Taking Control of a Problem Saudi Asset: A 90-Day Plan

A stabilisation sequence for an asset that has drifted: establish the facts, stop the bleeding, deal with the tenancies, fix the information, then decide what the asset should become.

A problem asset is rarely one problem. It is usually arrears, a vacancy, deferred maintenance and poor records arriving together, with an owner who has lost confidence in the information they receive. Do not start with the strategy. Spend the first month establishing what is true, the second stopping the losses, and the third deciding what the asset should be.

Before stage one

Accept before you begin that the numbers you currently hold are probably wrong, and that the person who produced them may not be the right person to correct them. The purpose of the first stage is not to assign blame but to get a position you can act on, which means independent verification of anything that matters.

• The last twelve months of statements, however incomplete, in one place.
• A list of every tenancy with its term, rent and payment history as currently recorded.
• Your own copy of the title details and the documents you actually hold.
• A view on how much additional capital you could commit if stabilising required it.
• A decision on who will do this work, since an owner who delegates the rescue to the cause of the problem will get a reassuring report.

Stage 1: Reconstruct the position from source documents

Rebuild the rent roll from the tenancy documents themselves rather than from a summary: who occupies what, on what terms, from when, at what rent, and what has actually been received. Reconcile to bank credits. Expect discrepancies between the recorded rent roll and the documents, because that gap is usually where the problem started.

• Deliverable: A verified rent roll reconciled to bank receipts, with every difference noted.
• Owner: The owner, or an independent adviser instructed for the purpose.
• Approval gate: Every tenancy is supported by a document you have read.

Stage 2: Inspect the asset independently

Commission an inspection by someone who has not been involved. You are looking for the condition of plant, anything unsafe, unpermitted alterations by occupiers, and the works the building actually needs in the next three years. Photographs with dates matter, because you will be comparing against them later.

• Deliverable: A dated condition report with a prioritised schedule of works.
• Owner: An independent surveyor or inspection firm.
• Approval gate: Anything presenting a safety or compliance risk is identified and separated from discretionary work.

Stage 3: Stop the avoidable losses first

Deal with the items that are costing money every week: arrears that are ageing without action, utilities running on empty units, service contracts for plant that no longer exists, insurance that lapsed or no longer matches the asset, and marketing that is not running on a vacant unit. None of this requires a strategy, only attention.

• Deliverable: A list of stopped or corrected costs with the monthly saving against each.
• Owner: The owner with the manager, or an interim manager.
• Approval gate: No cost is still being paid for something the asset does not have or use.

Stage 4: Triage the tenancies

Sort occupiers into three groups: paying and wanted, in difficulty but worth keeping, and to be brought to an end. Each group needs a different approach, and a tenant in genuine difficulty often produces more money through a documented arrangement than through an immediate confrontation. Where enforcement is needed, take the route and the procedure from a licensed adviser rather than improvising.

• Deliverable: A tenancy plan naming the approach, the next step and the date for each occupier.
• Owner: The owner with the manager and a licensed legal adviser where enforcement is in view.
• Approval gate: Every arrears case has a documented next step with a date.

Stage 5: Rebuild the information flow

Reset what you receive and when: a monthly statement with arrears by age, a rolling list of lease events, and evidence of completed works rather than invoices. If the existing manager cannot produce this, that is itself the answer to a question you have probably been avoiding.

• Deliverable: A reporting specification with dates, and the first report delivered against it.
• Owner: The owner, specifying; the manager, delivering.
• Approval gate: Two consecutive reports have arrived on time in the agreed format.

Stage 6: Restore compliance and insurance

Bring the certification, maintenance contracts, tenancy documentation and insurance back into a defensible position, and declare to insurers anything that has changed, including vacancy. An asset with lapsed compliance cannot be sold cleanly and may not be insured in the way the owner assumes.

• Deliverable: A compliance calendar with each item current or with a dated plan to make it current.
• Owner: The manager, verified by the owner against source documents.
• Approval gate: Insurance reflects the actual occupancy, use and reinstatement cost.

Stage 7: Decide what the asset should become

Only now take the strategic decision, with a verified rent roll, a real condition report and honest numbers. The realistic options are hold and run it properly, invest and reposition, or sell. Price all three. An owner who takes this decision in month one is deciding on the same bad information that created the problem.

• Deliverable: A written decision with the numbers behind it and a review date.
• Owner: The owner, with any co-investors.
• Approval gate: The decision rests on documents produced in the previous stages, not on the earlier picture.

Handovers between stages

The critical handover is between the verification work and whoever will run the asset afterwards. A rescue that ends with an unchanged arrangement and a hope of better behaviour usually produces the same drift within a year. The second handover is between you and your advisers: a legal adviser handling an arrears case needs the reconstructed documents, not a narrative, and an inspection report is far more useful to them than your account of the condition.

How you know it is finished

Ninety days are well spent when the rent roll is verified against documents, the condition is known and prioritised, avoidable costs have stopped, every arrears case has a dated next step, reporting arrives reliably, compliance and insurance are current, and the strategic decision has been taken on the new information. Where enforcement, tenancy remedies or tax are involved, take the specific position from a licensed adviser, and confirm the applicable procedures at the time, since they are revised.

Domira builds the numbers on a Saudi property with you before you commit: rent and cost evidence, condition and capital expenditure, the appraisal and the sensitivities that decide whether the deal survives a bad year. The investment decision stays yours, and so does the advice of your licensed tax and legal advisers.