6th July 2016
Stuart Cooper
Roger Hannah were appointed to act for the owners of 236 Wellington Road South, Stockport let to Lloyds Pharmacy.
The property was let for 21 years from 1998 at £15,000 per annum with 3 years unexpired under the lease. We considered that based on this lease structure and rental that the property had a maximum market value of £195,000 reflecting a yield of 7.5%.
We advised the Landlord to seek to re-gear the lease with the tenants. Our negotiations resulted in Lloyds Pharmacy agreeing to take a new 8 year lease at a rental of £16,000 per annum rising to £18,000 per annum after year 4.
To achieve this result we had to offer the tenants a 1 year rent free period.
The effect of the new lease structure transformed the market value of the property. We marketed the investment and achieved a sale at £225,000 with the new buyers accepting that they would be responsible for the rent free period. The effective sale price amounted to £241,000 equating to a yield of 6.43%. By restructuring the lease, the clients were able to achieve a £30,000 increase in their capital value on sale.
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