Spectrum, Solent Business Park - Refinanced December 2016
The building is around 30 years old, totals just under 40,000 sq ft on three floors and has an excellent parking ratio of 1:200. Previously tenanted by Santander, and owned by Mapeley which was in financial diffi culty, Craigard secured the opportunity to acquire the freehold in October 2012 on a very short timetable at a highly attractive figure of £800,000 – £20 per sq ft.
The building required refurbishment and new M&E but has excellent flexible floor plates and good floor-to-ceiling heights. At this extraordinary pricing, Craigard quickly assembled a syndicate to acquire the building in under a month, receiving support from two other corporate investors in raising the cash to purchase and refurbish the building (a pre-let of the ground floor was secured to MITIE). Craigard has systematically remodelled the building into a modern energy efficient (EPC rating B) facility that is now fully let with six tenants paying rents of £10.00 - £12.50 per sq ft. After rent frees expire the annual rental of the building is set to climb to around £475,000.
After careful analysis, Craigard offered the investors the opportunity to sell the property on conclusion of the initial business plan, or to refi nance and hold it because rents before the recession were in the range of £15.00 - £17.00 per sq ft on Solent Business Park. There is no reason, with declining supply, that rents should not recover to that level over the next few years. Given it is newly refurbished, the building is an attractive investment and there are real prospects for further returns.
Investors have taken this concept on board and refinancing has been completed with Santander – raising £3.2million against a current value of £6million. This allowed investors repayment of their original stakes, rolled up interest of 8% per annum and Craigard has been paid part of its performance bonus – reinvesting some of its fee as equity in the deal. One of the investors decided not to participate in the refinancing, so an agreement was reached to acquire its stake. This is likely to be the first of a number of Craigard syndicate acquisitions where the property still has prospects for future return and investors will be offered the opportunity to retain the asset.