SIPP 12 – The Whitehouse Restaurant, Basingstoke
Purchased in October 2006, this was our first property purchased under the new A-day regime, with lower borrowing, but the same principles as our existing pension syndicates.
The tenant Pizza Express has been in occupation since 1988, when the property was converted to a restaurant. The location is excellent, next to Basingstoke Football Club and opposite a key retail park. We understand that trade has always been strong at this location.
Purchased for £1,080,000, we used client’s pension money of £ 815,000 with a Nat West loan funding the balance. The initial rent at purchase was £52,000 and we increased the rent at review to £65,000. The lease expires in 2013, but the tenant is already talking with us about a new lease.
A fine looking building in a prime location, we believe that this will be a steady syndicate. Pizza Express have recently improved the property and this indicates a long future beyond lease expiry.
The mortgage has reduced under the repayment terms. More importantly, an investor that put in £50,000 into the syndicate will receive an annual income of £4,000 (subject to inland revenue maxima) upon mortgage repayment, estimated to be in 5 years time. The rent review is likely to increase this annual income figure. On the current rent that is a rate of 8% per annum.
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