Aqua Trinity Partnership LLP 1
This was our first non pension purchase under the new format of a Limited Liability Partnership (LLP), through which clients are able to invest in similar investment properties to our SIPP Syndicates but just using normal savings.
Purchased in Dorchester in November 2006 at a price of £1,368,000, this property although not contemporary in style, had excellent investment credentials. It was our favourite type of property, where ‘heads our clients win, tails they do not lose’. The reason for this was that we purchased at a time when the tenant was struggling, even though as a national retailer the company had some substance. The lease was very favourable to the long term landlord, although if the tenant failed, this was a large piece of real estate suitable for redevelopment in the centre of Dorchester.
The tenant ‘Bejam Group Ltd’ is owned by the Icelandic retailers the ‘Baugur Group’ and the lease had 24 years remaining at purchase, with no break options and a starting rent of £74,800 increasing every 5 years to the higher of 2.5% per annum or open market value if higher. This means that the rent in the lease is guaranteed to be £122,669 for the last 5 years of the lease.
Although Bauger and Iceland the country are suffering some difficulties, we understand that Iceland (our tenant) is trading extremely well and has ammassed £80 million in cash over the last three years!
The site itself consists of the 8,000 square foot retail unit, together with a 30 space car park adjacent and is freehold. Located in Trinity Street in the centre of Dorchester, this is very much an improving location.
The LLP borrowed £900,000 from Nat West on a variable rate loan, but with interest rate protection and the balance was of course from members capital introduced. The rent repays the mortgage each quarter and is expected to last 15 years.
We expect this to be a very profitable medium/long term investment. Since purchase Iceland have made an approach on the partnership, looking to achieve a much smaller unit. As a result we have investigated the redevelopment potential of the whole site.
Furthermore, we have secured the purchase of the neighbouring property South Grove Cottage, which will allow an enhancement to the existing site. This required an additional small injection of capital by the partners together with further financing from Nat West. However this is becoming an exciting project, which over the long term is likely to benefit the investors.
< Back