litecycle is the Asset Protection Scheme (APS) Approval Process it should be noted that not all assets are covered under the scheme Under each heading ot the case litecycle, there is an APs section that handles the necessary approvals needed to comply with APS legislation WR-specitic APs Guidance Notes have been issued by the APs and can he tound in Seclion 21 14 2.6. Housekeeping and team administrative requirements There are several requirements imposed on WR suit as part ot the wider GRG and reguirernems Such requirements include the JnlnErS leavers processes, holiday approvals, fillng and the clear desk policy These requirements are covered either by the RBS Group Policy or the GRG procedure manual All WR employees should read this procedure manual and make themselves aware ot their obligations and ensure that within two months ot ioining WR that they undertake the introduction to wurse 3. Pipeline Cases Process 3.1. Case Introduction and Review Cases are introduced to WR by the Relationship Manager within the GRG Business Unit that currently owns that case WR's typical customers tor case introduction are the Real Eslale Recoveries team and Real Estate Restructuring teams RMs are required to notity all new cases to the West Reglsler' mailbox which serves as a central mailbox tor all new cases The mailbox is checked daily by the WR Business Manager who reviews the case details and assigns a Primary Case Manager to the case depending on the nature ot the property and resource availability He tshe will also set up the case in Just the case name and PCM assigned The email is then archived in the mailbox and can be picked up by the PCM at a later date tor tuture reterence it is then the PCM's responsibility to update and maintain all intormation about that case A suggested response timetrarne has been agreed with various GRG Recoveries teams The tollowrng acts as a guide only and represents best practice when responding to our GRG colleagues Day1 GRG RM appoints insolvency Practitioner (iP) GRG RM sends redacted version ot IP's report to West Register Day 29 (4 weeks trom appointment) mailbox Case is allocated by WR Business Manager PCM is required to submit indicative bid level Day 39 (1 0 days mew" GRG RM gives teedback whether an APP is likely to be required Day 44 (t 5 days trom receiving repon) PCM submits APP tor approval The above schedule ensures that within three months ot appointment, the GRG RM has a clear indication ot the likely level ot provisioning required tor a case 3.1.1 Net Present Value A Net Present Value (NPV) calculation must be prepared tor all properties reterred to WR under the rules ot the APS When advising on or acguinng an asset, the table below displays who should prepare an calculation and the umumslannes BRG Cass Cass Advice on value today >2250k WR valuation advice only Advice on value today Not required valuation advice only When acguiring property WR WR The NPV should be saved in the Case Folder, and a copy saved in the Pipeline 1 APS NPVs tolder as sent to the GRG RM The naming convention tor this is Case Name - Property Address Weti Register The inlornuiion classiticaiion ot Inls document is INTERNAL Author Ben Deacon Page a ot tot Anni 2mt GRG West Register (GB) Policy & Procedures Manual 3.1.2 The Property Advisory Unit The Property Advisory Unit sits within the Business Restructuring Group (BRG) and provides advice to BRG RMs on all property-related cases. WR’s relationship with BRG is always via PAU, except for in sales situations where WR have been asked to submit a bid as part of a consensual sale. In these cases, the following protocol is to be followed: 1. The PAU Representative will email the WR mailbox with a copy of the Strategy and Credit Review (SCR); Strategic Valuation Paper (SVP); property marketing details and any other property information that may be required to formulate a bid. In certain cases, it may be necessary to redact the SCR paper because of sensitive information. Refer to Section 5.1 for further clarification. The relevant BRG RM will be copied in this communication. 2. The PCM will be appointed accordingly and will contact the BRG RM to discuss the background connection and PAU to discuss the property. 3. The PCM will formulate a NPV calculation including a bid price and communicate this to the BRG RM and PAU Representative with a view to firming up on the APP submission. 4. Prior to APP submission, the PCM must email the 'connection background' section of the APP to the BRG RM for review. This will ensure that all of the relevant and up to date connection information is available for the committee. 5. A formal bid should then be submitted once approval is gained, following the guidelines in the Bid Submission Process in Section 5. 3.1.3 NPV Acceptance Once the NPV Calculation has been sent to the GRG RM, they must decide whether a) the NPV is higher than the NPVs produced for alternative scenarios (e.g. versus external bids or a deal restructure)or b) the bid price in that NPV calculation is higher than the external bids received for the property. This ensures that the highest NPV is achieved whilst meeting the Insolvency Practitioner’s obligations to maximise recovery for the bank. If an NPV is accepted, the Asset Acquisition Approval Process should be followed. If the NPV is lower than the alternative scenarios, or we are later outbid, the Lapsed Cases process in Section 3.2 should be followed. 3.1.4 Management Information Requirements For pipeline deals, it is the PCM’s responsibility to maintain the case and property-related information in REMIT. Field Case ID Case Name Original Connection Primary Case Manager Secondary Case Manager WR Silo GRG Relationship Manager Case Status Case Tracking – Summary Property Information Financial Info – Debt £ Property Info – Bid Price Property Info – Price to Beat Property Info – Town & County Property Info – Demise West Register Author: Ben Deacon Allowed Information Make up any unique code for this – can be numbers or letters. Whilst in the pipeline, please use the Connection Name as supplied by the GRG RM This is the same as the Case Name but does need to be completed. Your name (SURNAME, First name) (SURNAME, First name) Commercial, Residential, JV, Hotels or Complex When in the pipeline, only statuses A and B are relevant. Status A is used to mark pipeline cases. Status B is used when we are in the process of submitting an APP. Include a short overview of the property, limited to 255 characters. This is used as part of the Management Information Process. Original connection debt. Enter an indicative bid level – this does not have to be final. Please enter the best external bid here (if known / allowed – refer to Section 5.1 for further guidance). When in the pipeline, only outline info is needed here – detailed address can be put in once we are in documentation Please update Size, Area, Units, Use, Construction Page 9 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 3.2. Lapsed Cases A lapsed case covers all cases that have been looked at by a PCM and have subsequently not been purchased by WR. This covers cases where the WR NPV was deemed to be too low, a bid was made but was later unsuccessful, the deal was restructured / returned to satisfactory (RTS) or it was below the de minimis £250k. 3.2.1 NPV too low If an NPV is produced that is deemed to be too low by the GRG RM (i.e. there is no opportunity for WR to add value) and alternative methods produce a higher NPV, the case lapses. At this point in the case lifecycle, the PCM is not permitted to know external bids since the case may become ‘live’ again at a later date (i.e. external bidders fall away). Once a successful acquisition has been made by the external party, this information is permitted to be seen by the PCM and recorded by the PCM as the ‘Price to Beat’ in REMIT. 3.2.2 Unsuccessful bids If an APP is produced (refer to Asset Acquisition Process), the bid is submitted and is later declined by the Insolvency Practitioner (IP), this is captured under the lapsed cases process. On REMIT the case must be set to lapsed and the reason for lapse is that we were outbid by an external bidder. If any value was deemed to be added by our involvement in the bid process, the relevant information should also be captured in REMIT – refer below for guidelines. An example of this would be where we successfully bid on a property, clean off title issues prior to acquisition, then subsequently lose the bid owing to a higher offer at the eleventh hour. Any increase in external bids during this time is deemed to have been value added by WR involvement. 3.2.3 Process for WR to decline to make an offer A ‘no’ decision cannot be made without the approval of the Asset Class Head (in whose absence, the Head of WR). The Asset Class Head will then discuss and justify all “no” decisions on a weekly basis with the Head of WR. Once the decision is made, it is imperative that this is documented in REMIT on a WEEKLY BASIS. A memorandum should be prepared by the PCM and reported directly to the WR Executive by the WR Head. Examples of ‘no’ decisions are likely to be limited to cases where the potential reputational risk of acquiring is deemed to be too high or where the asset is potentially an environmental liability. 3.2.4 Management Information Requirements The following information needs to be filled in by the PCM on REMIT when recording a lapsed deal. For straightforward cases, the ‘Quick Case’ form in REMIT can be used. Field Deal Status Reason for Lapse Allowed Information Set the deal status to F – Lapsed. Please select the most appropriate reason for lapse: • Under de minimis £250k value • No opportunity to add value (NPV too low) • Deal restructured • Outbid by external bidder Property Info – Price to Beat If we have knowledge of the external bids, use this as the Price to Beat. It is imperative that if we were outbid on a property, the ‘Price to Beat’ be completed once the PCM is allowed to know that information. Property Info – Bid Price In all cases, enter our likely bid price (even if not final) Sale / Lapse Date Value Added Always complete this for lapsed cases Where we feel that our intervention in the bid process has increased the recovery for the bank, indicate this increased recovery here. Use the Case Narrative field to capture the circumstances behind the value captured. West Register Author: Ben Deacon Page 10 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 4. Asset Acquisition Approval Process The Asset Acquisition Approval Process is based on the production, submission and approval of the Asset Purchase Proposition (APP) document. 4.1. APP Production If an NPV has been accepted by the GRG RM, an Asset Purchase Proposition (APP) should be produced. The blank APP Template can be found in the template folder. Information Property Information Where to get it The receivers and agents will normally produce a ‘schedule of accommodation’ that can be used to fill out the detailed property information. Cashflow Information The following is a reference guide when preparing a residual valuation. Gross Development Value If a property is being marketed, the agent would usually be able to provide a guide price. If it is not being marketed, transacted deals (e.g. for residential properties on www.aboutmyplace.com) can be used as a guide price as well as properties being marketed. www.globrix.com is a good reference guide for this and gives average selling price for an area. (Note that marketing prices are usually more than today’s value). Capex Estimates of build costs can be obtained from the “Spon's Architects' and Builders' Price Book” located in the template folder. The WR Build Team should be consulted in relation to all build matters. Opex The rule of thumb for residential operating expenses is: 10% void – assume 10% of the properties are void (i.e. reduce rent by 10%) 10% management fees – to cover asset manager fees 10% operating expenses – to cover costs of maintenance etc Funding costs are usually included at 4% which represents the upper limit to WR’s actual cost of funds. Bid Price The ‘goal seek’ function in Excel can be used to set the bid price based on your Target Return. If you were looking to set the Target Return at a 10% profit on cost, you would select the profit on cost cell and click Tools, Goal Seek... The ‘Set cell’ box would refer to the profit on cost; In the ‘To value’ box, type 10%; Then select the ‘By changing cell’ box and select the bid price box in the cashflow. This will then change the bid price to ensure a 10% profit on cost is achieved. Target Return All acquisitions are made by reference to an NPV figure, primarily for use by the APS when deciding whether an acquisition is the best option to maximise recovery. In assessing the bid price for a case, the amount of new capital being invested by the Bank is a key factor in determining the amount of positive NPV which should be appropriate. For example, where we are buying a site for £1m and investing £10m to develop out that site, the returns that we should expect will be similar to market expectations, as that fresh cash will require a commensurate return West Register Author: Ben Deacon Page 11 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Reg ter (GB) Policy Procedures Manual on capital to jusufy its allocation it, by contrast, we are buying an investment property <GRG West Reg ter (GB) Policy Procedures Manual 4.3. APP Approval 4. .1 APP Commlnee APP Committee meetings are held weekly at 2 30pm on Mondays There are Iwu levels oi committees used ior APP approval The Commnlee" convenes first and has the mandate to a rove all APPs and transactions oi 25m or greater (nr local sterling equivalent) or the relevant Country Head present cases at Committee A The quonim must include the Chairman plus Iwu members a" Board Position Name Role Description Chairman Derek Global Head oi GRG Alternate Chairman Laura Barlow Head oi GRG, UK Declan Houncan Head oi Finance, GRG Peter Ballard Head oi Corporate Restructuring Unit, GRG Jny McAdam Head oi Recoveries, Litigation and Properly, GRG Committee Members lan Roberts Global Head oi West Register James Rowney Head oi West Register, Property Country Head oi Case being presented The "a Commnlee" convenes directly aiier the A Committee and approves all APPs and transactions less than 25m (nr local sterling equivalent) The Primaiy Case Manager present at the Committee The quorum be two members oi Board Position Name Role Description Declan Houncan Head oi Finance, GRG Laura Barlow Head oi GRG, UK Committee Members lan Roberts Global Head oi West Register Jny McAdam Head oi Recoveries, Litigation and Property, GRG James Rowney Head oi West Register, Property Country Head oi Case being presented it should be noted that the limit applies to the Gross Asset Value alter the transaction Thereiore, where a transaction is less than but the net eiiect is to increase the Gross Asset Value above 25m. the A Committee should be used ior approval in both cases the quorum must include at least two directors oi the subsidiaiy company acquiring Idisposing oi the assets GRG Central Operations will urCulaIe minutes aiier each meeting, Confirming the decision oi the committee and noting iacilities a roved, to the quonim, the relevant Case rector; GRG Finance the Head oi the Deal Execution Team (in whose absence, sends the results oi the meeting to the team He will then give the signed APPs to the Head oi Deal Execution who scans the signed APP and saves ll into the relevant case fulder The scanned APP is then sent to the PCM and GRG Finance Team Complotion must occur within six months of tho APP approval data. Should this period expire, the APP should be resubmitted to ensure the business plan is still valid The projected completion date should be assessed by the DETM to ensure that this period does not expire Any anticipated overruns should be reported to the PCM and the Head oi Deal Execution Team as soon as they become apparent 4.3.2 Sanctioned and WR Finance The iacility sanctioned in the APP is made up oi . Eld price . Acquisition costs . Capitalised expenditure . Operating expenditure . Headroom Wadi Regisler the oi iris dammenl is INTERNAL Author Ben Deacon Page is ol tot i Aoril zoti GRG West Register (GB) Policy & Procedures Manual The signed APP is scanned by the DETM and sent electronically to the GRG Finance team. Once the signed APP and signed Pre-Completion Checklist is received by the GRG Finance team, a physical bank account is then opened with the limit being the sum of the sanctioned items. All of the constituent parts are the gross costs required for the proposed life of the case as sanctioned in the business plan. Any income that is factored into the business plan will affect the headroom element of the facility. It is therefore possible to have a negative headroom figure, depending on the timing of the cashflows e.g. where an asset is already generating income upon purchase. The headroom element is also used to facilitate the payment and subsequent recovery of VAT. Once acquisition VAT has been recovered, it is the responsibility of GRG Finance to reduce the limit by this amount so that this part of the facility cannot be ‘recycled’. Refer to the Management Accounts Review Process for further details. 4.4. APS Approval 4.4.1 APS Approval for asset acquisition The APS decision for WR to acquire an asset covered by the APS is sanctioned by a webform submitted by the GRG RM who owns the case. The NPV provided to the GRG RM by WR, proves that a sale to WR will maximise returns to the bank when compared against other options (e.g. external sale or restructuring). 4.4.2 APS Approval for costs and realisation expenses All costs and realisation expenses are then sanctioned by the APS by submitting the signed APP via webform by the DETM. Once approved, all costs sanctioned in the APP by the APP Committee are then also approved by the APS. If there is any spend outside of these limits, or if there is a significant change to the business plan, the Facility Amendment Process will need to be followed in Section 12. 5. Bid Submission Process In general, once the required approvals are in place, a bid should be prepared and submitted to the Insolvency Practitioner or their agent as soon as possible so as to minimise the time to complete. It is the responsibility of the PCM to ensure the receiver accepts the offer in writing as soon as possible. Once the offer is accepted, the DETM can then liaise with the receiver’s lawyers and progress the transaction. 5.1. Integrity of Bid Process To ensure that WR achieves maximum return for the bank it is imperative that the integrity of the bidding process is preserved. Accordingly, unless there are specific circumstances, a PCM should bid blind for a property with no knowledge of external bids. WR is only allowed to bid once for a property, the purpose of which is threefold: 1) to ensure a fair bid price is submitted; 2) to reduce the administrative time of running a bidding process; and 3) to ensure the bank cannot be accused of self-dealing, thus preserving the integrity of the bid process and not discouraging the external market from submitting bids. Generally the GRG RM will guide the PCM whether the WR bid price is acceptable, but to ensure a consistent approach is taken, the following acts as a guideline. West Register Author: Ben Deacon Page 14 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual Situation There are third parties with an economic interest in the charged asset(s) (e.g. second ranking chargeholders / guarantors). Allowed Information (a) Information Sharing: WR should be provided with no more information about the charged asset(s) than any other bidders. However, subject to the Bank’s need to know policy, and any confidentiality obligations applicable to the information, it is possible to flag (i) the level of provisioning; (ii) background to the customer’s debt and security package; and (iii) defects or downsides affecting the charged asset(s), to WR even if these are not being disclosed to other bidders. (b) Marketing Process: a full marketing process will be required. There are clearly no third parties with an economic interest in the charged asset(s). (a) Information Sharing: Subject to the need to know policy, and any confidentiality obligations applicable to the information, a more pragmatic line can be taken and GRG may share information about the charged asset(s) (e.g. schedules of occupation, officeholders’ report, valuation reports) with WR, even if that might not be shared with third party bidders. (b) Marketing Process: a full marketing process is not required but, as a minimum, up to date professional valuations must be obtained. 1 Once a sale to WR has completed, any information about the purchased asset(s) may be shared with WR subject only to the need to know policy and any confidentiality obligations applicable to the information. In any situation in which the customer is, or any securities issued by the customer are, listed (and so any information may be “inside information”) GRG Legal and GRG Compliance must be consulted at the earliest possible opportunity and before any information is shared between GRG and WR. A bid integrity guidance note is included in Appendix Section 21.7. 5.2. Bid submission prerequisites A formal bid can only be made on a property once the APP has been approved. The bid letter can only be signed in accordance with the Authorised Signatories in Section 40. It should be noted that APS approval is not required to submit the bid since the bid letter is non-contractual and explicitly states that our offer is subject to internal approval. 5.3. Appropriate West Register entity There are currently four general-purpose WR vehicles actively used by West Register Property: • • West Register (Realisations) Ltd West Register (Property Investments) Ltd o West Register (Hotels Number 1) Ltd o West Register (Hotels Number 3) Ltd 5.3.1 West Register (Realisations) Ltd (“WRR”) Generally, WRR should only be used when we expect to sell the property within twelve months of acquisition, i.e. it is being held for sale. This is a vehicle with a broad mandate to purchase property, with a view to trading/ reselling the assets in the market. A caveat should be made that due to uncertain market factors (both Property & Macro Economic) it may not always be viable to resell the asset in the short term due to a lack of interest from prospective purchasers. 5.3.2 West Register (Property Investments) Ltd (“WRPI”) Generally, where we do not intend to sell the asset within twelve months, WRPI should be used as the acquiring vehicle in bid submission. This vehicle differs from Realisations in that it seeks to purchase property with a view to hold in the medium term future as an investment, therefore generating a return on the asset. 1 Of course, whether an officeholder will require anything more than a professional valuation may vary from case to case. West Register The Information Classification of this document is INTERNAL Author: Ben Deacon Page 15 of 101 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 5.3.3 West Register (Hotels Numbers 1 & 3) Ltd These are subsidiary companies of WRPI and each have a distinct use detailed below. Vehicle Hotels Number 1 Asset Type Town centre hotels which are business or boutique oriented Hotels Number 3 Country House and Coaching Inn style hotels and guest houses 5.3.4 Additional Entities Where it is deemed that a further holding entity is required for a transaction, further SPVs can be set up. It should be noted that the additional time and effort incurred by the GRG Finance Team required when setting up and maintaining these SPVs should be weighed against the potential cost savings. The procedures for setting up a new entity are governed by RBS Group Policy with the involvement of the GRG Finance Team. Refer to Section 9 for details on the appointment of directors and Joint Venture considerations. A full diagram of the current SPV structure can be found in the appendix, including the legacy assets transferred from the Property Ventures portfolio. 5.4. Management Information Requirements The following information is required to be filled in to REMIT by the DETM during the bid process: Field Deal Status Allowed Information Status C should be used once the APP has been approved but the bid has not yet been accepted by the agent. Status D should be used once the bid has been approved. Case Tracking – Date Bid Accepted Case Tracking – Documents Received Date Inputted by the DETM on the date the bid was accepted by the agent / IP. Inputted by the DETM on the date that documents were received by the DETM from the receiver’s lawyers (e.g. Report on Title (RoT). Since there is usually some delay by the agent in providing a RoT, this date is normally used when assessing the time to complete a case. 6. Asset Acquisition Process Once all the necessary approvals have been gained for the acquisition of an asset, the case is handed over to the WR Deal Execution Team to appoint and liaise with external lawyers to progress the transaction. 6.1. General Protocol for Acquisition of Asset The list below outlines the general procedures that need to be completed when acquiring an asset. During this process, a number of documents need to be acquired and maintained. These are listed in following sections. Filing of the Signed APP On receiving the signed APP, the DETM should set up a hard copy acquisition file containing a copy of the signed APP and any other relevant information in relation to the property. The hard copy files are kept in the filing cabinets provided. In addition, the signed APP should be emailed to the GRG Finance Team to request that they open the relevant account and if possible some indication should be provided on timings. A pdf copy of the signed APP should also be inserted into the relevant computer folder within Pipeline – Deal in Docs. In relation to a Hotel Purchase, a copy of the APP should also be sent through to Group Secretariat (namely Rachel Fletcher). New deal checklist A new deal checklist is to be started for new asset acquisitions. The form is found in the templates folder. This is self explanatory – and is an aide memoire to ensure that we follow the procedures set West Register Author: Ben Deacon Page 16 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual out in this manual and wider RBSG policies Instruction of Solicitors A quote should be obtained from the relevant solicitors, and this should be checked against the amounts provided for in the APP. The Head of Deal Execution (or in his absence, the Head of West Register) will approve the law firm to be instructed, which should be on the Transactional Group Legal panel. Since the law firms that are appointed are on the approved panel, RBS benefits from preferential rates and therefore only one quote is sufficient for approval. This expedites the process of appointment and enables the most suitable firm to be used for each specific case. Once the quote is approved by the Head of Deal Execution, an engagement letter will need to be sent to the relevant law firm for counter signature and return. This will need to be signed by two Authorised Signatories. The engagement letter can be found in the templates folder but may require tailoring for the particular transaction (for instance on portfolio purchases). Any material amendments to the engagement letter should be sanctioned by the Head of Deal Execution (under advice from Group Legal). Once instructed, the DETM should ensure that contact details are provided to the administrator’s solicitors and the DETM should chase to ensure that the title pack is issued as soon as possible so that the due diligence process can commence. The DETM should chase of the signed acknowledgement of the instruction letter which should then be put in the hard copy folder. Due Diligence Reporting The Deal Execution Team aims to achieve completion within 28 working days. During the acquisition process, the DETM is responsible for reviewing the Due Diligence report, contract, transfer and other acquisition documents and distilling the information back to the PCM. Title Insurance Where defective title insurance is needed the solicitors should be instructed to obtain two quotes, one of which should be from First Title. They should be asked for a quote on our standard agreed terms, which includes a flat rate discount of 15%. VAT VAT analysis and advice will be provided internally by Group Tax based in Edinburgh. VAT issues will be dealt with predominantly by Janice Murdoch. A copy of the contract should be provided to Janice to comment on and information regarding proposed strategy post completion and VAT elections should also be provided. Janice will arrange for VAT elections to be made (pre or post completion depending on whether the transaction is a Transfer of Going Concern). Capital Allowances Capital Allowances should be considered, especially on the larger commercial properties. Ewan Reid will provide advice in relation to any allowances or elections which may need to be entered into as part of the transaction. The GRG Finance Team should also be notified in relation to capital allowances claims. Group tax will generally not advise in relation to Stamp Duty Land Tax (SDLT) and SDLT forms will need to be reviewed by DET and then signed off by Authorised Signatories. West Register Author: Ben Deacon Page 17 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 6.2. Pre-Completion Documentation Required The following checklist provides a guide as to the necessary information required to be held and maintained during the Asset Acquisition Process and before completion. Item Due Diligence Issues List Notes A Due Diligence Issues List should be prepared during the Asset Acquisition Process. This covers (in general): • Title issues • Rights which benefit or affect the property • Relevant findings from search results • VAT and capital allowances analysis • Whether security arrangements are needed • A separate list of any indemnities provided in the underlying contract / documentation • Insurance • Arrears info, and • How the issues are to be dealt with and flag any liabilities which WR will be subject to post completion. Issues identified should be discussed with the PCM (for instance where there are service charge void costs it should be checked with the PCM that the APP contains sufficient provision, equally if there are items which require capital expenditure, it should be checked that these are within the APP approved Capex limits). Pre-Completion Checklist Once the due diligence has been finalised and contracts are being readied for signature the DETM must produce and review the Pre-Completion Checklist with the Head of Deal Execution (HoDE). This acts as a final check that the terms are as per the approved APP and all due diligence matters are satisfactorily resolved to enable completion (for instance, if security is required that this has been put in place for completion). Once this has been signed and dated by the HoDE, it is possible to complete the transaction. If the HoDE is unavailable, the Head of WR, any WR Company Director, Joss Brushfield or Barbara Turnbull can sign the Checklist. Asset Management Handover Checklist This document only applies to residential properties and contains some further information regarding planning permissions, ground rents etc. Completion Statement The completion statement should be obtained and provided to the GRG Finance Team in advance of completion (ideally giving the accounts team at least 2 days notice of completion). This should include details of WR’s solicitor’s bank account details to which the monies should be sent. Summary of Rental Income If we have a property that is let & income producing, we should send a summary of the rental terms (amounts/dates) to GRG Finance and the relevant property manager, with an instruction to elect the property into the property management contract and for GRG Finance to diarise. West Register Author: Ben Deacon Page 18 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 6.3. Documentation Required Upon Completion Upon completion, these additional records should be kept for audit purposes. Item APP Sanction Period Notes The DETM should ensure that the completion date is within six months of the APP approval date. Should this period have expired, an APP resubmission should be prepared in line with Asset Acquisition Approval Process. Signature of Documents Certain of the above documents will require a signature upon completion. The DETM should be aware that the signing authority is more onerous that the standard Companies Act requirements and two Authorised Signatories are required for all documents. The documents should be signed in accordance with the Authorised Signatories in Section 21.2. If in doubt, the DETM should discuss with the Head of Deal Execution in advance of signature. ‘Victory’ Email Upon completion, it is customary to send an email to the Primary Case Manager and cc the ‘*GRG West Register’ mailbox and GRG Finance Team. The email should contain: • A concise list of the key issues to be resolved • Due Diligence Issues List attachment • Handover Checklist attachment • Details of the VAT treatment of the purchase Insurance WR’s properties are insured through a global RBS block policy. Provided that the asset has a reinstatement value of less then £5m there is no need to notify Group Insurance. The property simply needs to be added to the Insurance Schedule (contained within the Insurance folder within the Legal Team folder in the shared WR computer drive). The DETM should obtain reinstatement and contents values from the PCM to insert into the schedule if possible. If this information is not available, the schedule is updated by the PCM in any event with these figures on a quarterly basis. This process is overseen by the WR Business Manager. It may also be appropriate to insert comments into the schedule (for instance if buildings insurance is not required as it has already been put in place by a management company). For properties which have a reinstatement value of more than £5m, RBS Group Insurance (Stewart Hill) needs to be notified in advance of completion with details of the property and the various insurance values. Certain cases will not be insured by the RBS block policy (e.g. legacy JVs). It is important therefore to ensure that cover is in place before completion. West Register Author: Ben Deacon Page 19 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy Procedures Manual 6.4. Management Information Requirements 6.4.1 lnlorrnation required during the due dl lgence process Once in documentation. the DETM has to maintain the mliuwing inIorniation in REMIT Id Allowed Information Due Diligence Into -- Completion Date When the case is in Status D. it is the DETM's to give an expected date or completion This is then used to torecast the growth or the portiolio Case Tracking -- Bid Accepted Date To he filled in once written confirmation Irom the agent/ IP has been received Case Tracking -- Documents Received Date To tie filled in once the relevant documentation has been received to enable the due diligence process to beam Due Diligence Into -- Tramc Light During status D, the Tramc Light serves as an indication ot when a case is likely to complete 1 --Green Acquisition ImmInenl. deal progressing smoottily 2 -- Amoer Detault position -- transaction progressing -- nothing tundamental has arisen which would delay the acquisition 3 -- Red WR are unable to proceed with the transaction (mainly due to tiid not yet made. or being ambid' second charges or tundamental issues arising trom DD) Once completed (Case sutus E). this tramc light is used to summarise the complexity or the transaction 1 -- Green Transaction was straighttorward 2 -- Amoer Transaction encountered some significant issues 3 -- Red Transaction encountered numerous significant issues DD Into -- Deal Status Commentary Once Case sutus is set to D, this box is used to track the progress ot the deal. reasons tor delay etc 6.4.2 lnlorrnation required upon deal completion The tollowing intormation needs to he filed in by the DETM upon completion otan asset Id Allowed Information Case Name When a deal completes, change the case name to the Town tollowed by Property Name(s) (plus the original Connection itneeded as an aide memoire) Original Connection Please ensure this is completed --this enables the case to tie tracked back to the original APP when cases are split Deal Status The DETM should upd this once a deal completes to - Case Completed and Under Manageme Case Tracking -- Completion Date The DETM should update this with the actual completion date once a deal completes Where multiple property completion dates occur within a case. the flnzI completion date should tie recorded here West Regisler Author Ben Deacon 'he iniormairon oi documenl is INTERNAL Page 2a or tot Anni 2oti GRG West Register (GB) Policy & Procedures Manual Deal Ex Traffic Light This should be changed to reflect the complexity of the case. For example: Red - numerous significant issues were encountered during the asset acquisition process Amber – default position – some material issues were encountered Green – few material issues were encountered. This is then reported in the monthly Management Information Reporting Process. Deal Status Commentary This should be used to summarise the transaction and detail any of the significant issues encountered. This then serves as a permanent record of the transaction. 7. Asset Management Processes It is the responsibility of each PCM to ensure their cases are being managed with a view to maximise the recovery for the bank. This responsibility covers all areas of the activity surrounding the asset including, inter alia: • Insurance (refer to Section 6.3). • Security (refer to Section 18.3) • Appointment of Managing Agents (refer to Section 7.4) • Keeping within agreed limits (refer to Section 12) • Keeping planning current / enhancing planning • Exploring alternative uses • Keeping REMIT updated • Adherence to all approvals • Following the agreed Asset Management Objective There are several procedures that need to be followed when managing an asset. These are listed below. 7.1. The SCR Process (replaces Asset Reviews) A rolling programme of Strategic Credit Reviews (SCRs) is overseen by GRG Central Operations. The Committee presiding over the reviews follows the GRG SCR process as defined in the SCR guidelines. Refer to https://cbfmnet.fm.rbsgrp.net/S814/P4 for further guidance. The SCRs are held separately from traditional SCR meetings due to the property-specific nature of the cases. Minutes of the meeting will then be produced by GRG Central Operations and saved in the Assets Under Management Minutes folder for future reference. All reviews are conducted using the West Register specific SCR Template (located in the template folder) which should be updated with the latest case information and financials from the management accounts. If there is a material or urgent issue that needs discussing, the weekly APP Sighting Forum should be used to discuss the issue. West Register Author: Ben Deacon Page 21 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 7.1.1 SCR frequency This differs according to the complexity of a case. This is determined by the Asset Management Traffic Light that the Primary Asset Manager must determine at acquisition. Traffic Light 3 – Red Review Process Quarterly reviews Definition Cases that are: • Over budget (both over physical bank limits and sanctioned Opex/Capex limits) • Active development sites • Receiving media attention • > £25m book value 2 – Amber Bi-annual reviews Cases that do not meet Red criteria but where the underlying assets are still the subject of considerable scrutiny (e.g. pending legal issues). 1 – Green Annual reviews Cases that do not meet Red criteria where the underlying assets are stabilised (e.g. generating income, secured vacant site). The Asset Management Traffic Light is reviewed at the SCR meeting for appropriateness. Any changes are subsequently made by the GRG Central Operations team and the review dates amended accordingly. The Chairman of the SCR has the authority to override the SCR frequency detailed above, with the ability to defer or bring forward a review to a different date. The traffic light may also be set to Red during the Management Accounts Review Process should it become apparent that further funds or sanctioned limits have been exceeded. 7.2. APS Approval Process You can find out whether a case is covered by the APS by checking the ‘Financial Information’ tab in REMIT. APS approval is required for: • • • Any expense incurred outside of the sanctioned costs in the original APP; Any material deviations from the sanctioned business case; and Sale of assets covered by the APS below the price set out in the sanctioned business plan. Refer to Section 19.4 for further information. In the case of expenses in excess of the sanctioned business plan or for material deviations to the business plan (i.e. these usually affect the costs in relation to a case), the Facility Amendment Process will need to be followed. Where the PCM is seeking approval to sell assets at a price materially below the sanctioned business plan, the Asset Disposals Process needs to be followed. For legacy assets which are covered by the APS in old-form APP format, the APS Central Compliance Team confirmed that all costs sanctioned in the signed APP are sanctioned provided that there has been no material deviation from the sanctioned business plan. This is also conditional on the spend on those assets being within sanctioned limits. Again, the Facility Amendment Process should be followed where it is apparent that there is a deviation from the sanctioned costs and business plan. West Register Author: Ben Deacon Page 22 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 7.3. Asset management checklist When managing an asset, the following should be a relatively exhaustive list of things that need to be done from an administrative perspective. Item Case Folder Notes Ensure the case folder is saved in the ‘Assets Under Management’ folder and in the appropriate WR Company. Make sure the folder is named the same as the case name in REMIT. Email correspondence All relevant email correspondence relating to a case should be saved in the shared case folder within the West Register mailbox. Cost Tracker Template The Cost Tracker Template can be found in the template folder. Make a copy and save this in the Case Folder Ensure all invoices received for a case are logged in here – including acquisition fees. This will help determine which invoices are yet to be paid and ascertain remaining costs. Signed APP Have you got a scanned pdf copy of the original signed APP in the Case Folder? Signed Facility Amendment Request If you have one, ensure a pdf copy of the signed Facility Amendment Request is in the Case Folder. SCR Template This is constantly updated with the latest financial information and is used in the monthly SCR process. REMIT Information Have you updated REMIT with the latest information? Things to consider: Recent lettings Updates to ERV and values Changes in strategy Whether WR are on site or not Change in Traffic Light Sanctioned Cost Report This report is sent out fortnightly/monthly and gives the latest bank balance position and sanctioned costs. When approving spend and invoices, ensure you have clearance in both the bank account and sanctioned costs before you approve the cost. This should be used in conjunction with the other available financial information to account for costs incurred since the last report was produced. NB For certain legacy cases (e.g. Property Ventures cases transferred into West Register), some of these documents will not be applicable. 7.4. Insurance Review On a quarterly basis, an insurance schedule must be returned to RBS Group Insurance to ensure that the most up-to-date information in held for their records. This process is led by the Head of Deal Execution, and requires all PCMs to ensure the insurance information on the ‘H&S and Insurance’ tab of REMIT is accurate. A quarterly download of the insurance information (including Buildings, Contents and Loss of Rent values) is maintained by the Deal Execution team. The download is then reviewed and sent to Stewart Hill at RBS Group Insurance. West Register Author: Ben Deacon Page 23 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 7.5. Management Information Requirements It is the responsibility of the PCM to maintain accurate information pertaining to their cases in REMIT. The following acts as a guide to the information needed: Field Advisors Tab Allowed Information Please list all parties who are used for a particular case. You do not need to fill in info regarding fees and when it was last updated. This helps with secondary RMs managing a case. Property Tab Please update all fields as and when they are updated – e.g. Income, Estimated Rental Value, Occupancy, Construction and Strategy. Ensure the strategy is relevant to the current build and occupancy status. Agent Ref - If a property is being managed by ARIM or LSH, please include the external agent’s reference here. This is used to automatically update occupancy information etc. Asset Management Tab For cases where West Register are managing the build process, tick the ‘Currently on Site’ box. Health & Safety and Insurance Tab The PCM must ensure all properties have sufficient insurable values allocated. 8. External Suppliers 8.1. Supplier Approval Process The Supplier Approval Process covers the approvals required to appoint a Supplier where we have no existing relationship with that Supplier. This covers all appointments of Suppliers and Contractors as defined in Section 8.3. Where we are looking to appoint a lawyer, the provisions set out in the Asset Acquisition Process should be followed. There is also a separate requirement for the appointment of Joint Venture partners in Section 9. Whenever it is necessary to appoint a new external supplier, a PCM should first check existing relationships held with WR assets. For example, where two similar assets are geographically close, it would make financial and operational sense to use the same supplier, rather than appoint a new supplier. Similarly, WR uses suppliers that specialise by asset class regardless of geography for example, residential lettings agents. A Supplier Details Request Form must be submitted to the supplier by the PCM. This must then be filled out by the supplier with the relevant account information and returned to the PCM who then confirm the relevant details and pass on for signature by two Asset Class Heads as defined in the Team Structure Chart in Section 2.3. 8.2. Supplier Appointment Process Where a Supplier is to operate under a build contract, the Contractor Appointment Process should be followed in Section 8.3. WR intends to minimise the amount of external suppliers used for managing cases, mindful of the fact that the best asset manager needs to be appointed for larger cases and for specialist cases. A Supplier Appointment Memo should be filled out with the relevant information and approved as follows: Estimated annual fees (excluding VAT) Up to £10,000 £10,000 - £50,000 £50,000 - £250,000 £250,000 - £500,000 Over £500,000 West Register Author: Ben Deacon Minimum alternative estimates required 0 0 1 2 2 Page 24 of 101 Approval process PCM approval only PCM and Asset Class Head (ACH) ACH and Head of WR Head of WR and Global Head of WR WR Executive A Committee The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual The Supplier Appointment Memo template can be found in the templates folder. Additionally, a Group Sourcing and Vendor Management approved contract must be used. Refer to http://grmweb.fm.rbsgrp.net/grouprisk/policy/dealing_with_external_suppliers/standards/dealing_with_external_ suppliers.asp#c4 for further information. The APA has also confirmed that for new Supplier appointments, no mention of these specific Suppliers need to have been made in the sanctioned APP. Additionally, their appointment does not require a webform submission. 8.3. Contractor Appointment Process This process should be followed for all appointments requiring the supplier to operate under a build contract with WR. For the avoidance of confusion, these suppliers are referred to as Contractors. For new appointments (where we have no existing relationship with the Contractor), a Supplier Details Request Form must be submitted to the Contractor by the Build Team Member. This must then be filled out by the Contractor with the relevant account information and returned to the Build Team Member who then confirm the relevant details and pass on for signature by two Asset Class Heads as defined in the Team Structure Chart in Section 2.3. In certain cases, the cost estimate is not the overriding factor in appointing specific Contractors. For example, the incumbent Contractor in place on purchased development may be best placed to continue the works given their knowledge of the site. For all new contracts, a memorandum should be prepared by the Build Team Member assigned to a case and approved as follows: Estimated total remaining fees under contract (excluding VAT) Up to £10,000 £10,000 - £50,000 £50,000 - £100,000 £100,000 - £1,000,000 Minimum alternative estimates required 0 0 1 1 £1,000,000 - £2,500,000 2 Over £2,500,000 2 Memorandum approved by Build Team Member approval only Build Team Member and Head of Build Team ACH and Head of Build Team Head of WR and Head of Build Team Head of WR, Head of Build Team and Global Head of West Register WR Executive A Committee In documenting the agreed contract, a standard JCT or similar contract is to be used. In the case of more complex works, an amended version from the MacFarlane's approved suite of contracts can be used. The Build Team Member assigned to the case should use and prepare the appropriate build contract in conjunction with our appointed advisors. These are located in the templates folder. Any material amendments to these contracts must be signed off by the Head of Build Team and the Head of Deal Execution Team. Prior to appointing the Contractor, the PCM and Build Team Member agree which Contractor is appropriate based on costs provided by the Contractor, ensuring that the costs are within the sanctioned capex limits. After appointment, the Contractor must then provide regular updates to the relevant Build Team Member or Contract Administrator with regards to progress on site and performance versus budget. 8.4. Contractor Review Process A Build Cost Budget is maintained by the Head of Build Team and a record of updates must be maintained on a monthly basis by the Build Team Member. This is then reviewed on a two-month cycle by the Build Team Members, Head of Build Team, the Head of WR and Ben Deacon. The following process should be followed where the current or projected results are outside budget: • • Where the spend is within APP sanctioned costs but is projected to exceed Budget, approval for those costs should be gained from the relevant Asset Class Head and the Head of WR; Where the spend is outside APP sanctioned costs and also exceeds the Budget, approval should first be sought from the relevant Asset Class Head and the Head of WR. Additionally, the Facility Amendment Process should be followed once approval is gained. West Register Author: Ben Deacon Page 25 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual Where the Build Team Member is aware of an actual or projected deviation from budget, the Build Team Member must notify the PCM and Head of Build Team in a timely manner. It should be noted that the appointment of Contractors on WR Cases is not always within the control of the PCM (e.g. Joint Ventures with a minority shareholding). In these cases, the Build Team should be consulted prior to that appointment and appropriate representations made. 9. Joint Venture and Subsidiary Creation Process It is sometimes necessary to create joint venture entities and create additional WR subsidiaries. Any such additional legal entities, whether wholly-owned by RBS Group or otherwise, will be incorporated in accordance with the RBS Group Policy Standard for Legal Entities Incorporation/Dissolution and the Special Purpose Vehicles policy standard. In accordance with this standard, the application form for approval of creation of such entities will be signed by the Head of GRG in his capacity of Divisional Chief Executive. 10. West Register Finance This section covers all processes that have interactions with the GRG Finance Team. It should be noted that the processes are owned by GRG Finance and that WR staff should operate within the stipulated procedures. The following acts as a guide as to how WR staff should interact with GRG Finance. 10.1. Invoice Approval & Review Process This process is administered by the GRG Finance team, with initial sanctions being gained via the Asset Acquisition Approval Process. 10.1.1 Invoice Approvals Process When an invoice is received in relation to a case, the following needs to be included: Stamp the Invoice Several stamps have been provided for use around the WR offices. These give a template that needs to be filled out when approving an invoice. Identify the Case The case name as it appears on REMIT should be written clearly on the invoice. The Sun Account code must also be included when approving the invoice. This can be found on the financials tab in REMIT for the case. Classify the Spend The PCM should decide whether the expense is Capex, Opex, Acquisition Costs or Disposal Fees. A simple guide is included in this document – refer below for further information. Check within Limits This is a self-policing declaration where a PCM must check that the spend is within sanctioned limits (be it Opex or Capex). The Cost Tracker Template should be used in conjunction with the latest Sanctioned Cost Report to check whether the case is within sanctioned limits. PCM Declaration The PCM then signs and declares on the front cover that they confirm that the spend will not exceed sanctioned limits. Invoice Submission The signed invoice should then be given to the GRG Finance Team for processing. Invoice Approval The GRG Finance Team will scan the invoice and enter the invoice into IPOS, which will then check the invoice against the sanctioned operating or capital expenditure and email a request for approval to an authoriser within defined parameters. Refer to Section 21.3 for the list of Invoice Signatories. Once approved, the invoice is paid and the review of costs in picked up in the Management Accounts Review Process. West Register Author: Ben Deacon Page 26 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 10.1.2 Classification of Costs Capex Capitalised costs are those costs deemed to increase the value of an asset. These are therefore added to the balance sheet rather than being expensed through the profit and loss statement and contribute towards the book value. In the course of a development, the associated costs including professional fees need to be capitalised. There is often confusion is around repairs and maintenance. If costs are incurred to restore the asset to its original condition, i.e. resurfacing a driveway or painting, then this is a repair (Opex) and not Capex. Where we enhance the value of the property, i.e. build a patio or put up gates and electric fencing then this would be Capex. Where you are unsure, the GRG Finance Team should be consulted. Opex All other expenditure is basically an operating expense and is recognised in the profit and loss statement. There is often confusion over professional fees. Where we are seeking planning advice and the value of property will increase as a result of the approved planning then this can be capitalised. If planning consent is not given then this would be Opex. Architect fees follows the same principle, if we do build we capitalise otherwise we would expense. Acquisition Costs When we purchase a property, the related purchase costs need to be capitalised. Costs include, but are not limited to: • Legal Fees • Any Registration fees • Agent fees (if applicable) • Environment survey fees • Any other survey fees relating to the purchase Disposal Fees Invoices relating to the sale of a property need to be correctly allocated to the cost of disposal so that we can calculate the profit or loss on a sale. Fees generally included are: • Legal Fees • Valuation Fees • Agent Fees • Any other related disposal cost Where there is unclear that an expense should be capitalised or expensed, it is prudent to expense the item. Any valuation uplifts should then be picked up in the Fair Value Process. 11. Management Accounts Review Process The management accounts are prepared by the GRG Finance Team on a monthly basis with a deadline for completion on working day ten of the month. The report covers the financial results for each case on the following bases: • Inception to date results • Year to date results • Month result • Cash recovered The process of producing the reports is overseen by the Head of GRG Finance. The review has many purposes: • To ensure that all PCMs are comfortable with the financial results of their cases and to identify any anomalies in the accounts; • To identify missing payments that should have been received into the bank accounts; • To identify those facilities where the acquisition VAT element needs to be removed to reduce the artificial headroom created upon acquisition of VAT-opted properties; West Register Author: Ben Deacon Page 27 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy Procedures Manual . To Identify cases where the lacility has exceeded the expiry date as defined in the sanctioned . To Identify cases where the physical bank acwunl limits have breached rid . To Identify any spend that exceeds the sanctioned limits within the tacility Capex and Opex The management accounts are circulated to the team as soon as the final drafi is ready The PCMs then review the results and report any discrepancies to the Asset Class Head A series ov meetings is held by Ben Deacon and with each Asset Class Head in turn and the accounts reviewed it the bank account imit or sanctioned Capex or Opex limits are exceeded the Asset Management Tratfic Light is changed to Red within REMIT and the case is picked up in the Pacility Amendment Process The meeting is currently held on the third Thursday ol the month with a subsequent review by the Head otWR and Head ol Recoveries Should a sanctioned lacility exceed the expiry date as specified in the APP, a revised APP should be submitted in line with the Asset Awuisillnn Approval Process The expiry date is defined as being the final completion date ol the assets within an APP plus the sanctioned time period within that APP This covers cases where there are significant delays between APP approval and completion and subsequent account opening it should be noted that this review process is a backwards looking test tor ascertaining the financial perlorriiance ov a case it is the responsibility ol the PCM to take ownership ot the financials ol their cases and idenufy any likely breaches in sanction belore they occur The PCM is given the lollowing tools to assist their analysis olthetr cases . Regular provision management accounts, . Regular provision olbank account spend versus llmist . Cost Tracker Template, located in the templates lolder This can be used to budget tor costs where invoices have not yet been received and . lnvoioe Log' this is produced by GRG Central Operations tmiddle otfice) and is integrated with REMIT This can be used to accrue tor costs tor which invoices have been received but have not yet been reflected in the management accounts it the PCM identifies any likely breaches belore they nwur' they should tollow the Facility Amendmem Process Wen Register The intornution classification oi Inls document is INTERNAL Author Ben Deacon Page 25 0! tot Aonl 2ott GRG West Register (GB) Policy & Procedures Manual 12. Facility Amendment Process As discussed earlier in this document, when a facility is sanctioned, the bid price, Capex, Opex, and acquisition fees are sanctioned on a gross basis with any other cashflows (such as VAT and income) forming the headroom allocated to that account. This process is followed when it becomes evident a facility has breached either the physical bank account limit or the sanctioned costs within the sanctioned business plan. The Management Accounts Review Process picks this up as a backwards looking test and it is the PCM’s responsibility to review their financials to look forward, identify and rectify possible future breaches in a timely manner. This process should be followed where there is a material deviation from the sanctioned business plan. 12.1. How do I amend the sanctioned Capex or Opex for a case? When a cost has exceeded the limit as defined in the sanctioned business plan, the Asset Management Traffic Light is set to Red as defined in the Management Accounts Review Process in Section 11. This does not cover cases where the physical bank account limit has been exceeded. This automatically brings forward the due date for the next SCR as overseen by GRG Central Operations. The SCR Template includes a section needed to amend these sanctioned limits (provided no new cash limits are required). The Chairman of the SCR signs off the requested amendment on the SCR Paper which is then passed back to GRG Central Operations. The scanned SCR Paper is then attached to a webform and sent to the APS for subsequent approval (if the asset is covered by the APS). Once APS approval is gained, the PCM should update REMIT and inform GRG Finance. 12.2. How do I request further funds for a case? Where it is evident from the Management Accounts Review Process, or from the knowledge of the PCM on a forward-looking basis, that further cash is required (and a larger facility) a Facility Amendment Request (FAR) must be resubmitted incorporating the previously sanctioned costs as well as current spend and projected financial requirements. The FAR template is located in the Templates folder and is based on the SCR template. The FAR is then submitted in line with the Asset Acquisition Approval Process. The FAR should summarise how the overspend occurred, the current financial position and future costs required to complete the case. It should be noted that the same WR Executive “A” and “B” Committee authority levels apply, however this is based on the consolidated Book Value of the assets under scrutiny. West Register Author: Ben Deacon Page 29 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 13. Value Capture Value added must be captured at all points in the Case Lifecycle. For cases where we do not complete, but it is evident that WR has added value through the bid process, the Pipeline Cases Process should be followed. Additional value is measured relative to the best external bid received at acquisition by WR -(the ‘Price to Beat’). 13.1. How is ‘additional value’ determined? ‘Value Added’ as mentioned in the mission statement is defined as the difference between the total recovery made by West Register (i.e. all cash recovered by WR post-acquisition through operating the assets and subsequent sale) and what could be achieved by external sale at acquisition. The obvious downside to this is that for the majority of assets, this ‘Price to Beat’ will be subject to much interpretation, given that there are usually very few serious bids made for our assets. It will therefore be down to the discretion of the APP Committee (and via some negotiation with the West Register team) at what level this price should be set. Example Case A - Original Debt B - Best External Offer at WR Acquisition C - WR Purchase Price D - Subsequent WR Costs E - Subsequent WR Sale Price £100m £30m £50m £20m £60m Notional Profit (E – D –C) Cash Recovery (i.e. cash realised) (E – D) Value Added by WR (E – D – B) £10m loss £40m £10m profit As can be seen in the example above, WR have made a £10m loss on paper. However, the actual recovery by WR was £10m in excess of an external sale at acquisition. It is important that this Price to Beat is set at the outset so we can judge performance effectively. The ‘Price to Beat’ is recorded in REMIT at a property level so that when each property is sold, we can determine the value added through sale. 13.2. How is ‘Price to Beat’ determined? The Price to Beat is captured by the PCM upon deal completion by reference to the relevant GRG RM. This is then entered into REMIT and a quarterly download is taken and sent to the Head of WR and Head of GRG Finance for review and approval. A 10% reduction is taken to the Price to Beat to reflect: • The costs that would have been incurred upon external sale via insolvency fees and agents’ fees; and • The haircut also reflects the fact that any external offer is almost always subject to downwards correction (or ‘chipping’) to reflect findings from their due diligence process. 13.3. How is Value Added reported? A download from REMIT is taken on a fortnightly basis and any value added is discussed at the team meeting. These results are then fed into the Monthly Management Information Pack and reported to the APP Committee. 13.4. Management Information Requirements Refer to Section 3.2 for REMIT information required when capturing value-added in a lapsed case. All necessary information for capturing value-added through sale will be captured by the PCM during the normal asset management processes. Refer to Sections 0 and 19.6 for further details. West Register Author: Ben Deacon Page 30 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Reg ter (GB) Policy Procedures Manual 14. Fair Value Process The lair value process is owned pnmanly by lhe GRG Team ll is used lo ensure lhal lhe assers are slaled al a lnie and lair value in lhe balance sheel and is conducled annually in coordinalion wilh all learn members and subsequenl sign-oil by exiernal audilors All PCMs should be aware lhal lhey will be asked lo Justify lhe value oi lherr assels al year-end, bul rmenm reviews during lhe SCR Process Any malenal movemenls in value lwhelher lhey be upward or downward) should be liagged first lo Ben Deacon who will lhen liarse wilh lhe GRG Finance Team Malenalrly lor lhe purposes process is by lhe exlernal audilors and is based on a case, rrol pmperly, level re lhe PCM musl Justify lhe value oi lhal case regardless oi lhe number oi properlies conurned ll should be noled, however, lhal cenarn cases will require propeny level analysis ior example where ceilain propemes wilhrn a poniolro are being markeled lor sale 15. Data Stewardship and Security ll rs lhe responsibility oi lhe PCM lo marnlain up-lodale records oi lheir cases There is no prelerence as lo wirelher a paper-based or electronic syslem is used, so long as rl complies wilh lhe relevanl dala secumy prolocol This is overseen by GRG Central Operalmns and all WR slaii should read lhe GRG Procedure Manual lo ensure lhey are lamrliar wilh lherr oblgalrons All WR leam members have wrile access lo all inlorrnalion in which ln lum brings a responsibilily lo ensure lherr dala is marnlained and key rniormahon nol changed wilhoril due cause Regular backups oi are laken in line lhe RES dala backup prolocol 16. Dealing with the Media ll rs lhe general policy olWesl Regrsler nol lo commenl lo lhe press Any approaches by lhe press should be iorwarded lo lhe aliemion ollhe RES UK Media Centre where erlher David caiiney or Nigel Owen will prepare lhe relevanl response Should a WR learn member be approached in person by lhe press, lhey should ascenain lhe publicalion lhey represenl and iorward lherr oueries lo lhe RES UK Media Centre 17. Complaint Handling When dealing wilh all WR cuslomers, lhe PCM needs lo ensure lhey lreal lhem in a lair and sensihve manner This is core lo lhe "Treating Customers lerly" chr) recurrernems which lorm pail ollhe Financial Services Aulhoriiys (FSA) "Principles oi Business" Should lhe PCM receive a complarnl, lhe iollowing process should be lullawed' . Noliiy lherr Assel Class Head, . Noliiy lhe Head oi Wesl Reglster . Follow lhe GRG Handling procedure lo log and resolve lhe complarnl l/cbimnel lm neussll/Psa) Fur iurlher resources, please reier lo lhe iollowrng Infurmatmn' Leamrng and Developmenl lor Complaint Handlers omub rbsorc and Developmenl/Concerns aml Queries/deiaull asp Wan Reglsler Tire oi Inls documairr is INTERNAL Auliior Ben Deacon Page 31 or ml Anni zoil GRG West Reg ter (GB) Policy Procedures Manual 18. Health Safety Comp nce All employees musl adhere io ihe Wesi Regisier Heallh Saieiy (Hasl Pmcedures as well as lhe Group was Policies which can be iound on lhe Gmup lnsile page hug/Mww group nel/hr/Healih Saieg/Beiauli asp WR is a unique service line wiihin lhe Group and some aclivihes encouniered during ihe normal course oi business may noi be covered by Group Policies Where Group Policies are siiem, or an overlap occurs ihe WR is io be iollowed in ihe first insiance Should employees be unsure oi iheir commilmenls under ihe Policy, ihe WR Heallh Saieiy Officer (WR HSO) should be coniacied immedialely ior guidance As oi November 2010, Paul Round (Head oi Build Team) was nominaied as WR Hso Heaiih and Saieiy requiremems iail inio Mo main calegnnes' Personal was Requiremems ii measures required when conduciing siie and Sne-Speuflc Requiremenis ii siie securiiy) 18.1. Personal Health 8r Safety Requirements The ioilowing iable acis as a summary oi lhe Health Saieiy Proiocol required io be iollowed by WR siaii when carrying any WR The hill can be iound in lhe Securiiy iolder in lhe WR drives li you have localing or inierpreiing ihis documeni, please reier io ihe WR Hso Prior io any sile visil, a risk assessmeni should be conducted Por iunher iniormaiion and guidance wiih regards io sue-specific risks and measures io miligale ihem, reier lo Seciion 21 7 Any siie visiis where lhe work iall ouiside ihe scope oi lhe Wesi Regisler Specific Risk Assessmeni in Seciion 21 7 should be broughl io lhe alienhon oi lhe WR HSO [1&5 Roquiramom Summary oi Employee Obligaiions General Pamiliarise yourseiiwiih Group was requiremenis requirements Personal Proleclive When a sile, Personal Prolechon Equipmeni (PPE) musl be uken and used as Equipmem (PPE) defined in lhe Risk Assessmem PPE should be checked ior any deiecis Training should be requesied in case oi diihculiy using ihe PPE Lone Working Gmup Policy ihai employees generally should noi work alone and lhe relevam Group Policy should be adhered io Speulal care needs lo be iaken by iemale I less experienced employees, especially when aiier dark or oulside normal working hours Belaiis oi ihe place being visiied musi be leii wiih ihe depaiimenial secrelaiy or line manager when working alone, plus any changes communicaied as required li you ieel under lhreal oi immineni violence, lhen aciivale ihe Personal Aliack Alarm and (from ouiside ihe UK) Visiis io Conslruclion Employees musi use wiremy sized PPE and Demolihon sues Du noi enier any excavaiion lhai is noi shubered and barriered Only use or access equiprriem i he Pnncipai Gomraoior has consenied io Ils use Repoii all accidenis and near misses lo ihe Principal Coniracior, your line manager and lhe WR HSO Visiis io Empiy/Paii Avoid use oi Iiflslelevalors Complele Buildings Carry a lorch and spare bahenes Be aware oi irespassers -- make as much noise as you can under no circumslances should employees inspeoi pans oi lhe building which are considered '31 heigm' and where lhere is a risk oi ialiing visils lo derelici or oiheiwise unsaie buildings should noi be underraken alone Visiis io Occupied Repoii lo receplion on amvai and depaiiure Buildings Ask ior speufiz'. siie mies and procedures including lhe risk assessmem ior ihe Wes! Reglsler riie Classmulmn oi iris doumeni is INTERNAL Amhor Ben Deacon Page 32 hi mi i 2011 GRG West Register (GB) Policy Procedures Manual building Only access rooi areas it accompanied by a responsible person wno tias detailed knanedge oi ttie property Use oi tadders is only permitted wnen accompanied by a responsible person Hazardnus snould anyone disturb or come into contact wilti any nazardous substance, ttiey Substances sboutd stop work, iniorm Reportline and contact ttieir line manager and/or WR Hso immediately ior iunner advice Awidem Reponing You must repon all accidents and near miss incidents, wtiicti occur during or as a Reporting result oiwork activity, to your line manager and tbe WR HSO as well as to Reporltine wnion nierzles between 8am-6pm Monday to Friday, iet -- lion a site controlled by a principal contractor or owner/occupier tbe employee stiould ensure tnat ttie accdent back is completed and ttiis iniormation is ioiwarded to ttie WR H50 1 RES Group was ior investigation Gonstniclion tuesign Where a case is, or will be, subject to any iorm oidesign or constniclion works, a Build 8i Management Team member is to oversee ttie appointment oi designers and CDM Coordinators Regulations) 2007 - ensuring tnat competent, suitabty qualified personnel ior tbe pmjecl are employed CDM Regulations Training Regular was training is to be provided to meet ttie needs oiWR Protecting the Public site endosure measures and warning signage to protect public is to be installed at all WR sites where ttiere is such a requirement Reduction oiWR wnere WR owned assets are being managed or operated by third parties sucn as Liability Joint Venture partners, asset managers, operators or management teams, Primary Case Managers are to ensure tnat Has responsibility is as iar as praclically possible passed over to sucb persons so to reduce Has liabilities 18.2. Health E- Safety Tra 9 L09 All exrsting and new employees must make tnemselves iamiliar wrtti Group policies and tbe WR protocol beiore any site visits and witnin tbree monttis oi ioining tbe team All exrsting employees must iamiliarise tnemsetves witti ttiese documents every quarter and the prior to visiting site, wnere ttie WR risk assessment will need to be reviewed and ttie required control measures implemented At ttie end oieacti quaner employees must provide evidence oitnis iamitiarisation by signing and dating ttie Training Log located in ttie WR Has equipment cupboard oi eacn WR oifice it is ttie responsibility oittie relevant Asset Class Head (nr ultimatety ttie Head oi WR) to ensure tnat all new employees are inducted, exrsting stati are iamiliansed and tnat tbe training log is completed prior to montti end oieacb quaner ii any subsequent training is wnducled, ior example iittie WR Policy manual is updated, ttiis is required to be reviewed and again, tbe employee must sign ttie log to indicate they nave completed ttiis training Group was training requirements are logged as pan oittie Regular Reading and Viewing procedures as defined in ttie GRG Procedure Manual 18.3. e-Spec Security Requirements Security on WR assets ialIs into two categories 18.3.1 Site Enclosure Measures (SEM) Ttiis covers physical barriers to ttie boundary oi a sne preventing unauttionsed access and securing its contents Barriers take ttie iorm oi tiistoric permanent boundary treatments (such as tiedges or trees, walls and iences) and temporary measures (such as Henas iencing, constniction boarding, boarding or griltes to secure windows or doors and Jersey blacks to prevent traific access) Wes! Register me inlornuiion classiticaiion oi inia document is INTERNAL Auttior Ben Deacon Pnge 3: ol mt Aoril 2mt GRG West Register (GB) Policy & Procedures Manual Where SEM is provided and there are risks within the site/property (for example deep excavations, trip hazards, possibility of falls from height, risk of collapse by the building or stored materials) warning signage is appropriate to advise of the dangers to the general public. 18.3.2 Site Protective Security (SPS) This covers the security regime put in place to protect the asset and prevent unauthorised assess onto the site. Regimes can take the form of weekly or fortnightly security inspections, hourly security inspections covering pre-determined times on either a drive-by or internal inspection basis, full time manned security, CCTV cameras and live-in guardians. 18.3.3 Initial Security Review Process The PCM must take overall responsibility for all SEM & Site Protective Security (SPS) on their case. The following process should be followed prior to the acquisition of a case and utilises the “Security Review Form” (SRF) which can be found in the Templates folder. Site Inspection The PCM, or appointed nominee, must inspect each asset prior to completion paying particular attention to both SEM & SPS. Initial Form Completion The SRF (located in the templates folder) must be completed following the site visit and should be accompanied by photos indicating general site conditions and shortfalls. The “Description of Non-Conformance” section of the SRF should be completed as appropriate. Identify Shortfalls & Propose Works The PCM, or appointed nominee, must establish any remedial works required to SEM and adequacy of SPS by completing the SRF. Particular attention should be paid to: • Boundary treatments noting openings which prevent the site from being fully enclosed; • The suitability and condition of existing SEM; • Consideration of additional or replacement SEM to ensure site is fully enclosed preventing unauthorised access by the general public; • The suitability of current SPS measures. Where applicable, the PCM should question on-site personnel with regards to any incidents that have occurred and obtain from the agent or IP the incident logs to enable an appraisal to be made; • Infrastructure installed, or ease of installing, to enable 24hr/12hr security or remote CCTV installations to be put in place and any implication of installing such services; • Hazards, materials or rubbish on site which require addressing so to comply with Insurers Code of Practice; and • Requirement of warning signage and its installation. The “Corrective Action Proposal” section of the SRF should be completed as appropriate. Adequate Sanctioned Costs The PCM should make adequate allowances in their APP submission to cover SEM & SPS and for any immediate site clearance to ensure the Insurers Code of Practice is adhered to. Security Appraisal Immediately after the initial inspection, a meeting should be held with PCM, DETM and other WR Team Members (where applicable) to appraise the current arrangements and corrective action proposals within the SRF. The “Corrective Action Evaluation” section of the SRF is to be completed at that meeting to ensure the proposed works are appropriate. West Register Author: Ben Deacon Page 34 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual Scheduled Works Once approved, the required works as identified in the SRF should be scheduled to commence as soon after completion as reasonably possible. For any security firm to be appointed as part of ongoing SPS arrangements, the PCM should follow the Supplier Appointment Process. Once all works and provisions in the SRF have been completed, the “Corrective Action Verification” section of the SRF should be completed in order to verify that the necessary arrangements were completed to a satisfactory standard. Security Review Within two weeks of the completion date, the DETM must arrange for the Security Company appointed (if applicable) to undertake an initial appraisal of the site which includes focus on the adequacy of the SEM with commentary on any deterioration and if the Insurers Code of Practice will be met on completion. Any shortfalls reported to the PCM should result in the SRF being reviewed, updated and agreed by the PCM, DETM and other WR Team Members (where applicable) as consulted in the Security Appraisal part of the process. Completion Upon completion of the works, the SRF should be passed to the Asset Class Head and signed off. A scanned copy of the signed form must be held in the relevant case folder. 18.3.4 Subsequent Security Review Process Following case completion, the PCM should continue to manage the asset and proactively assess whether the SEM and SER provisions are still sufficient and appropriate. In general, this process should be followed where emergent issues on site are experienced, such as the failure of security fencing. Any proposed changes should be logged on the SFR which can be found in the templates folder. A copy should be made of any prior SRF submissions so that changes can be tracked. The same process as for the Initial Security Review Process should be adhered to with any corrective action identified scheduled to commence as soon as practically possible. 18.3.5 Periodic Security Review Process A periodic review of security provisions is conducted at end of each quarter. The PCM is required to fill out the SFR based upon information received from security reports. Again, a copy should be held of all prior submissions. The information on the SFR should be summarised and entered into REMIT on the Health & Safety tab. This information is then collated and reported to the APP Committee on a quarterly basis. 18.4. Management Information Requirements The following information is required to be filled into REMIT in respect of H&S. Field Last Review Date Site Protective Security (SPS) Status Site Enclosure Measures (SEM) Status Warning Signage Status Comments Advisors Tab West Register Author: Ben Deacon Comments To be updated with the last review date To be taken from the relevant Security Review Form section To cover any comments the PCM has in relation to the case. Any Security Company appointed should be entered here. Page 35 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 19. Asset Disposals Process 19.1. General Procedural Guidelines The SCR process will ensure that asset managers actively involve themselves with the case. If the PCM feels that the best way to optimise value recovery is by sale, there are several authorisations required. Once a Completion Statement has been received from the solicitor instructed on a sale, the PCM should forward this to Ben Deacon and the GRG Finance Team. 19.2. Internal authorisation required to dispose of an asset In general, if the disposal is materially outside the most recently sanctioned business case, further approval will be required. This is necessary because any material deviations from the sanctioned business plan will require APS approval. Examples of material deviations from the business plan include: • Sale of a whole property (i.e. sale of all assets held in a case) significantly below the price sanctioned in the business plan; and • Sale of a single unit within a larger property (e.g. if the sale of a flat within a block is significantly below the average sales price in the sanctioned business plan). Materiality is defined as being any sale made at below 90% of the sanctioned business plan. Any sales prices in excess of the sanctioned business plan are not deemed to be material. It should be noted that for piecemeal sales (such as in the second example above), the price as sanctioned in the business plan is the average price. Therefore any sales less than 90% of the average sanctioned sales price will require internal authorisation. An Asset Disposal Form should be prepared and approved as follows. This form incorporates the NPV calculations to be submitted with the APS approval below. Cost of Asset Sale Price >= 90% of Sanctioned Business Plan Sales Price < 90% of Sanctioned Business Plan Sales Price >= £500,000 Allocated Book Value Asset Class Head (ACH) and Head of WR < £500,000 Allocated Book Value WR Executive B Committee ACH ACH and Head of WR For sales where the gross sales price receivable in any one transaction (i.e. if we are selling a single property or multiple properties in one transaction) is £5m or greater, a memorandum should be prepared and submitted to the WR Executive A Committee for approval prior to the transaction occurring. The memorandum should then be signed by the Chairman of this committee and submitted to GRG Finance before the transaction completes. The memorandum should substantiate why the sale maximises recovery to the bank. 19.3. ‘Know Your Client’ (KYC) requirements Further internal clearance is required to be obtained before any asset sales in respect of ‘Know Your Client’ requirements. Before any sale, the PCM must send an email to the GRG KYC team (email address ‘GRG KYC’), with a subject heading 'West Register Property - Asset Sale'. The email should contain details of the purchaser: either the individual’s names & address or the company name, whichever is applicable. The KYC team will undertake the necessary enquiries and revert back to the PCM. An ‘all-clear’ decision should be received before any sale and it is the responsibility of the PCM to ensure this clearance is obtained. 19.4. APS approval required to dispose of an asset A separate approval will always be required for a subsequent disposal of the Non-Cash Realisation by West Register, such action constituting Prohibited Conduct under the APS Scheme rules. A webform needs to be submitted in order to seek APS approval for asset disposals. The NPV calculation within the Asset Disposal Form must be completed and sent to the APS approver. West Register Author: Ben Deacon Page 36 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 19.5. Disposals Review Process Once all assets within a case have been disposed, the Primary Case Manager must update the Asset Disposal Form with the historic cashflows pertinent to the case. This is used to finalise the net cash recovery made for that case which can then be compared against the ‘Price to Beat’. Any cash receivable in excess of this amount is deemed as value added by West Register. The Asset Disposal Form must be prepared within one month of disposing of the asset and submitted to the Head of WR before review by the team at the APP Sighting Forum. Once discussed with the team, the Disposal Review Form is then submitted to the Finance Team who will then maintain a record of the cash generated and value added by WR. 19.6. Management Information Requirements Upon disposal of an asset, the following information in REMIT should be updated: Field Property Information – Demise Sale Date Allowed Information When a single property within a case is sold (i.e. one of many properties), the sale date must be entered at a demise level. Property Information – Demise Sale Price When a single property within a case is sold (i.e. one of many properties), the sale price (gross of fees) must be entered at a demise level. Case Tracking – Case Sale Date When the final property within a case is sold (i.e. all economic interest within that case is sold), the sale / lapse date should also be included at case level. Case Status When the final property in a case is sold (i.e. all economic interest within that case is sold), the Case Status should be set to “G – Sold”. Notes Any relevant notes should also be made to assist in the reporting of the transaction. West Register Author: Ben Deacon Page 37 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy Procedures Manual 20. Management Information Report 9 Process All the Ml collected during the case lilecycle is collected penodicaily and reported lo the wp Execulive Bnard There are several regular key reports thal are prepared and presented The liming and Infurmalmn induded is included in lhe uhle heiow Report pnguancy and Timing Comm: 5 Raspunsih ity Team and APPS Weekly -- sent on a Thursday anernoon Mo working days in advance or the App Commiltee meeting Weekly Updale paper including - Current book value and lorecast - Caseload and loreoast - Schedule or residenlial unils under managemenl and their current Slams - Schedule or commercial units under management and their current Slams - Schedule or hotels and land under management and their current Slams pipeline Paper including - Near terrii pipeline detailing Apps heing prepared through to completed deals (by value and caselnzd) - Top five cases hy value in each deal status within REMIT - Reoenlly unsuccessful hids All Apps and other papers <.353: E. 5 mm mm; :3qu [mm 555 a Emsjsuega [335:6 at GBP53555 is: as. i :ssSs Sea 33% a 2.: 2 53.93 i 9:50--53" Eflmh . . FN 52.35 .3 .5235. 3.5309; a >o=on Em: 553% 010 GRG West Register (GB) Policy & Procedures Manual 21.2. Authorised Signatories The delegated signing authority is as follows: Up to £100,000 Up to £250,000 Over £250,000 Two members of: James Rowney, Howard Lincoln, Joss Brushfield or Barbara Turnbull One member of: James Rowney, Howard Lincoln, Joss Brushfield or Barbara Turnbull AND A Director of the WR Entities Any two Directors of the WR Entities For contracts to bid upon, purchase or sell a property, if the APP has been approved by the Head of GRG the above delegated signing authority does not need apply. In these cases, any two of the signatories listed above can approve the transaction. 21.3. Directors of West Register Entities As at 28th January 2011, the Directors of West Register (Realisations) Ltd and West Register (Property Investments) Ltd are: • Derek Sach (Chair) • Declan Hourican • Laura Barlow • James Rowney • Steve Eighteen • Marcus Pollmann • Nathan Bostock • Rory Cullinan • Ian Roberts • Joy McAdam th As at 28 January 2011, the Directors of West Register (Hotels Number 1) Ltd, West Register (Hotels Number 2) Ltd and West Register (Hotels Number 3) Ltd are: • Declan Hourican • Joy McAdam • James Rowney A full list of Directors for each WR company can be found in Section 21.13. 21.4. Directors of GRG Strategic Property Group Committee As at 28th January 2011, the Directors of the GRG Strategic Property Group Committee are: • Derek Sach (Chair) • Nathan Bostock • Rory Cullinan • Declan Hourican • Laura Barlow • Joy McAdam • Ian Roberts • James Rowney West Register Author: Ben Deacon Page 40 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy Procedures Manual 21.5. Invoice signatories Amount including VATE Candmans Approval Requimd Where Head oi Build Below "0000 Team nas initiated Approval by Head o1 adild Team only invoice Invoice inltlatur Is not the relevant Asset Class Relevant ACH wl|| approve invoice by email sign-ow Head (ACH) Difieren! ACH must approve tne invoice invoice initiator is also tne relevant Asset Class The invoice reddire two pnysical signatures tor Head adtnorisation as tne new system cannot deal witn tnis Below 250.000 type ol transaction at present Sancliuned Opex or Capex is oreacned Tnis invoice will need additional approval by one oi The invoice will he paid a" "we via the CHAPS process Requires the additional approval by one Di 21.6. REMIT Case Classifications Case Status Processes Covered A - Case Under ReView Pipeline Cases Process -- APP Belng Prepared Asset Acquisition Approval Process -APP Approved - Bid Not YetACoepted Bid Submission Process - APP Approved - Bid Awepted and In Legal Docs Asset Acquisition Process - Case Completed and Under Management Asset Management Processes -- Lapsed Lapsed Deals Process -- Suld Disposals Process West Reglsler rne lnialmallon Cloggificalian olihls document .s mremu Autrior Ben Deacon Pagan onoi i April 20ii GRG West Register (GB) Policy & Procedures Manual 21.7. Guidance on Information Sharing with Recoveries Can charged asset(s) be reliably valued? Yes Is LTV over 130%? (See calculation below) Yes Are there any sub-participants / CDScounterparties? No Is the borrower a listed company? No General Rule 2 applies Yes No No / Not 2 sure Yes Contact GRG Legal General Rule 1 applies Bank information is likely to be inside information and a complete information barrier should be maintained between GRG and WR. Contact GRG Legal / GRG Compliance For the purpose of this guidance note, LTV should be calculated as follows: Secured exposure – nominal value of personal guarantee LTV = x 100 Net expected recovery from charged assets The reliability of this test in ascertaining whether any other parties have an economic interest in the sale of the charged asset(s) depends upon the reliability of the valuation evidence. RMs should not apply this calculation rigidly, but should simultaneously step back and consider the core question: does anyone other than the Bank have an economic interest in the sale? Seek input from your line managers as necessary. General rule 1 WR should be provided with no more information about the charged asset(s) than any other bidders. However, it is possible to flag (i) the level of provisioning; (ii) background to the customer’s debt and security package; and (iii) defects or downsides affecting the charged asset(s), to WR even if these are not being disclosed to other bidders, provided that: there are no confidentiality obligations applicable to the information which restrict disclosure to WR – see further below. General rule 2 A more pragmatic line can be taken and GRG may share information about the charged asset(s) (e.g. schedules of occupation, officeholders’ report, valuation reports) with WR, even if that might not be shared with third party bidders, provided that: there are no confidentiality obligations applicable to the information which restrict disclosure to WR – see further below. Guidance on confidentiality obligations Where facility documents are in Bank standard format, then there is no confidentiality obligation owed to the customer which would restrict disclosure of information to WR. Where facility documents are not in Bank standard format, confirm the extent of any confidentiality obligations owed to the customer with GRG Legal or external solicitors. There may, of course, be confidentiality obligations owed to other parties in respect of a particular piece of information – if so, confirm the extent of any restrictions/waivers with GRG Legal or external solicitors. West Register Author: Ben Deacon Page 42 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual 21.8. West Register Specific Risk Assessment and Controls WR carries out a range of business activities (other than sedentary office activities) that may subject employees to an increased of risk of personal injury. These activities involve entering and working on a wide range of different premises’ throughout the UK and includes but is not limited to the following list: • • • • • • • • • • • • • Vacant land Part built sites Completed sites ( vacant and occupied ) Residential premises Commercial premises ( Industrial Offices and Retail) Hotels Horse racing courses Marinas Caravan parks Airports Fishing lakes Car show rooms Abattoirs The RBS Group takes its responsibilities very seriously in terms of employee protection and under no circumstances should employees engaged in any Group activity place themselves in potentially dangerous situations or contravene the advice given in this assessment. The purpose of this risk assessment is to ensure that the hazards associated with such activities are identified and assessed and that that required controls are put in place to prevent injury or harm to RBS employees and those working on behalf of RBS. The physical activities undertaken during visits to these premises may include: • • • • • • • • • • • • • • • • Entering the property and adjacent properties not owned by RBS Climbing Scaffolds Entering Basements Entering Plant rooms Entering occupied premises Accessing roof spaces and roofs Using a Cherry picker or similar equipment to access roofs Accessing upper floors, basements, loft spaces using ladders Taking photos and notes during inspections Entering dark spaces due to lack of lighting Inspecting partially completed sites Using a boat ( owner operated) to inspect harbour walls and groynes Travelling to sites by car or by public transport including trains, buses and planes Abseiling to inspect facades Using window cleaning cradles Entering food preparation and handling areas e.g. abattoirs As there are a wide range of potential hazards associated with the many different activities on the sites visited, this risk assessment looks at the generic hazards that are associated with the different premises and advises on the general controls that need to be put in place It should be noted that whilst this document can serve as a useful reminder of the hazards identified and the controls that the Group has put in place each visit may present different hazards on arrival at the location. How those hazards manifest themselves will have a bearing on how best to address or control them in the field. This section should be used as a basis for that dynamic field review. 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Eta--no 922m mwm>oEEw wva 926; Sn $252282 2 3:3, 2 23 $332 2: 22. 3.3.62 3 2.5% "22% 0231022 $2.3 is 2228" 25222.3 2: 2 8.82228 .22 252325 32: 2 $822 23 is 2: 2 22m: 2: 95 22% 5; 852:8 ma via-.3 :mawmxm'mjo: 5 32.6mm d6 mE--m--cm'meQ 26 vwajuuo wcfitw--fi cmfi>> 22m $2395 .223 a 23 GBP5 332m $222; 2836: on $33 2922 2 a 29: a 22 2322: Ea 8 2,2sz 2 322$. 22% 822; :22, 52 a $5.32 2m 2 V62 25 21225232 323 2m 22. $222 5323. $2225 .o 223 2523 2 2322 2289 225 5 is; 233.38: 3.28 via223 293223 22 22 Em 2222; m2 5 23; 22. 2 22222.2 25 is 92222,582: 223 2222 2: as 28. 8238,25, .5222 222.2522. 225 223232 5:2: 92.6 25 2:2: :23 wEwmno a. mwm>oEEw mm! mmeU 9.2.6 5 ca {03 gm 2wEw 0:3 :m 22$ 9: 23% 2 225mg :o 3.5 cm 9 zuam mm mwima En "5:25 cosfimqo 2.22:6 Em fix. mwimqoi a. w; >mE Emfib $382 26:2 25 29238 55 .2228 22353 22 35$ 25 22 .2. 2235 .38 :3 222%". :25 85: 2.22125 2 22, 253 22% 2:52, 8.28% as 2,222 2 GBP35 935:2 oE, 225v $on ma :5 xm: Em 5. man; we; 33:55-- mmhsumoohl a Ammvv LmumEmm 010 West Register Author: Ben Deacon Climbing scaffolding Assessing development sites that may be derelict or partially finished Entering Development sites and other property and or adjacent properties which may not be owned by RBS Injury and ill health from improper use of work equipment Using work equipment Bangs to the head or other body parts from low scaffolding or from dross moving through across confined spaces Cut and lacerations from rough sharp edges of scaffolding Falling from height Risk of injury from unfinished or part completed development site Risk of injury from Guard Dogs Risk of injury through accessing properties via other property / land Injury and Ill health through improperly maintained wok equipment Hazard Work Activity Page 45 of 101 The Information Classification of this document is INTERNAL 1 April 2011 Do not carry items when ascending scaffolding ladders unless securely fastened and both hands are free facilitate climbing Don’t climb outside the scaffolding, e.g. on handrails Only use fully complete, properly erected scaffolding for access, Inspect the scaffolding tags to ensure it has been checked recently and is safe to use. Never enter lift shafts or use lifts that are not fully in service Never enter confined spaces ( separate specific risk assessment needed – see main body of report ) Never enter excavations that are shuttered or barriered Take into account all local hazards associated with the development site such as unsuitable flooring or walking surfaces, missing hand and guard rails, stored loads, residual chemicals, obstructions and any other observable hazards. Carry out your work based on this knowledge of the hazards identified. Wear any PPE required and if not specified by local rules wear basic construction site PPE – Hard hat, high visibility vest, safety footwear Ensure that permission is sought where its required for entering any premises that is not owned by RBS – when entering the property or adjacent property ensure that there are no guard dogs, or other security controls that might cause harm. Any equipment that is not new must be tested prior to being issued. All portable electrical appliances supplied for the work activity will be added to the company’s PAT testing and examination programme. All equipment must in good working order and regularly inspected for defects and taken out of service if defects are found guarded around all edges and the roof construction is non-fragile.. Employees should be accompanied by another member of staff, or by a site representative. If using a site representative, this should be arranged prior to attending site. RBS is responsible for all equipment supplied to their employee. The employee must be able to use the equipment without exposure to danger or risk to their health and safety. Where work equipment is provided appropriate training must be carried out Control Measures in place or to be put in place GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Use of a Mobile Assessing and working roof spaces Entering into plant rooms Entering into basements Work Activity Falls from height Fall from heights Collision due to poor light Falling through the roof or openings Slips trips falls Collision with plant and equipment Exposure to chemicals Hot and cold surfaces and pipes Excessive noise Slips trips falls Bump hazards due to low ceilings Colliding with objects equipment due to inadequate lighting Potential for wild animals or trespassers to be present in such places Potential for asphyxiation due to noxious atmosphere Hazard Page 46 of 101 The Information Classification of this document is INTERNAL 1 April 2011 Do not climb onto any equipment, racking or piping without appropriate access equipment Ensure all assess equipment is suitable for accessing the roof space or roof safely Ensure adequate lighting Do not walk on the roof space floor unless it is designed for it Take care to observe roof openings, vents and other holes where you might fall through Do not work close too or approach the edge of roofs as there may be no edge protection Do not operate the controls; these are only to be operated by trained operators. Do not touch or sample any chemicals Know how to get out of the plant room in case of emergency Do not interfere or tamper with plant and equipment Stay on designated walkways Ensure PPE is worn where required including hearing protection Be aware of the atmosphere conditions and do not enter the basement if there is a smell of gas, chemicals or other readily identifiable substances Listen for animals and or trespassers and make noise to ensure the area is not inhabited and allow time for it to be vacated Enter the basement slowly and take care to pick out appropriate safe pathway into and out of the basement Ensure there is adequate lighting before entering and use a torch if there are no lights Wear PPE when required or where a local assessment requires it Where scaffolding is incomplete or has obvious defects or has not been used in some time this should not be accessed until a thorough inspection has taken place and the scaffolding is deemed safe to use Wear appropriate PPE at a minimum hard hat and gloves and safety footwear to provide a firm footing and a non slippery shoe sole Ensure any work equipment is not able to fall or drop from the scaffolding Control Measures in place or to be put in place GRG West Register (GB) Policy & Procedures Manual Risk of collision with equipment or building materials, or falling on uneven surfaces Risk of injury in partially completed sites on uneven footing or ladders or dark spaces Entering dark spaces on partially complete sites without electricity Taking photos and notes during the Inspection West Register Author: Ben Deacon Potential for burns from ovens, hot oil, Potential for collision with staff and equipment working in the kitchens Potential exposure to food waste and pathogens from uncooked meats Dropping items on people below from unsecured equipment Falling from height whilst using a ladder Hazard Entering into food preparation areas Elevating Work Platform (MEWP) or cherry picker to access roofs or other high fixtures and fittings Access upper floors, basements, loft spaces using a ladder Work Activity Page 47 of 101 The Information Classification of this document is INTERNAL 1 April 2011 Stand on firm stable ground and do not walk around or work from ladders when talking photos or notes If travelling alone ensure that someone is aware of your movements and can raise the alarm in the event of an emergency Always ensure that photos and notes are taken in a position that does not put you at risk of injury Ensure that exits are known and that everyone can get out of the area in an emergency - Carry a mobile phone to stay in communication Don’t handle food waste in the food preparation and other associated areas Ensure that temporary lighting is put in place for the duration of all visits to dark areas - this includes appropriate portable torches and lamps Do not handle any raw meat or produce Do not interfere with or use any equipment or implements in the food preparation areas Follow all local rules and safety requirements including hygiene precautions such as overalls, gloves and hair nets when entering such areas Ensure where possible all ladders are tied off at the top Two people required if they are not secured - foot the ladder firmly at the base ( by another individual) Only use on firm stable ground Apply three points of contact at all times when ascending or descending Do not work from ladders they are for access and inspections not a working platform Carry all items in a back pack (rucksack)or other suitable method to keep hands free No more than one person on a ladder at any one time Wear appropriate footwear with suitable heel and sole grip Always wear a harness when using MEWPs or Cherry pickers Do not stand on the guard rails Do not climb out of the MEWP or Cherry picker Use this equipment for inspections only and do not use it to access high areas of buildings or roofs Control Measures in place or to be put in place GRG West Register (GB) Policy & Procedures Manual Risk of drowning if you fall overboard or hypothermia if exposed to cold water for long periods Risk of injury and death due to known road user hazards Using a boat (owner operated) to inspect harbour walls, groins Travelling to site in own car or hire car, or by public transport (trains, planes, buses Risk of falling from height Use window cleaning cradles West Register Author: Ben Deacon Potential for serious injury due to falling from a height or collision with obstacles during the abseil Abseil to inspect a facade Risk of harm due to public unrest / terrorist activity in some counties Hazard Work Activity Page 48 of 101 Never climb on to the guard rails or out of the cradle The Information Classification of this document is INTERNAL 1 April 2011 These cradles must only be operated by competent, trained staff who are familiar with their use All equipment must be inspected prior to use and emergency provisions must be put in place due to the high risk nature of this activity. Group H&S and WR H&S Officers to be notified prior to commencing or planning such activities. Use of these cradles requires the use of PPE such as hard hats, safety footwear and high visibility vests as well as being harnessed into the cradle. This activity should not be undertaken unless you are trained in abseiling procedures and that an approved Abseiling Contractor is overseeing the descent Do not travel to any international location without prior arrangement from the appropriate level. All international travel needs to be booked through the RBS group travel desk Always follow the boat owners local rules Never operate the boat or craft without appropriate training and licensing Always wear flotation devices provided Take particular care embarking and disembarking from the vessel Stay with the protective railings of the craft (if provided) Ensure clothing that is suitable for ambient weather conditions and water temperature is warm Follow the group Driving Policy and Travel policies for all other methods of travel Control Measures in place or to be put in place GRG West Register (GB) Policy & Procedures Manual GRG West Register (GB) Policy & Procedures Manual All employees should be aware of the RBS group Safety policies currently in place http://www.group.rbsgrp.net/hr/Health_Safety/Default.asp The PCM should: • Ensure that the controls and suggested controls in the tables in this risk assessment are actioned (if not already in place); • Ensure that all employees who carry out such activities are aware of the hazards and the controls in this assessment by giving suitable briefings, awareness or training; • Review this assessment regularly to ensure it’s kept up to date and other activities are assessed as they are identified; and • Equip themselves with a simple personal safety pack to take on such visits. Based on the generic hazards this could include, a hard hat, gloves, high visibility vest, protective footwear, Safety glasses, torch, earplugs and a whistle or other device for attracting attention and a back pack for keeping cameras, notepads and other equipment safe when negotiating uneven ground or ascending ladders. In summary, the safety basics include: • • • • • • Let some one know where and when you are visiting and returning from site; Assess the area locally when you arrive; Follow the local safety rules (if there are any); Wear any PPE when required; Know what to do if you or someone else is injured; and Know how to get to safety in the event of an emergency. RBS Group H&S Website Links: Lone working Accident Reporting Supplementary Risk Assessment Driving on Business West Register Author: Ben Deacon http://www.group.rbsgrp.net/Grphr5/Health_and_Safety/Lone_Working/default.htm http://www.group.rbsgrp.net/Grphr5/Health_and_Safety/Accident_Reporting/default.htm http://www.group.rbsgrp.net/Grphr5/Health_and_Safety/Supplementary_Risk_Assessmen t/default.htm http://www.group.rbsgrp.net/hr5/Health_and_Safety/Driving/default.asp Page 49 of 101 The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon Applicable all the time Applicable some of the time Case Introduction & Review Lapsed Deals Asset Acquisition Approval Process Bid Submission Process Deal Execution Process SCR Process APS Approval Process Health & Safety Process Security Process Supplier Selection Process Asset Manager Appointment Process Management Accounts Review Process Facility Amendment Process Payment Approval Process Fair Value Process Dealing with the Media Asset Disposal Process Disposal Review Process Management Information Deal Lifecycle & Process Page 50 of 101 Asset Acquisition APP Approval – Completion Pipeline Deals Notification – APP Approval The chart below demonstrates which processes are applicable at each stage of the deal lifecycle. 21.9. Procedure Map GRG West Register (GB) Policy & Procedures Manual Sale Asset Disposal The Information Classification of this document is INTERNAL 1 April 2011 Completion – Sale Asset Management West Register Author: Ben Deacon Update REMIT Status J Lapsed Deal NPV too low Deal restructured RTS’d Below De minus of £250K Update REMIT Status A Pipeline cases NPV Given To GRG RM Update REMIT Status B Engage with Deal Execution Team APP Production APP Approval Bid Unsuccessful Update REMIT Status C A or B committee Minutes by GRG Central Operations APP Rejected at Committee NPV Calculation given to the GRG RM APS Approval to acquire asset Pipeline Cases & Asset Acquisition Approval Process GRG RM & PCM Signed APP Bid should be blind and only allowed to bid once Via written bid letter – signed by one authorised signatory Bid Submission 21.9.1 End to End High Level Processes Process Maps West Register Case Lifecycle 21.10. Bid successful Update REMIT status GRG West Register (GB) Policy & Procedures Manual Bid accepted in writing by Receiver Asset Acquisition - Completion date - Traffic light Deal status commentary Purchase complete Accounts opened and limits set by WR Finance Maintain record of cash generated on disposal of property Prepared by WR Finance Management accounts WR Finance Deal complete Update REMIT status F Page 51 of 101 Due Diligence Information tab in REMIT Webform submission APS Approval for costs and realisation expenses Deal Execution Completion Checklist - Due Diligence Issues list - Handover checklist - Pre-completion memo - Victory email Deal Execution Team Sent to WR Management Account Review Process - APS Approval - Authorised signatories - Capitalise costs? Payment Approval – Invoices - Case folder (signed APP) - APP Cost Tracker - REMIT information - Sanctioned cost report Asset Management Checklist Frequency of review set by traffic light SCR with Real Estate expert as chair and panel Asset Review Process Asset Management If sanctioned limits (Capex or Opex) are - APS Approval - Internal Authorisation Asset Disposal Asset Disposal Property sold Disposal Review Process Finalise the net cash recovery The Information Classification of this document is INTERNAL 1 April 2011 Disposal Review Form submitted to WR Finance Facility Amendment Process review Decision to sell by Primary case manager PCM West Register Author: Ben Deacon END Record cases that lapse or NPV too low in REMIT Keep REMIT up to date for MI New case assigned Page 52 of 101 Archive email in central mailbox Set up case in REMIT Review case details and assign Primary Case Manager (PCM) New case received Send calculation to GRG RM Save calculation in case folder & pipleline / APS NPV folder Prepare calculation NO BRG refer case for NPV calculation BRG Case? Email details of new case to West Register mailbox Case Introduction and Review 3.1 21.9.2 Case Introduction and Review GRG West Register (GB) Policy & Procedures Manual GRG RM Primary Case Manager WR Central Resource Property Advisory (PCM) Team Unit YES AAP (6.1) The Information Classification of this document is INTERNAL 1 April 2011 END NO NPV calc accepted? West Register Author: Ben Deacon Signed APPs and pre-completion checklist received Signed APPs Received A Committee approves APPs >£5m Circulate APP to WR Executive committee Engage Deal Execution Team for summary of due diligence issues YES NPV calculation accepted? NO END Bank Account opened Completion occurred within 6 months of APP approval date? B Committee approves APPs <£5m Obtain APP template from template folder NO Asset Acquisition Approval Process 4.0 Page 53 of 101 YES Signed APPs scanned and emailed to GRG Finance together with pre-completion checklist Signed APPs passed to Head of DETM Complete Template to include - Property information - Cashflow information - Target return - APS facility information - Price to beat - Backgound information APP submitted via webform for APS approval 21.9.3 Asset Acquisition and Approval Processes GRG West Register (GB) Policy & Procedures Manual GRG RM Primary Case Manager WR GRG Deal Execution Executive Central Team Committee Operations GRG Finance Update REMIT to status B The Information Classification of this document is INTERNAL 1 April 2011 Submit APP to GRG Central Operations West Register Author: Ben Deacon 21.9.4 Bid Submission Process Page 54 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 21.9.5 Asset Acquisition Process Page 55 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 21.9.6 SCR Process Page 56 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 21.9.7 External Suppliers Page 57 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon Invoice received and stamped Identify case from details held in REMIT Invoice Approval and Review Process 10.1 Page 58 of 101 Identify if spend is Capex, Opex or Acquisition costs or Disposal Fees 21.9.8 Invoice Approval and Review Process Email request for approval Once approved, invoice is paid and picked up in Management Accounts Review Process Scan invoice and enter in to IPOS Pass signed invoice to Finance for processing The Information Classification of this document is INTERNAL 1 April 2011 Sign declaration to confirm spend will not exceed sanctioned limits Use cost tracker to check spend is within sanctioned limits GRG West Register (GB) Policy & Procedures Manual Primary Case Manager (PCM) GRG Finance West Register Author: Ben Deacon Page 59 of 101 21.9.9 Management Accounts Review Process GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 21.9.10 Facility Amendment Process Page 60 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 21.11. REMIT Training Slides Page 61 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 5 Page 62 of 101 easily referenced by any West Register team member. The Information Classification of this document is INTERNAL 1 April 2011 • REMIT provides a common central location for the basic key information relating to each case that can be actual workload of the team (in terms of cases and value). • Accurate data, both in the pipeline and under management, allows West Register to properly demonstrate the reflects badly on the team when compared to other parts of GRG. • The data in REMIT drives the weekly and monthly reporting to senior GRG management and inaccurate data Why is it important? • REMIT is not a duck. recently referred to the team and being evaluated as potential buy-ins to those purchased and under management and those that never make it into the portfolio.) • REMIT encompasses the entire West Register pipeline (from those cases • The system is used solely by West Register Access database that holds the basic banking and property information for each case referred to the West Register team. • REMIT, or in full the Real Estate Management Information Tool, is a Microsoft What is REMIT? What is REMIT and Why is it Important? GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon O REMIT, REMIT, wherefore art thou REMIT? Deny thy macro and refuse thy access; Or if thou wilt not, be but sworn my love and I'll no longer be a Case Manager. I love REMIT as much as penguins love fresh fish. Penguins love fresh fish but can get eaten by sea lions. Penguins cannot fly in the air but can slide on the ice. Chapter 2 Chapter 1 Page 63 of 101 5 their position in the pipeline. This is further illustrated in the following 2 slides. The Information Classification of this document is INTERNAL 1 April 2011 • Although the Case Status is held within the Case page, in essence it creates the chapters within REMIT, by allowing cases to be grouped by Informational Tabs (green section below) and the General Information Bar (the grey section above the tabs). These hold the detailed property and bank information for each case. • Visually, REMIT is set up such that each Case has its own page on the screen (red section below). Within the Case page, there are 5 organised by 3 main subdivisions. These are Statuses, then Cases, then Informational Tabs. • Perhaps the simplest way to visualise how REMIT is structured is to think of it like book. • In the same way a book is divided into chapters, which are subdivided into pages, which are further subdivided into paragraphs, REMIT is How REMIT is Structured? GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon ‘A – Case Under Review’ APP rejected at committee ‘E - Case Completed and Under Management’ Case subsequently falls away during legals Page 64 of 101 6 Entire asset sold (not individual components*) Purchase of asset is completed ‘D - APP Approved - Bid Accepted and In Legal Docs’ West Register bid accepted and legals commence ‘C - APP Approved - Bid Not Yet Accepted’ APP approved at committee ‘G - Sold’ ‘F – Lapsed’ The Information Classification of this document is INTERNAL 1 April 2011 * Individual unit / plot sales dealt with at the demise level No opportunity to add value APP discontinued in light of further information and discussions with GRG Case meets West Register buy-in criteria and an APP is started Add case to REMIT using ‘Quick Case’ ‘B – APP Being Prepared’ Case Referred to West Register from BRG/RER/R&L How to Classify Cases Throughout the Buy-in Process GRG West Register (GB) Policy & Procedures Manual Quick Case Information What Data Gets Updated? West Register Author: Ben Deacon Case Manager Key Transaction Dates and Deal Ex Tab Page 65 of 101 7 APP Approval Date and Deal Ex Manager Case, Property and Banking Information from APP Deal Ex Team & Case Manager F - Lapsed E - Case Completed and Under Management D - APP Approved - Bid Accepted and In Legal Docs C - APP Approved - Bid Not Yet Accepted Sale Date and Value or Lapse Information Maintain Property and Case data and Advisors Tab, Traffic Light, Account Details, Further Key Dates The Information Classification of this document is INTERNAL 1 April 2011 * reporting weekly changes to Pash/Decs Case Manager Case Manager * G - Sold Asset Sold Asset Purchased Docs Received Bid Accepted Case Manager & Deal Ex Team B – APP Being Prepared APP Approved Case Manager A – Case Under Review Case referred to WR Who Updates REMIT? Status Key Dates Overview of Case Lifecycle and Corresponding REMIT Responsibilities GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Town, Street or Building Name Full Case Connection Name* Full Case Connection Name* Case Name Connection Name Page 66 of 101 8 The Information Classification of this document is INTERNAL 1 April 2011 All people names should follow the convention LAST, First (note: it is possible to free type a name if it is not available in a drop down box) * Use the EXACT same connection name in REMIT as is used n the APP Full Case Connection Name* Under Management (E) Pipeline (A – D) Naming Conventions • Obeying the naming conventions is critical because searching in REMIT requires exact matches. Deacs to explain what changes have been made. This is necessary so that all movements in the data can be explained accurately in the reporting each week. • If one makes any changes to the property data under management it is vital that you drop a note to Pash and • Any changes made to REMIT are instantly updated and so there is no need to click the save button. General Points to Remember When Using REMIT GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Page 67 of 101 Filling Out the Data GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 2 1 3 Page 68 of 101 10 • REMIT is located on the shared drive (eurofiler7) in GRG Real Estate\Database Opening REMIT GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 Adds a new case within full case view Deletes all entries in search filters Applies filters West Register Author: Ben Deacon Page 69 of 101 11 • Before starting a new search, it is best to hit the Clear Filters button to get rid all the existing search inputs. Residential and Town as Leicester and then hit Filter Records. The Information Classification of this document is INTERNAL 1 April 2011 • It is possible to search using multiple fields (e.g. if you want to know all the residential team cases in Leicester, one can filer WR Silo as Street, Leeds into the Case Name bar, there will be no matches.) • The search function will only match EXACT searches (i.e. if you are looking for the Leeds, Concorde Street case and you type Concorde Search filters Using the Search Bar GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Must be less than 255 characters LAST, First Just enter random numbers • When? As soon as a case is referred to West Register • Who? Case Manager Quick Case Connection name can be new free text OR selected from a dropdown if the connection already exists Page 70 of 101 12 The Information Classification of this document is INTERNAL 1 April 2011 Case Status can be assigned straight to ‘F – Lapsed’ where it is immediately apparent that WR cannot add value. Cases that are referred to WR with short notice can be assigned straight to ‘B – APP Being Prepared’ GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon General Information and Case Tracking Tab Page 71 of 101 13 What Quick Case Looks Like in Full Case View GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon Property Information Tab Page 72 of 101 14 What Quick Case Looks Like in Full Case View GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon • Original Connection Administration, Consensual) • WR Company • Purchased via (LPA, (if already known) • GRG Case Manager • WR Deal Ex Manager Manager (if applicable) • Secondary Case Remaining General Information into REMIT without any further enquiries. 15 Reporting Classification APS Deal Core/Non Core CIS Code(s) Originating Division Remaining Debt (proportioned to particular property/properties) VAT & Headroom Sanctioned Capex Sanctioned Opex Sanctioned Acq Costs Page 73 of 101 • • • • • • • • • • Financial Information Tab – the yellow boxes • • • • • • The Information Classification of this document is INTERNAL 1 April 2011 Demise/Unit Level Property Details – Unit/Plot Name – Area (sq ft) – Number of Units – Property Type – Property Detail – Income, ERV & Ground Rent – Sale Value and Date – Demise/Unit Status Confirm Price to Beat Confirm Bid Price Site Tenure Site Area (acres) Full Address Property Information Tab - basic property and demise detail • All of these inputs are required in order to present an APP and hence should be available to the Case Manager to enter (found via the Case Maintenance button) • Upon completion of the APP the Case Manager must fill out the following information on the expanded case page B - APP Being Prepared GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon General Information B - APP Being Prepared Page 74 of 101 16 GRG West Register (GB) Policy & Procedures Manual Financial Information Tab – the yellow boxes Property Information Tab basic property and demise detail The Information Classification of this document is INTERNAL 1 April 2011 Remaining General Information West Register Author: Ben Deacon Page 75 of 101 19 A Note on Adding a New Property and New Demise GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 To scroll to the end/beginning of the properties within a case use the triangle button with the vertical line To scroll between properties click the triangle button To add a new property (i.e. the address line and corresponding demises) click the button with the triangle and the * PROPERTY: A new line will appear as soon as any data is entered into the blank sections To add a new demise line simply enter new data into the blank line (indicated with a *) DEMISE: West Register Author: Ben Deacon Page 76 of 101 20 C - APP Approved - Bid Not Yet Accepted GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 has been approved, Case Manager should key in the APP Approval Date and liaise with Deal Ex (if not already done) as to who the Deal Ex Case Manager will be. • Once JMR confirms that an APP West Register Author: Ben Deacon Light, see Traffic Light Key slide in Appendix • For definitions of Deal Ex Traffic out the Key Dates below. • Deal Ex also responsible for filling be filled out by Deal Ex Case Manager as running summary of the key issues and status updates. • Due Diligence Information Tab to Page 77 of 101 21 D - APP Approved - Bid Accepted and In Legal Docs GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon Page 78 of 101 22 The Information Classification of this document is INTERNAL 1 April 2011 • Account Details: One off addition of the bank account and sun code details (these can be obtained by asking Finance at time of purchase.) Key slide in Appendix. • Asset Management Traffic Light: Ensure this dropdown is correct on Case Tracking tab. For definitions of Asset Management Traffic Light see Traffic Light • Key Dates: Ensure under management dates on the Case Tracking Tab correct. – Third Party Advisors: When third parties are appointed (lawyers, agents, managers etc) update their details in the Advisors tab. – Property Information: Ensure that any changes to the demise status are updated on a timely basis (i.e. changes to planning, changes as units get built, updates to lettings and sales etc.) – Maintaining an accurate snapshot of the property portfolio under management is vital for the quality of the weekly and monthly reporting. Please remember to inform Pash/Deacs when changes are made to demise data in order that these can be accurately reflected in the reporting. – A wise old Dutch mongoose once said “hard days banking can never be complete without a full set of accurate reports for management.” May we all abide by this shrewd and enlightening observation. Case Manager is then responsible for maintaining the following key information: • Upon acquisition the Case Manager must update the case status to ‘E - Case Completed and Under Management’. Over the course of the hold period the E - Case Completed and Under Management GRG West Register (GB) Policy & Procedures Manual 4. Case and Connection Name (the same) 5. Case Details 6. Address/Location Info Case Restructured - Provide the WR indicative bid if devised. Below deminimis £250k - No info required • • West Register Author: Ben Deacon Page 79 of 101 23 West Register successfully bid £1.2m for a property, with best external bid of £800k. The deal-ex team then instructed lawyers and cleared various title notices, investing significant time and expense. A subsequent bid was accepted at £1.35m in light of the clean title and WR were unable to match this bid. The value added was therefore £550k, being the difference between the two external bids. If you believe that WR's work added value please quantify this here. For example ... B) Value Added No opportunity to add value - where WR NPV was too low - no formal bid made. Provide the WR indicative bid and external bid. • The Information Classification of this document is INTERNAL 1 April 2011 (b) WR's proposed bid that was not actually carried forward (a) WR's actual bid; or Bid price is either, depending on the scenario, E) Bid Price Price to beat is the external bid for which the property eventually sold (need to liaise with R&L/BRG to confirm this figure) D) Price to Beat From the Property Tab The date that the case was lapsed on REMIT There are 4 options Outbid by external bidder - where WR made a formal bid but did not end up purchasing. Provide the WR indicative bid and external bid. C) Sale / Lapse Date A) Reason for Lapse • From Case Tracking Tab From the General Section (grey area of the top of the REMIT screen) 2) SPECIFIC INFORMATION REQUIRED FOR LAPSING CASES 1. Case ID 2. Primary RM 3. Case Status The basic information that would be inputted from Quick Case 1) BASIC CASE INFORMATION When lapsing a case, the MINIMUM information required is as follows: F - Lapsed GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon F - Lapsed C Page 80 of 101 24 GRG West Register (GB) Policy & Procedures Manual D E The Information Classification of this document is INTERNAL 1 April 2011 Awwwww, it’s a sleeping panda .. lapsed and no longer active. A B West Register Author: Ben Deacon • These are divided into Pipeline and Assets Under Management. Page 81 of 101 25 The Information Classification of this document is INTERNAL 1 April 2011 • Pre-programmed into REMIT, there are a number of useful reports that can be accessed through the Reports button on the opening page. • The accuracy of the reports of course depends on the accuracy and completeness of the information. variables. • Based off the data contained within each case page, REMIT can be used to generate any number of summary reports across a given set of Reports GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon 4 3 5 2 1 Pipeline Reports Page 82 of 101 26 The Information Classification of this document is INTERNAL 1 April 2011 5. Returns graphs showing the number of cases per WR team member (according to the REMIT data) 4. In essence a summary report of all completed transactions. Returns a list of all deals under management but with the same variables as #3 3. Returns a list of cases in the Deal Ex pipeline (C and D) with a selection of summary information (e.g. key dates, case managers, status update etc) 2. Returns the same data as #1 but in a pre-designed report format 1. Returns a list of all the cases in the pipeline (A and B) with a selection of summary information (e.g. brief description, bid/value, case manager, date case opened etc) in a format ready to export to Excel GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon 2 1 3 5 4 Page 83 of 101 27 Assets Under Management Reports The Information Classification of this document is INTERNAL 1 April 2011 5. Returns a list of all cases and the key APS information (CIS codes, APS?, Originating Division etc) 4. Returns a list of all cases and their associated sanction limits 3. Returns a list of all the units allocated to WR letting agents (this is driven by whether an agent reference has been entered at the demise level – if the agent reference is blank then the units will not be picked up in this report) 2. Select either ‘All Cases’ or a specific team from the drop down box and List Properties returns a list of the demise level entries (i.e. every unit listed within a case) with the basic property and location information 1. Select either ‘All Cases’ or a specific team from the drop down box and List Cases returns a list of the cases with the key case information including bid price, sanction limits, case managers, purchase date, connection name etc GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon The Invoice Log Page 84 of 101 29 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 – By going to GRG Real Estate\Database one can access the entire Invoice Log for all cases by opening the INVOICE LOG file – Via the case page on REMIT: Click the View Invoice Log button on the Financial Information tab. This will return a list of all invoices that have been paid in relation to the specific case selected system: • There are 2 ways to access the runs parallel to REMIT where GRG COO log all the WR invoices that have been processed and paid • The invoice log is the system that West Register Author: Ben Deacon Some More Invoice Log Page 85 of 101 30 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 to the full invoice log as well • The same search method applies specific, enter the log and press Ctrl + F. This will bring up the window highlighted in red below. In order to search the entire log make sure that the ‘Look In’ dropdown has “fromInvoiceLog” selected. Then type the detail you are searching for (i.e. an amount or invoice number) in the ‘Find What’ box • In order to search for something invoice log for Great Leighs • The example to the left shows the West Register Author: Ben Deacon Appendix Page 86 of 101 GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 D4 - Freehold sold D5 - Leasehold sold C3 - Under offer for rent C4 – Let C5 – Unlettable B2 - Part built - pre-works DD B3 - Part built - pre-works tendering B4 - Part built - on site works A3 - Plot with detailed planning Completed units where the intention is to sell. Also encompasses all sold units (D4 and D5), as well as units where WR holds the freehold to previously sold leaseholds prior to purchase (D6). D Page 87 of 101 The Information Classification of this document is INTERNAL 1 April 2011 Completed units where the intention is to let. C West Register Author: Ben Deacon Only units that are part built are included in B1 and B2. The B2 category is where WR purchases part built units and is now considering whether to complete the build and how best to proceed. If WR decides to build out a scheme (either part built or not previously under construction) use B3 and B4. B 32 Broad category for sites/plots of land. For reporting purposes this level of detail is sufficient (note: more work is required to verify the accuracy of the current data on REMIT) D6 - Ground rent purchased D3 - Under offer for sale D2 - Marketing for sale A Degree of Completion C2 - Marketing for rent D1 - Minor works prior to sale A2 - Plot with outline planning C1 - Minor works prior to rent B1 - Part built – mothballed Completed Being Sold A1 - Plot only Completed Being Let Unfinished/Being Built Site/Planning Only Demise Status Categories REMIT Classifications for Demise/Units GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon • The second takes the an aggregate approach. (because there is only one office) Page 88 of 101 33 The Information Classification of this document is INTERNAL 1 April 2011 • Both methods are acceptable. The first lists the individual tenants and their individual rents but note only the top line has a positive unit entry Method 2 Method 1 • A single office building with 4 tenants. Filling Out Multi Tenanted Commercial Spaces - Part 1 A Note on Entering Commercial Units GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon • There is no aggregate solution in this scenario. Page 89 of 101 34 one building shares multiple use classes choose the primary space as the line to put the unit on. The Information Classification of this document is INTERNAL 1 April 2011 • As with the previous example note that only one entry needs a positive unit number as there is only one industrial shed. In instances where • An industrial shed with ancillary office space Filling Out Multi Tenanted Commercial Spaces - Part 2 A Note on Entering Commercial Units GRG West Register (GB) Policy & Procedures Manual – All the 2 beds are 750 sq ft and all the 3 beds are 950 sq ft – Passing rent for a 2 bed = £650 pcm and for a 3 bed = £775 – ERV for a 2 bed = £675 pcm and for a 3 bed = £800 West Register Author: Ben Deacon Page 90 of 101 35 Method 2 – Individual Unit Entries (slightly longer to enter but much simpler to maintain over the long run) Method 1 – Grouping (slightly quicker to enter but more fiddly to manage) – 8 are let (5 x 2 bed and 3 x 3 bed) – 2 are vacant • Example Property: 10 flats (5 x 3 bed and 5 x 2 bed) Example Uses Completed Residential Stock The Information Classification of this document is INTERNAL 1 April 2011 Note: The same methods can be applied to units under construction OR planning permissions – the more detail on REMIT, the better our reporting and fundamental understanding of our portfolio A Note on Entering Demises Individually or in Groups GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Page 91 of 101 36 • Also for hotels income data should be read; Income ≈ EBITDA and ERV ≈Stabilised EBITDA – Number of beds – Whether it is Let or Managed (not applicable for planning only or unfinished) • Important variable that are required when entering a hotel onto REMIT are: A Note on Entering Hotels GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon 1) WR owns leasehold units – WR owes ground rent to freeholder during the hold – Unit is classified as normal depending on let/vacant status but with Ground = annual ground rent owed to Freeholder (negative entry) – At point of sale Demise Status = Leasehold Sold – Ground = £0 If Site Tenure = Leasehold 3) WR owns freehold units and then sells them leasehold – During hold period unit is classed as usual depending on let/vacant status – At point of sale Demise Status = Leasehold Sold – Ground = enter the annual ground rent owed to WR (positive entry) 2) WR owns freehold units and then sells the freehold – During hold period unit is classed as usual depending on let/vacant status – At point of sale Demise Status = Freehold Sold – Ground = £0 1) WR has only acquired ground rent investments – Demise Status = Ground Rent Purchased – Ground = enter the annual ground rent owed to WR (positive entry) If Site Tenure = Freehold At Point of Sale: During Hold Period: At Point of Sale: During Hold Period: At Point of Sale: During Hold Period: Page 92 of 101 37 A Note on Selling Units and Entering Ground Rents GRG West Register (GB) Policy & Procedures Manual The Information Classification of this document is INTERNAL 1 April 2011 West Register Author: Ben Deacon Property 2 Property 1 Page 93 of 101 38 The Information Classification of this document is INTERNAL 1 April 2011 accurately, there are 2 properties, the first with the 4 flats and a value of £230,000 and the second with the commercial unit and a value of £90,000. Note that it is only necessary to fill in the Site Area and Tenure on 1 of the properties. • In the below example WR purchased a building with 4 flats over a shop for a total of £320,000. Whilst this is only one site, in order to capture it other which holds the commercial units and their associated value. • To do this, one has to treat the building or permission as 2 properties, one which holds the residential units and their associated value and the use classes on REMIT (i.e. a site with planning permission for offices and houses might have a total bid of £10m of which £8m relates to offices and £2m to houses – as WR reports value in terms of residential and commercial, it is therefore necessary to show the £8m and £2m breakdown on REMIT not just the total £10m.) • In these instances, although WR will bid a single price, it is important to show the different components of the bid price, broken down by their with a mix of commercial and residential use, a site with a planning permission for commercial and residential use or a site with an existing mix of commercial and residential buildings.) • The way REMIT is structured means that a slight complication arises when trying to capture value on a mixed use scheme (either a building A Note on Capturing Value in Mixed Use Schemes GRG West Register (GB) Policy & Procedures Manual Straightforward case - expected to complete imminently Few, if any, major issues discovered to date – expected to complete according to regular 28 day timeframe Complicated case where a number of significant issues were uncovered in the due diligence stage – remote chance of imminent completion West Register Author: Ben Deacon Page 94 of 101 38 Passive asset management only (i.e. being managed by external agent) Active asset management required The Information Classification of this document is INTERNAL 1 April 2011 Includes: (1) cases over £25m (2) cases with active development (3) cases with accounts over limit (4) cases receiving media interest Time intensive active asset management required. Assets Under Management Deals In Docs Traffic Light Keys GRG West Register (GB) Policy & Procedures Manual Previously KUC Grantmaster Bletchley * 50% .JV 50% .JV 50% .JV 100% 100% 50% West Register Author: Ben Deacon Note: Numbering cross references to the appended list of RBS directors Partner in limited partnership No directors from RBS Dormant Entity [D] To be acquired from another RBS subsidiary JV with KUC Properties Ltd Subsidiary (direct or indirect) of KUC Properties Ltd [n] Key: Dixon Mount Pleasant13 Developments Ltd 5 West Register (Hotels No.3) Ltd Springwell Street 12 Developments (No.1) Ltd Dixon (Thorne Land) Ltd 11 4 50% 7 100% 14 Grimsby Maling Retail Development Company Ltd Centurion Park Developments Ltd Mount Pleasant (Hull) Ltd 18 Page 95 of 101 Riossi Ltd 17 100% Gatehouse Way Developments Ltd Northants Developments Ltd 35 100% 34 100% 33 100% 32 100% 50% 50% 50% 50% 31 100% 30 28 25 23 19.9% 50% 50% 50% 29 27 Fareham Scarlet Ltd [n] First Alliance Fareham Reach No.3 LLP [n] Wigford Ltd Chord (St Paul’s Square) Ltd Falkirk Gateway LP Macdonald Estates 24 Falkirk Partnership Ltd West Register 37 (Project Developments) Ltd 100% 36 The Information Classification of this document is INTERNAL 1 April 2011 Property Ventures (B&M) Ltd * 100% 22 KUC Properties Ltd Omega Warrington Ltd Land Options (West) Ltd 26 Rok Development Solutions Ltd Rok Developments (Wilmslow) Ltd Thrapston Triangle Ltd 20 Cala Campus Ltd Priority Sites Investments Ltd KUC Holdings Ltd21 100% Proposed Transfer from Property Ventures Priority Sites Ltd 19 51% JV Walton Lake Developments Ltd Dixon Motorcycle 15 Holdings Ltd Motorsport Dealers 16 International Ltd 8 Riossi Motorcycles Ltd Claycliff e Property Develop ments14B 50% 14 Drivefirst Ltd Lombard North Central plc Dixon Motors 10 Developments Ltd West Register (Hotels No.2) Ltd Dixon 11B (Thorne Land) No.2 Limited Dixon Vehicle9 Sales West Register (Land) Ltd 100% 3 2 West Register Hotels (Holdings) Ltd West Register 6 (Realisations) Ltd 100% The Royal Bank of Scotland plc West Register UK Corporate Structure Chart West Register (Hotels No.1) Ltd 1 West Register (Property Investments) Ltd 100% 21.12. GRG West Register (GB) Policy & Procedures Manual mm min a 59 .6339. $25 010 GRG West Register (GB) Policy & Procedures Manual 21.14. APS Guidance Notes Introduction The purpose of this note is to set out the work that the UK Asset Recovery team (“West Register”) undertakes, the impact that the APS Rules will have on that work, and a practical and workable solution for the issues highlighted. West Register Realisations Limited, West Register Land Limited, and West Register Property Investments Limited (together, “West Register”) provide an advisory role to the other teams within GRG and acquire property-related assets (ranging from individual properties to development sites and commercial property (generically referred to as “property” in this note), predominantly out of enforcement scenarios, but also as part of consensual restructurings. The property is then managed and/or developed and/or sold. Please note that separate West Register companies hold equity and related instruments acquired by the Strategic Investment Group (“SIG”) within GRG. Those companies and operations are beyond the scope of this paper. Executive Summary APS Approval for West Register actions involving the acquisition and management of property assets which constitute NonCash Realisations should be sought in one APS Webform at the outset of the acquisition process wherever possible. This is to be achieved as follows: 1. As with current practice, West Register submits an Asset Purchase Proposition (“APP”) to the APP Committee prior to submitting a bid. 2. The template APP will be amended to ensure it encompasses sufficient strategic, financial and AMO analysis. 3. The West Register bid for property is to be submitted “subject to contract and internal approvals” (to take into account the need for APS Approval). 4. Should the West Register bid be the administrator/receiver’s preferred bid, the mainstream (i.e. non-West Register) GRG RM will submit an APS Webform requesting approval for the disposal of the property/release of security and the West Register acquisition, strategy and budget (i.e. conduct relating to a Realisation and incurrence of Realisation Expenses). The (credit approved) APP will also be submitted by the mainstream GRG RM as part of the APS Approval request. For ease of reference, the APS Webform will include relevant background and AMO wording from the APP form and not merely refer to the attachment. The West Register RM will provide this wording to the mainstream GRG RM when they send the APP to them. 5. This applies equally to the auction sales process, where the mainstream GRG RM will seek APS approval to release security prior to the auction process and for the West Register acquisition at the proposed bid price, as well as APS. Approval for the ongoing West Register strategy and budget. Whilst the West Register bid may not be successful, the APP should be APS Approved prior to the auction in the same manner as set out in (4) above. 6. Further approvals only need to be sought by West Register if and when there are diversions from the APS-Approved APP budget/strategy. The current West Register asset management policy will be amended to ensure APS approvals are identified and obtained where required, with an APS Compliance representative on the review committee if deemed appropriate. The asset management policy review process works on the following basis: Red (monthly case review), Amber (bi-monthly case review) and Green (bi-annual case review). 7. A separate approval will always be required for a subsequent disposal of the Non-Cash Realisation by West Register, such action constituting Prohibited Conduct under the APS Scheme rules. Background The strategy in relation to the property is determined at the point at which West Register submits a bid for approval in the form of an Asset Purchase Proposition (“APP”). Presently, the APP is submitted to the APP committee comprising Derek Sach, Laura Barlow, Joy McAdam and Declan Hourican. The APP contains (in addition to property and loan information) (a) purchase rationale; (b) bid price analysis; (c) asset management strategy, and (d) exit strategy. APS Analysis In simple terms, the key APS impact on acquisitions, management and disposals of Non-Cash Realisations by West Register is as follows: • • • When West Register acquires property relating to a Covered Asset, the property is classified as a Non-Cash Realisation (Condition 7.3). The purchase price paid by West Register and received by RBS in respect of the Non-Cash Realisation will generally not constitute a Recovery for the purposes of the Scheme Rules (Condition 7.3). A Recovery is made in relation to the Non-Cash Realisation where West Register receives: o proceeds upon disposal of the property o any income derived from the property whilst managed by West Register (e.g. rental income), in each case, after the underlying Covered Asset has Triggered (Condition 7.1) West Register Author: Ben Deacon Page 97 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual • • Between acquisition and disposal, West Register must manage the Non-Cash Realisation in accordance with the asset management obligations set out in the Scheme Rules (including the Asset Management Objective etc, see Condition 10.8). Any expenditure in relation to the property which is incurred in accordance with Condition 7.20 of the Scheme Rules constitutes a Realisation Expense. Note Individual approvals are only required by West Register where the Asset Actions in question have not already been approved by virtue of the mainstream GRG APS Approval submission. Disposals will always require separate APS Approval as they will constitute Prohibited Conduct. In view of the analysis set out above and the terms of the Asset Management Framework, the table below indicates which actions undertaken West Register require APS Approval. In view of the analysis set out above and the terms of the Asset Management Framework, the table below indicates which actions undertaken West Register require APS Approval: West Register Author: Ben Deacon Page 98 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy & Procedures Manual West Register Author: Ben Deacon Page 99 of 101 The Information Classification of this document is INTERNAL 1 April 2011 GRG West Register (GB) Policy 8. Procedures Manual 22. Document Governance Endorsed by: me Members al the GRG Slnlogic Property Group Committee Owned by: sen Deacon 2&0 Eisna 5 ate London EczM 4R5 22.1. Document Information Locallun Real ReglsleflFersonal ioldersiaen neaoomprooedure ManuaiiWest Register Policy a Pmmdures Manual v1 2 (pnnled) do: Dale Last Saved an Marcn 2011 Last Saved av Deaconb 22.2. Versions Vernon Dab mum/OW 1 March 2011 Original dran 'A'e 29 March 2011 Updated Contractorappointmem levels. Asset Reviews new superseded oy son Process. various other minarcnangss 1.2 1 April 2011 Updated Governance and Oversight Terms. First primed dralt distributed to team. Process flowcnans included in appendix. Wesl Regisler Yhe cressriicanon documenl rs INTERNAL Author Ben Deacon Page mm lAanl 2am GRG West Register (GB) Policy & Procedures Manual THIS PAGE IS LEFT INTENTIONALLY BLANK West Register Author: Ben Deacon Page 101 of 101 The Information Classification of this document is INTERNAL 1 April 2011