Hello and welcome back to the Caridon Weekly, the podcast for landlords, investors and property professionals looking for honest insight and real value in today's market. Now we know a lot of landlords are feeling the pressure right now, rising costs, tighter regulation, uncertainty around interest rate, it's a lot. So we thought, Who better to speak to than someone who's right at the heart of it, joining me today is Abbas Alidina, co founder and CFO of keratin group with 20 years of experience in real estate finance, he helps secure major institutional funding, and he also works closely with landlords every day to help them protect their investments. Abas, great to have you here.

Thank you for having me on

To give us to get us going for anyone who hasn't met you yet, can you give us a quick overview of your role at Kerry day?

Yeah, sure so thank you. And as you mentioned, my title is a CFO chief financial officer. So the clue is in the title my my role is heavily focused upon financial strength of the business, both from an operating and from a strategic perspective. What I generally focus on as CFO is direction and decision making, if I was to sum it up into two words. And what do I mean by that? I guess essentially, my job entails me providing the direction to various members within the organization to enable the business to continue growing strategically and operationally, and a lot of my time is spent thinking and going through due diligence in order to arrive at the most optimal decisions for the business. So a lot of a CFOs work really is about decision making, correct decision making, be it for immediate opportunities of a long term strategic gain.

Sounds like a lot of moving parts to manage just a few. What does a typical day a CFO look like?

Sure, so a typical day for a CFO in my current position, is really about interacting with finance team members. So of course, as a CFO, as mentioned, leadership is a big part of the role. It's about direct, giving direction, providing good leadership to other finance people and overseeing what they do. So at a CFO level, you don't necessarily want to be in the detail of every transaction, but what you want to be doing is monitoring and overseeing other members of your finance team that you have entrusted guided and trained to think like you and perform at a level where as appropriate. And what my task is to do is to really come in and reinforce their decision making, their thought process, or correct their decision making or thought process if they're not aligned with the vision of the company.

Brilliant. That gives us a really good foundation for the rest of the chat. From a financial perspective, what are the biggest challenges landlords are facing right now? Is it more cash flow, financing, tenant risk?

All of the above? As you as you mentioned in your introduction, these are difficult times for landlords, and one of the key considerations is cost of cost of borrowing. Later on in this podcast, we're going to discuss but other areas in the world for investment, and there is a clear distinction between the use of leverage in Western markets, or let's say, the UK market, compared to other regions where the UK is housing market is heavily predicated on raising debt and using leverage for acquisitions the market, and therefore landlords become very susceptible or sensitive toward cost of borrowing. So what do I mean by that, if I'm an individual who is going to buy a property with my own equity, cash funds, as they would say on the market, then I'm not sensitive toward interest rates, and we know that interest rates over the last few years have risen an unprecedented amount when compared to historically for 10 or 12 years prior. However, UK investors, landlords and property owners do heavily rely on debt, making them a lot more sensitive to cost of rising debt. And as we know, we're in a high interest rate environment, and I think everyone's expectations now is that we will not see cost of borrowing being as low as it historically was, and that's something that landlords and property owners, even developers, need to factor in when looking at new opportunities, acquisitions, development. So I would highlight interest rates being the obvious one, but there's lots of other things as well. Because as a landlord, you work as carried and as landlords, and other individual landlords may choose to work within the private or the public sector, if you're in the private sector or generally. You, you are exposed to political pressures and different environments. So for example, at the moment, we have a Labour government that is anti landlord, I would say, and it's not pro landlord, therefore making life more challenging for landlords, investors and property entrepreneurs, not to say that looking after tenants well being or tenants rights isn't important. It absolutely is, but the local current government is putting a lot more pressure on landlords, whether it be the renters Reform Act or strengthening putting in controls for rents, for example, or cutting funding for housing services through local authority budget cuts, these all create pressures that ultimately impact landlords.

Yeah, that's something we've heard quite a bit from landlords we work with. So if you are looking at a property or a block of flats, how do you figure out if it's worth investing in? And what are some of the key indicators? Shall we say

So in financial analysis and part of due diligence, there are many, let's say, indicators or methods that people use in order to evaluate an investment. It could be IRR, which represents internal rate of return. Could be NPV, net present value. It could be payback period. It could be yield on cost. In Caridon, we focus, I would suggest, on two main metrics. One is yield on cost, which effectively is looking at your annual rental income against the total cost of the asset. Of course, we want that number to be as high as possible, but generally speaking, we have a benchmark and a threshold above which we will consider a deal as viable. Below a certain threshold, we would not consider. There are other factors that we also consider. So it's a more holistic approach towards investment appraisal, rather than just one indicator, we also look at payback period. We have capital that has to rotate through deals and investments, and therefore we look at what our payback period is, a longer payback period indicates to us that capital will be locked into the asset for a longer period, therefore creating a loss of opportunity for that capital in new deals. So I would say two main metrics to summarize would be yield on cost and payback period.

I suppose that's especially relevant with the procurement work we're doing right now. So due diligence is everything.

Yeah, absolutely.

One thing that often surprises landlords is how we make our guaranteed rent model work. It sounds almost too good to be true to some people, but there's a lot of structure behind it. So how does Caridon Make guaranteed rent work financially? Is it risky?

So Caridon was one of the first companies to pioneer the idea of guaranteed rent, which essentially mitigates risk that would normally be associated to a landlord, because Caridon stands in the middle and underwrites for a profit margin. How do we make it work? Well, firstly, efficiency, infrastructure and scale are of most importance. If we didn't have scale, it's very difficult to make guaranteed rent work. If you don't have efficiency, it's impossible to make guaranteed rent work. So for any landlord considering whether or not they should rent directly to a tenant or wants to build a portfolio, I think the questions they should be asking themselves is, what is their appetite for risk? What is their appetite for operational involvement? And ultimately, if they're looking for an opportunity to have safer, more long term income, then Caridon, a guaranteed rent specialist, is your best bet, because ultimately, we have deep rooted connections and knowledge and experience that an individual or a small portfolio landlord will not have. They can obtain that knowledge, but it'll be through a painful experience of mishaps and mistakes which they will learn from. But if you can learn or leverage off our expertise and our knowledge, then I would suggest for a non-institutional landlord, it's the best way forward, because it mitigates risk and protects your asset for the long term.

Let's just unpack that a little bit. I think a lot of landlords still don't quite understand how we can offer that kind of certainty. Is there an example that you could walk us through?

Sure. So going back to the fundamentals, it is a lot to do with scale and efficiency, as I mentioned. So how does it work? We will offer a landlord a rent which is lower than the rent that we can collect, because we have to have a margin for error and a margin for profit. So on scale, if, for example, Caridon is collecting £1200 from a tenant and offers the landlord £1000, we have a £200 margin. The landlord can feel safe, secure and sleep at night knowing they have a long-standing, established corporate entity that pays them the rent rain or shine. Whereas Caridon, for the margin, undertakes or underwrites the risk of non-payment, voids, delayed payment, maintenance, etc. So it ultimately comes down to how efficiently we manage that property. If we collect the rent and it's not void for a day, and we don't have any management or repair issues, we've made a 20% margin. We're happy. But if we are inefficient and we have two weeks of void, we still have to pay the landlord — that comes from our profit, meaning we could make a loss. Now, if you only have one or two properties, this can be a very risky strategy because you can't diversify the risk. But Caridon has over 2000 properties, so there's a margin of error. And while managing a large portfolio isn't as efficient as managing one or two, that scale and diversity allow us sufficient coverage to always meet our rent commitments to landlords — that's the peace of mind they have.

A lot of landlords are still a bit confused about guaranteed rent providers like us versus guaranteed rent insurance. Can you explain to our listeners what the differences are and how we offer a better deal at the end of the day for the landlord?

Yes, so insurance-backed guarantees effectively insure the risk at a premium for non-payment. However, from my interaction with those types of companies, I've never found them to be a viable option. Let's say a tenant defaults — the insurance-backed guarantee might require the landlord to lose the first two months of rent before the insurance pays out, and then when it does, they take a £500 excess fee. So the landlord has already lost two and a half months of rent. Even with insurance, they're already in a bad place. Whereas with Caridon, you're paying a premium built into the rent we pay you, but there is no lapse or loss for you to incur. There's no situation where the tenant hasn't paid, you suffer a loss, and then we step in. No — we underwrite that risk. We pay immediately each month, every month, as per our guaranteed rent contract, without the landlord having to wait through a non-payment period before claiming on an insurance policy. got it.

That's why we'll always encourage landlords to read the small print before they sign up with any deals. So that gives a really clear picture of how it works. I think for a lot of landlords, just knowing they'll get paid every month no matter what, that peace of mind is massive, especially when the market feels volatile. And speaking of that unpredictability, what indicators do you keep an eye on that tell you when it's time to buy, sell, or simply hold tight?

So I think it's about being in tune with the market and monitoring macroeconomic factors like interest rates, local and central government policies, rent demand, rent costs, mortgage costs, and availability of capital. There's no single answer, but monitoring all these indicators gives you a sense. Generally speaking, you hear fund managers and experienced investors say about the stock market: you can't predict if a stock will go up, down, or stay the same. What you can do is create a diversified portfolio and follow an investment thesis. You'll still have ups and downs, but if you stay invested long-term, you smooth out the peaks and troughs. In property, there's never really a bad time to buy, in my opinion. If you can hold the asset long-term, it will almost always be worth more in the future. We've been buying properties for 20–25 years. Not a single one is worth less today than it was 25 years ago. Fact. So it doesn't matter if you bought in 2001 or 2008 — 10 years later, the value was higher. Yes, if you bought at the 2008 peak, you may have faced negative equity for a while. But if you held until 2025, you'd still be in positive territory. So for anyone asking, "Is now the right time to buy?" — for me, yesterday was the right time. The sooner you buy, the sooner you're invested. Long-term holding is the key. If you have that mindset, property is a solid investment.

That's really interesting. Do you personally tend to rely more on gut instinct or data in those moments?

I'm the CFO, so it's always data-driven. To give a serious answer: of course, I'm not suggesting you blindly buy property. Due diligence is crucial, and your intuition matters. There are times when it's better — or worse — to buy. For example, people say "buy when the market is down," which makes sense. But in practice, it's hard — you don't know how far it will fall, and lack of confidence makes people hesitant. Unless you can switch off emotion, fear, and concern, and truly assess the bottom, it's tough. So for me, diligence is key. Assessing your financial ability, risk appetite — that's personal. But overall, long-term investing is a smart move.

Thank you for that. What's your view on interest rates this year? And, more importantly, how should landlords be planning around them?

I keep an eye on media, news, and sentiment from central governments and banks. The current expectation is that UK interest rates will fall by another quarter to half a percent this year — welcome news for investors and landlords. This should boost confidence and market activity. A few years ago, rising rates hit those with existing mortgages hard. But many individuals, portfolio landlords, and companies — including us — have since restructured to fixed-rate products, so they're less sensitive to rate changes now. For example, Caridon had an asset on a variable loan — very painful from 2021 to 2023 as rates rose and costs increased, while rents stayed flat, squeezing our margins. Now, with fixed debt, our current portfolios aren't directly impacted by rate drops. However, lower rates make new investments more attractive, as borrowing will be cheaper than it was six months ago. So this should inspire confidence and increase real estate activity — new opportunities are now more viable.