Cornbrash Park, Chippenham
Due to more conservative financial appraisal assumptions adopted as a consequence of Brexit, this modern business park complex was one of only two acquisitions secured during 2019 and is an interesting mixed scheme comprising four office buildings and three warehouse units. The project encompasses all aspects of asset management with lease expiries occurring on the offices and the need for subsequent refurbishment and marketing and reletting, rent reviews and lease events to be concluded on the industrial and office space and potentially a leasehold title re-gearing exercise with the Local Authority.
At the more adventurous end of the spectrum of Craigard’s projects, quite a lot of letting risk has been accepted in the office campus but equally the industrial units are well let and a very good investment. The pricing was attractive partly because of the relatively short long lease of 94 years but also because the vendor, a large institution, chose not to separately sell the industrial and offices and the risks attached to the office part of the scheme therefore have dragged down the value of the industrial. There is therefore some real added value to be achieved here and the attractive pricing allowed a considered risk to be taken on reletting the offices.
Purchase was around £3m, a loan was secured of around £1.5m and total exit proceeds are modelled around £4.5m showing as annual investor IRR of round 13% per annum over the 4-year life of the project. With a fair wind it is hoped to exceed this figure, but much depends on the speed of letting of the office accommodation and this has now of course been impacted by the current pandemic. Prior to that, after the election result, there had been some very promising interest and enquiries in the space.