Craigard

Persimmon House

Purchased: March 2021
office space in an enviable location

investors are receiving
an income of circa

9.4%

Overview

Persimmon House is located within the well established Crossways Business Park in Dartford.

The property is prominently situated overlooking the lakes and provides an enviable working environment for the current tenants.

In November 2019, the investment was marketed for sale by a UK Institution with an asking price of £3,600,000 (8.00% NIY)

Despite the opportunity being of interest, we were not near the vendors pricing aspirations at the time and therefore we registered our interest and monitored the sales progress.

At the point of marketing in late 2019 the impact of the global pandemic and lockdown coupled with the increased caution and feeling of uncertainty around the office sector was becoming more apparent. This was a market environment that was not assisting a successful disposal.

In early 2021 Craigard made contact with the vendors agent where it was confirmed that no proposals had been accepted. Quick to act, we undertook an inspection and following a short period of negotiation we made an offer of £3,100,000 which the vendor accepted.

The property is single let to Westbury Homes (Holdings) Limited for a further 2.4 years at an annual rent of £306,643 (£20.55 per sq. ft.) with estimated rental values currently around £23.50 per sq. ft. The Tenant had vacated the building and successfully sub-let the space to three established tenants with ranging covenant strengths and all whom had indicated to us during our due-diligence their intention for longer term occupancy.

The business plan is to approach the sub-tenants when lease expiry is nearing and see if they want to stay in the building on new leases direct with ourselves. The M&E in the building is very dated and in need of replacement so the intention will be to invest in a new system at the time of lease renewals and modernise the building further. This should hopefully encourage the existing tenants to want to stay and also allow rents to be pushed on. If the tenants vacate then a full refurbishment will be undertaken and letting campaigns concluded. The base case financial model on purchase is targeting an investor IRR of 11.76% with a sale being concluded in late 2023. For the meantime, investors are receiving an income of circa 9.4%.

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