SIPP 15–24, 25 and 26 Westover Road in Bournemouth
Due to more of a buyers market in December 2007, we were able to negotiate before exchange of contracts a price reduction of £125,000 to a new price of £1,050,000. We consider this an excellent price for the unit, particularly with the potential that the location holds adjacent to the entrance of the ABC which is likely to be closed and suitable for redevelopment.
Although more speculative in nature, we have with Goadsby's secured leases on all the space and rent of £100,000 per annum has been achieved, on 5 year plus leases, but we are have been able to negotiate breaks on our side after 3 years in order to reserve the redevelopment angle.
Westover Road is very much an improving location with nearby occupiers such as Sony, Roberta and Frances jewellers. Additionally the Westover Road area is likely to see some major redevelopment including the Pavilion, which is almost opposite this building. This should benefit the syndicate. The purchase was off-market, through Goadsby Commercial and a Nat West loan of £ 400,000 used to assist the purchase.
The quick lettings have been a fantastic result and the gross yield on purchase price is 9.52%, but it is the redevelopment angle that is particularly exciting!
International property consultants King Sturge have recently valued the property at £1,325,000, providing a very healthy gain even in the current uncertain climate.
Not only has the mortgage reduced under the repayment terms, but also the value has increased. More importantly, an investor that put in £50,000 into the syndicate will receive an annual income of £6,500 (subject to inland revenue maxima) upon mortgage repayment, estimated to be in 5 years time. That is a rate of 13% per annum.
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