Surprisingly, the building had failed to sell at auction which presented Craigard with an excellent opportunity
Subsequently an approach was made to buy the asset and a deal was agreed at £1.4m reflecting 8.23%. The business model with this asset was to hold through the break in 2022 and hopefully secure an uplift in rent at the 2022 rent review. It was felt the passing rent at purchase was low for that market. Once the break had passed and the rent review settled, the base case business plan will be to sell the asset with five years left of the lease to a good covenant.
In the meantime as the building was in a poor state of repair, an interim schedule of dilapidations had been served on the tenant in order to bring the unit up to standard.
At the same time as service of the dilapidations schedule Craigard engaged with the tenant in offering to contribute 50% to a new roof, which was a much better option than a repair, in return for a longer lease and increased rent. Negotiations have been slow but are about to conclude. This will be an excellent result.