EY Ireland Real Estate services

Transcription

1 EY Ireland Real Estate services

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3 Our proposition 1 Why EY? 2 Our areas of focus for real estate 3 Audit 4 Tax 5 Corporate Finance 6 Team 7 Credentials EY Real Estate services 1

4 1. Why EY? We are committed to helping you create value for your investors. At EY, we have global resources available to us to help you excel. Beyond providing an effective audit, we want you to benefit from our other value added services and an expert team that helps you achieve your goals. Our global structure EY is distinguished by the extent of its global integration, in the way we think, in the way we work together and in the way we are structured around the world to ensure seamless, consistent service. We are unquestionably further advanced on global integration than all our major competitors. EY A global firm employing 167,000 people in 140 countries around the world. EY is divided into three practice areas. EY is a part of our Europe, Middle East, India and Africa (EMEIA) practice. EMEIA is one partnership, with 3,600 partners and 62,700 people. 2 EY Real Estate services

5 EY EY is one of the Big Four accounting firms. We employ more than 167,000 people worldwide in 140 countries and have revenues of US$24 billion. Our associated firms come together in five geographic areas. Each one is led by an Area Managing Partner, who is a member of our Global Executive. This integrated business model allows us to meet the global demands of our clients, as well as the legal and regulatory requirements that impact our organisation. The geographic areas sit underneath EY Global, our umbrella organisation that sets global standards for methodologies, quality control and service delivery. At EY, bringing the right people together to work with our clients is something we pride ourselves on. It is more than just ensuring the right mix of disciplines and skills. It is also about passion and communication. By making the right connections and bringing energy into our work with an appropriate and considered challenge, we help our clients resolve complex business issues and provide them with insights that will help. An effective, integrated team In order to achieve an effective service, our teams and your teams should be integrated. Our approach will mirror your structure in order to achieve a collaborative approach. This approach enables us to deliver a service that provides innovation and insight as well as robust independent assurance. We always plan to adopt an approach that will have a positive impact on timing and deadlines whilst providing you with valuable feedback on the effectiveness of your business. This will facilitate a robust process, which, through regular and candid communication will result in no surprises. Our approach is based on the following elements: Effective control and coordination Efficient execution using enablers such as automated modules Leverage of EY s global talent pool Joint planning sessions to co-develop the approach and areas of focus Benefiting from a client service partner, who has the authority to access the resources you may need Global authority in the Client Service Partner Key components of our unique structure Global performance assessment for partners Transparent global fee sharing EY regional practices Europe, Middle East, India and Africa Asia Pacific Americas EY Real Estate services 3

6 2. Our areas of focus for real estate Our real estate group links up globally to cover the full spectrum of issues for funders, developers, investors, operators and occupiers. Our integrated, multi-discipline approach allows us, uniquely, to offer clients beneficial opportunities and solutions. 4 EY Real Estate services

7 Due diligence/transaction support Tax Risk advisory services We have a sophisticated global real estate due diligence team. Our offerings include: Financial due diligence Due diligence tool kit and best practice database Entity and investment level focus Operating partner due diligence IT assessment Experience with large and small portfolios Cash flow and investment return modelling review Market support and valuation review EY has the leading European real estate tax group with unrivalled experience in advising international real estate funds. Examples of the types of advisory work undertaken include: Strategic tax structuring for funds Joint venture structuring Stamp duty, capital duty and transfer tax planning International holding company strategies Tax-efficient financing Control provisions We have experience is all the changing needs of the markets and focus on comprehensive risk management including: Enterprise risk assessment/management Performance assessments Internal audit and controls Fraud prevention Contract risk services Third party reporting/sas 70 Actuarial and treasury Real estate finance and real estate advisory Within the Global Real Estate Group we have first hand experience of different market segments and a wide range of transactions. Examples of some of the specialist areas we cover include: Capital raising M&A Performance improvement and cost reduction Programme management Assurance Our Real Estate Audit team has considerable expertise in the provision of audit and assurance services to the real estate sector. In addition to the provision of traditional audit services, we have advised clients (often as part of an integrated team including tax and transaction support services) on: International financial reporting standards Accounting implications of proposed transaction structures including joint ventures Integrity of accounting models Business advisory services Our real estate business advisory group is experienced in delivering property-driven cost and business performance optimisation: Strategic property review Property portfolio cost optimisation and performance improvement Rationalising the property portfolio EY Real Estate services 5

8 3. Audit We have set out here the building blocks and timing of the audit. Our approach is based on a number of core principles with a strong focus on your key business challenges and how these drive the financial statement risks. 6 EY Real Estate services

9 Our approach Planning Audit planning, including the scope of key procedures, will always be determined on a collaborative basis. Detailed timetables covering key business and financial risks, entity level management controls, financial transaction process, controls and IT systems and applications will always be agreed in advance with client teams. An audit timetable which covers the work to be performed will be established up-front with you. Test controls Our testing will be focused in three areas: IT systems and applications: We will review the general controls on your key primary systems and the application controls for the critical business processes. Our IT specialists will work with the core audit team to maximise our leverage from your IT environment and also to ensure that audit efficiency and improvement ideas are delivered. Entity-level management controls: We look to maximise efficiencies by seeking to rely on entity-level management controls and processes. Financial transaction controls: In addition to entity-level management controls testing, we will also test controls on fundamental reconciliations, authorisation procedures and review procedures. Substantive testing the balances that matter Our detailed testing will focus on the key accounts on the Balance Sheet and Income Statement. Pre-year-end close: Where possible we will move audit work forward in the financial year, wherever possible, facilitating early identification and resolution of potential issues. We will report significant matters in a timely manner to management. Proprietary-automated audit tools: We will review large transaction streams electronically. Our tools assist us in identifying variances from expected amounts for follow-up and, help to deliver greater audit assurance compared with traditional sampling techniques. Our audit tools can be used in the audit of account receivables, account payables and transactions for: Rental Income Service charges Administration expenses Accounts receivable Accounts payable Use of subject matter specialists: Our core audit team will be supported by subject matter professionals in areas such as property valuation. Key areas of substantive testing, we expect to focus on will include: Property valuations Debt Financial instruments Tax Consolidation Fund and corporate financial statements EY Real Estate services 7

10 Planning Interim Year-end Update understanding of key business and financial risks Update understanding and testing of entity-level management controls Co-ordination with your property manager to arrange visits (where appropriate) Review of IT, a testing of financial transaction process and controls Pre-year-end substantive testing on material interim balances and transactions Testing of valuations process and assumptions on a sample basis Financial statement pro forma review Year-end substantive testing (including updated audit procedures over the valuation process) Clearance on financial statements Reporting Coordination Effective co-ordination of the audit will be paramount towards meeting your reporting requirements. Our proposed approach is designed to mirror your structure. We will coordinate our planning, processes and controls work across all your service providers, (e.g., outsourced accounting and property service providers) avoiding any duplication of effort. We will aim to complete as much audit work pre-year-end as possible. We will utilise our specialists (e.g., tax specialists and surveyors) when necessary in order to conclude on judgemental areas quickly. Controls focused At the heart of every finance function should be a strong control environment. Our audit will seek to rely on this control environment in order to strive for the most efficient audit approach. Our process and controls testing will be focused on identifying process improvements that will allow us to further reduce our substantive procedures, ultimately achieving maximum leverage from your control infrastructure. After discussion with you, we will place reliance on the processes and controls operating within your Fund structure to reduce our substantive testing. Continuous communication In order to ensure that we deliver a high-quality, efficient and effective audit, we will maintain regular communication throughout the year: Detailed planning meetings incorporating specialists supporting the audit team. Development of a clear project plan and timetable to be mutually agreed by all parties. Regular update meetings and conference calls during the process to deal with issues as they arise. Development and agreement of clear information requirements for each stage of the audit, including a tailored client assistance schedule covering all work required. 8 EY Real Estate services

11 Planning Some of the key audit areas are discussed below. Key audit risk considerations Area Key risks Audit procedure Investment asset valuation Possible risk of overstating investment asset values due to error in calculation or unrealistic assumptions outside current market ranges. Use of experts (such as our in-house valuation experts to review the valuations prepared. Discuss assumptions and market outlook for the entity s portfolio and compare to relevant benchmark data. Taxation Financial instruments such as swaps Covenant compliance Going concern issues The group has a tax exposure that needs to be provided for. Possible risk of error due to incorrect calculations or assumptions outside current market ranges. Possible covenant breaches could occur that might impair the cash flows of the business. Possible risk that investors may default on capital calls. Analysis of tax profile including review of professional advice received and consideration of risk and exposure levels in the business. This will ensure we are able to form an early view on the recognition and valuation of any tax related balances in the financial statements. Review assumptions and valuations models, and verify appropriate accounting treatment and disclosures are made for financial instruments. Consult our derivatives experts to review valuations and assumptions. Understand the results of any covenant self assessments and how any potential breaches could be remedied. Consideration of risk and exposure to the business. Discuss with management plans to address this risk. EY Real Estate services 9

12 4. Tax We are highly specialised property taxation advisers and work with a broad range of clients on structuring their transactions, including ownership and disposal strategies. We will bring expertise and experience in helping you create an effective, robust structure that is aligned with your overall property strategy. 10 EY Real Estate services

13 Tax services We work with publicly quoted REITS, developers, domestic qualifying investor funds and international funds, private property businesses and entrepreneurs, bringing them the very best tax advice. Our expertise includes: Due diligence Properties are generally sold or acquired either directly or indirectly through special purpose entities. These transactions can carry significant tax risk and we are highly skilled at identifying those risks and recommending mitigation strategies, as this is crucial to the overall success of the transaction. Transaction tax services For asset or entity transactions we provide innovative tax structuring solutions including transaction tax planning, optimising effective tax rates, efficient ownership structures, and tax efficient financing. Specifically, for portfolio transactions we can assist with the utilisation of Irish fund structures in conjunction with any tax incentives provided by current tax legislation. Tax compliance In the current fiscal climate ensuring on-going tax compliance is critical to managing tax risk. We can cost effectively provide the full suite of cost effective compliance services, ranging from corporate or income tax returns to VAT filings. By our continued involvement with your property acquisitions we can ensure your strategy for each asset can be met with the minimum tax exposure. Working with tax authorities We are very active participants in the formal and informal consultation exercises that are a feature of the modern fiscal legislative process. We were actively involved with the inception process of the Irish REIT regime and regularly provide insight and submissions to the Department of Finance and the Revenue Commissioners on the evolution of legislation that impacts the real estate industry in Ireland. In addition to the above, we provide specialist capital allowances services to generate real cash savings for property investors. Our dedicated team of surveyors and tax specialists, skilled in tax and the practical aspects of construction, cost management and building technology combine to ensure we identify scope for increasing claims and deliver real tax savings. EY Real Estate services 11

14 5. Corporate finance Real Estate Corporate Finance Our Real Estate Corporate Finance team is a specialist team providing corporate finance lead advisory services to real estate owners, developers, investors and financiers, as well as to corporate users of real estate. The team s core services comprise the following: M&A lead advisory Real estate restructuring Capital raising Debt advisory Balance sheet optimisation Corporate occupier consultancy Loan portfolio services We have a team of dedicated real estate corporate finance professionals with a wealth of real estate expertise and a range of backgrounds, including real estate investment bankers, surveyors, financial modellers, lawyers and accountants which provides us with a deep and varied pool of skills to assist our clients. We have significant experience in helping clients address issues ranging from debt restructuring and re-leveraging through to joint venture structuring, equity placement and real estate company portfolio acquisitions and disposals. Our most recent market leading credentials include the sale of the Opera CMBS portfolio, in a pre-pack insolvency, the sale of Project Ulysses and Ashford Castle. In addition, we have led the stress testing of two Irish banks. In the current market where transactions are difficult to find, fund and close, our clients rely on our blend of sector expertise and market experience to assist them in all stages of the transaction process. 12 EY Real Estate services

15 Our services We offer integrated transaction advisory services for real estate land owners, investors, fund managers, financiers, developers, occupiers and end-users. We regularly work with: Banks Real estate companies public, private and REITs Corporate occupiers Hospitality and leisure operators Real estate funds Real estate developers Institutional investors Insurance companies Construction companies and PPPs Infrastructure companies Gaming companies Private investors Private-equity companies Public sector bodies EY Real Estate services 13

16 IPO Our experience with companies that have successfully floated suggests that an IPO is best viewed as a business transformation process and not simply as a transaction. The process takes time and to meet the expectations of shareholders and management goals it is absolutely essential that you start preparing for an IPO as soon as possible, ideally months ahead of the float. It is important to have a trusted, experienced, independent advisor who will sit alongside you through the process and who is able to educate, guide and challenge your team along the way. This will ensure that you address all issues in a timely and structured way and stay fully in control of the process. Our IPO team can will be an integral member of your EY team. Our real estate specific team have advised over 30 businesses both preparing for and executing their IPO. They not only understand the common IPO pitfalls and so can highlight them to you well ahead of time, but on account of their real estate sector specialism they are able to identify specific areas that add or erode value in the eyes of the investor community and translate these into actionable measures. Combined audit/ipo readiness The IPO Readiness Assessment is a tool designed to be delivered months ahead of an IPO to analyse the gaps that have to be filled. Its key objective is to maximise the valuation achievable on float and to minimise disruption through the process. It is a diagnostic tool which identifies for management potentially significant value eroders and those areas which require most of their attention. Although this can be carried out as a discrete exercise, much of the information that would be required is gathered as part of the normal audit process. By focusing audit attention on the requirements of an IPO, adding certain procedures and embedding key specialists into the audit team, we have developed a unique audit approach, which provides detailed insight into your preparedness for IPO as a direct audit deliverable. The run up to listing requires a significant investment of time and money from the executive team. It is therefore critical that you identify workstreams that can be performed early on in the process to ensure that during the 3-6 months before float you are focusing on the issues that will enable you to achieve an optimal valuation, rather than spending your time on housekeeping. These workstreams range from IFRS conversion to, contract reviews and governance and although they are rarely value enhancers, if not addressed they can significantly erode value on flotation. 14 EY Real Estate services

17 Benefits of this approach: Quality data collection is part of the audit process, rather than relying purely on discussion, resulting in better quality insights. Updated gap analysis is updated with each audit to monitor progress. Team key IPO specialists work with the audit team and build an understanding of your business and avoid later duplication of effort. Stages of audit process with IPO readiness assessment: IPO readiness workshop to discuss elements which are less financial/process related and challenge the equity growth story. Collection and assessment of data through enhanced audit process and review by IPO specialists. Presentation and discussion of gap analysis to validate findings and agree actions arising with timing, priority and owner for each. Control you keep control of the process and save time and money. EY Real Estate services 15

18 6. Team Unique structure EY is distinguished by the extent of its global integration, in the way we think, the way we work together and the way we are structured around the world to ensure seamless, consistent service. We are, unquestionably, further advanced on global integration than all our major competitors and our clients tell us that working with EY feels different. All of the countries you currently operate in are within our EMEIA area. This structure brings together 87 countries and is unique amongst our competitors. EMEIA is one profit pool and as such, we have removed the mindset of focusing on national profits. Key components of our unique structure are: Global authority in the Client Service Partner Global performance assessment for partners Transparent global fee sharing Global authority in the Client Service Partner Our unique structure gives our client service partners real global authority, empowering him to speak for the firm. This is fundamentally different from our competitors and provides you with a team that speaks with one voice, getting global consistency, decisiveness, timely issue resolution and no surprises. Global performance assessment Each partner at EY is remunerated relative to the achievement of their scorecard objectives. They will not only set objectives for each local country partner, but will also assess their performance at the end of the year. In this way, local partners are incentivised to be aligned with the commitments made at the centre. Transparent global fee sharing For all our global audits, each local firm receives a fair allocation of the overall group fee through an equalisation method called Global Fee Sharing. This prevents the service they provide being impaired as a result of an inequitable allocation of a centrally negotiated fee. 16 EY Real Estate services

19 The right skills in the right place Your business may be geographically diverse and offer a range of potential exit and value realisation options. As such, selecting a team with the right mix of skills to work with you during the life cycle of your business and who are based in the right locations is paramount. Below and overleaf we lay out our key real estate partners. Relationship chemistry Relationships and chemistry rest at the heart of everything we do with our clients. Our multinational client experience evidences our ability to build the type, breadth and strength of global relationships that you require. Our Client Service Partners set the tone for the team. They will ensure we earn your trust and respect, drive our commitment to doing the right thing and combine great professionalism with appropriate pragmatism. Our approach to communication focuses on the hands on involvement of our partners. Our integrated global structure means that communication lines are short, resulting in issues being resolved as they arise, and based on informed discussion. Flexible style Your geographic footprint and leading position in major markets demands flexibility in the service they receive. A recurring theme in recent major wins for EY has been the value clients place in a team and a firm who recognise the need for flexibility and proactively respond to it. We will be proactive and challenging; telling you what works well and when things are going wrong. We expect that to be reciprocal and will not shirk from making tough choices to flex our style or our team when needed. EY Real Estate services 17

20 EY contacts Head of Real Estate for UK and Ireland Dean Hodcroft Partner T: E: Transactions Advisory Services Luke Charleton Partner T: E: luke.charleton@ie.ey.com Dean has 25 years experience with EY, within the Real Estate Sector. After making Partner in 2001, Dean led our Real Estate Tax group for the UK and was subsequently appointed as Head of our Real Estate Industry practice for Europe, Middle East, India and Africa, and as his title shows he is now the head of Real Estate for the UK and Ireland. Luke leads the Irish Restructuring practice. He has been with EY for nineteen years, sixteen in the UK, returning to Ireland in He leads many of the highest profile restructuring assignments in Ireland including Newbridge Credit Union, Xtravision, Ashford Castle, Spencer Dock, Opera CMBS property portfolio and the Carroll property portfolio. Assurance Dermot Quinn Partner T: E: dermot.quinn@ie.ey.com Dermot is an audit partner specialising in the Real Estate, Industrial, Commercial and Technology sectors. He works with a broad selection of public listed entities, both in Ireland and the USA, together with subsidiaries of listed multinationals and domestic clients, advising on Irish GAAP, US GAAP and International Financial Reporting Standards (IFRS). Fergus McNally Partner T: E: fergus.mcnally@ie.ey.com Fergus has extensive experience of providing audit and advisory services to asset management clients. Fergus is a member of the Technical Committee and Alternative Investment Committee of the Irish Funds Industry Association and the firm s AIFMD Steering Group. Fergus specialises in alternative investment funds, offshore investment funds and asset management companies. Graham Reid Partner T: E: graham.reid@ie.ey.com Graham heads the M&A Service Line. Graham s background includes a wealth of experience from investment banking and corporate finance having worked at UBS in London and AIB Corporate Finance in Dublin. Graham is the AIB and Bord Na Mona GCSP. John Higgins Partner T: E: john.higgins@ie.ey.com John, based in Cork, is the office Managing Partner for Cork and the Munster region. John has significant semi-state and public sector experience and has worked extensively with NAMA, Bord Gáis, Aer Lingus and DAA. John is the GCSP for Bord Gáis, Amekab, Glanbia and Musgrave Group. 18 EY Real Estate services

21 Tax Dominic Rigby Senior Manager T: E: dominic.rigby@ie.ey.com Donal O Sullivan Partner T: E: donal.osullivan@ie.ey.com Dominic joined EY in 2009 where he has focused on financial services specifically asset management, real estate and private equity. Prior to joining EY Dominic worked for 6 years in Dublin specifically advising on the creation of commercial property investments for high net worth and institutional investors and has extensive experience in tax and investment structuring for FTSE listed real estate funds and syndicated property investments. Donal is a recognised expert on taxation and regulatory issues in the asset management industry. He currently participates in the Irish Funds Industry Association s Tax Working Group and is EY s EMEIA Solution leader for UCITS IV and pension and asset pooling. Eamonn O Doherty Partner T: E: eamonn.odoherty@ie.ey.com Gavin O Connor Director T: E: gavin.oconnor@ie.ey.com Eamonn is a tax partner in EY s Industrial, Commercial and Technology Group. He joined the firm in 1985, having previously worked with the Revenue Commissioners. With over 30 years experience of corporate, personal and indirect taxes, his expertise covers a broad spectrum of industries, including real estate, aviation, energy and utilities, technology and telecommunications. Gavin joined EY in 2013 where he specialises in VAT. Prior to joining EY, Gavin worked for over 16 years in VAT in another Big Four firm in Dublin. Gavin has extensive experience of advising on all aspects of VAT and property matters in Ireland for a wide range of clients including banks, institutional investors, private equity firms and leading developers. Advisory Colm Devine Partner T: E: cdevine@uk.ey.com Colm Devine leads our Government Services and Utilities sector groups in Ireland. He has over 20 years of experience working with Government, Power and Energy, Water, and Renewable organisations throughout Ireland and Northern Ireland. Colm has led finance transformation, change management and risk engagements for clients. In addition he has experience of strategy development and working with regulators. EY Real Estate services 19

22 7. Credentials EY have significant experience in the real estate sector. We have a global footprint, and are committed to being a thought leader in the sector through the development of our positions on topics such as regulation and industry trends. Working together with our clients we ensure the best practice and innovation is shared, providing clients with the most effective, timely and value added service. You will be able to access EY s extensive range of global expertise and knowledge, gained serving some fantastic and exciting businesses. We have listed below a selection of relevant real estate clients. We would be happy to discuss with you our credentials in the real estate sector. 20 EY Real Estate services

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24 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organisation and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organisation, please visit ey.com Ernst & Young. Published in Ireland. All Rights Reserved indd 01/14. Artwork by the BSC (Ireland) ED None The Irish firm Ernst & Young is a member practice of Ernst & Young Global Limited. It is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business in the Republic of Ireland. Ernst & Young, Harcourt Centre, Harcourt Street, Dublin 2, Ireland. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com