• Freehold retail investment opportunity

• Let to The Original Factory Shop

• Secure income; Shareholders’ Funds £46m

• Approximately 8.75 years unexpired lease term

• Guaranteed rental increase

• 7.8% net initial yield

• 9.0% guaranteed minimum reversionary yield

The subject property occupies a prominent position fronting Great Western Road, less than 1.6 km (1 mile) from Chard town centre.  The A358 is immediately to the west and a B&Q retail warehouse is directly opposite.   A Tesco foodstore is located approximately 0.4 km (0.25 miles) to the south.  The property also benefits from being situated in a densely populated residential area.

We understand the property is Grade II listed but is not located within a conservation area.

Planning

Planning consent was granted in May 2010 for “Internal and external alterations, the erection of a rear extension, car parking and the change of use of premises from business use (Class B1) to a shop (Class A1)”.

The property provides the following Net Internal Areas:

Freehold

Tenancy

The property is entirely let to The Factory Shop Ltd, guaranteed by OFS (DS) Holdings Limited, on a full repairing and insuring lease for a term of 15 years from 26th May 2010, expiring 25th May 2025 (approximately 8.75 years unexpired lease term).

The current passing rent is £78,251 per annum (£108.18 per sq m / £10.05 per sq ft). The lease benefits from a rent review on 26th May 2020. The rent is to be reviewed to the higher of 3% per annum compounded (£90,714 per annum) or RPI.

The permitted user under the terms of the lease is “for use as a retail shop as permitted by Class A(1) of the Town & Country Planning (Use Classes) Order 1987”.

The property has been elected for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Our client is seeking £950,000 (Nine Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 7.8%, and a guaranteed minimum reversionary yield of 9.0% in May 2020, assuming standard purchaser’s costs of 5.69%. 

Investment Considerations

1. An opportunity to acquire a freehold retail investment;

2. The investment provides secure income - let to The Factory Shop Limited - Shareholders’ Funds £45.8 million;

3. Approximately 8.75 years unexpired lease term;

4. The lease benefits from a guaranteed rental increase;

5. The property may lend itself to alternative uses in the future, subject to obtaining the necessary planning consents;

6. A purchase at the asking price reflects an attractive yield profile;

7. The investment provides a purchaser with an attractive lot size.