Imperial House, Kings Park Road, Southampton - Purchased October 2018
Located in an established city centre office area, Imperial House is a modern four storey office building totalling 13,245 sq ft and a secure ground floor car park. The building was bought out of a Receivership. The receivers had cosmetically refurbished the building when a major tenant had vacated but lacked sufficient cash to deal with the more comprehensive work that was needed to the mechanical and electrical installations.
Craigard bought the building with a business plan to conclude all the necessary works at a cost of about £400,000 and indeed, let three of the four vacant floors let within six months of practical completion of the works. Since then we have been impacted by uncertainty caused by Brexit and now the Covid 19 pandemic which has frustrated letting of the final vacant suite. However the project is in a good place and ahead of business plan.
On conclusion of the final letting investors in the syndicate will review whether to hold or sell the investment created. There will be a strong argument to retain it given that the lettings achieved have been done at competitive rents so there are good prospects for future rental growth. Further the building has now been comprehensively refurbished and is in good condition to be retained for the medium term. Bought for £2m with a £1m bank loan, expected exit pricing is about £3.35m showing an investor annual IRR of around 15% over the three year time frame of the project.