SIPP 7 – Landmarc The Square Bournemouth
We were approached by our clients who had a lease to purchase the freehold of St Andrews Church in the Square in Bournemouth. The tenant already had a long lease on the property and were fitting out the property to become known as ‘Landmarc’ entertainment venue and one of the South’s most famous!
We purchased the property freehold for £1.8 million in December 2005 and the tenant fit out cost an estimated £1 million.
Although the tenant was smaller than our usual, we agreed the purchase due to the fit out, location and lease terms. One of the largest syndicate members was also a director of the tenant Jimmy’s Group.
The rent is £110,000 per annum and the lease expires in 2040 with 5 yearly uplifts to the higher of 2.5% per annum or open market.
The redevelopment of the car park opposite for cinemas and retail will only serve to enhance the value of the property.
Not only has the mortgage reduced under the repayment terms, but also the value has maintained. More importantly, an investor that put in £50,000 into the syndicate will receive an annual income of £8,800 (subject to inland revenue maxima) upon mortgage repayment, estimated to be in 13 years time. That is a rate of 17.6% per annum.
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