The public debt crisis is putting the Euro under severe pressure and some even predict the inevitable end of it, at least in the most exposed countries.
We thought it would be a good idea to give you a brief overview of some legal implications on your business of Eurozone fragmentation, with a view to helping you to better manage your property portfolio in those unchartered waters.
Let it be clear that, in providing you with this overview, we certainly do not want to contribute in any way to the fulfilment of this gloomy prophecy.
The risk to you
As an investor in or occupier of real estate within the Eurozone, the expulsion or with draw al of a country from the Eurozone could have a material effect on (the performance of) your real estate portfolio.
Clearly, the key issue - for investors and occupiers alike - will be the currency in which rents and other outgoings are payable in the event of a Eurozone meltdown.
What should you do?
Carry out a health check now, to assess the impact on your real estate portfolio.
Ask yourself:
• In what currencies are the rents currently payable to or by you? As an investor, to what extent under either the leases or local laws can you require your tenants to pay in a particular currency which you specify? Alternatively, as occupier, do you have any flexibility in terms of currency?
• As an investor, if monies are collected by third parties such as managing agents, what are the arrangements in terms of currency risk or protection of your money in the event of that third party becoming insolvent?
• To what extent can you offset outgoings in a particular currency against income or turnover in that jurisdiction?
• How vulnerable are the countries that you have invested in or occupy premises in. As an investor you may want to search for some safer havens.
Together with our colleagues in the Eurozone, we are at your disposal to further advise you on these issues.
