We acquired this estate off-market for Scottish Widows Investment Partnership Property Trust (SWIPPT) and Centurion Properties for £6.4m, reflecting a net initial yield of 10.5%.
We had extensive knowledge of the asset from previous involvement and knew opportunities to add value were readily available with an active asset manager taking ownership, and provided capital expenditure was outlaid on the estate.
At the time of purchase there was a vacant unit and three units with forthcoming expiries where the tenants were looking to relocate. We advised the client to broker early surrenders of these leases and refurbish the accommodation which extended to approximately 37% of the total estate. There was a shortage of good quality secondary units on the market in Redditch and we were confident of swift disposals.
Speed of disposals
The refurbished units were let within six months of practical completion of the works on institutional terms, justifying the capital expenditure outlaid. Furthermore, Unit 8 was effectively pre-let as terms were agreed prior to completion of the works. Unit 15 which is situated to the rear of the estate had also been vacant for in excess of four years. We advised the client to extend the yard area which consequently yielded a successful disposal.
Our knowledge of the mutli-let industrial market and our letting capability has ensured significant success and added great value for the client. At the time of purchase the rent across the estate was £712,347 per annum. Following our involvement it has risen to an annual rent of £834,513. Furthermore the average unexpired term to lease expiry across the estate has risen to 7.63 years providing a secure income stream across the asset.