This private business deal to find new use for an empty industrial building is a great example of how real business intelligence and foresight doesn’t have to cost the earth and stands in stark contrast to Oldham Council which wants to expand low GVA, low-paid warehouse and logistics work by building expensive new warehouse parks when warehouses all over Oldham stand empty and underutilised.
Picton (LSE:PCTN), the income focused property investment company, has disposed of a non-core property in Drury Lane, Oldham, for £2.2 million, completing its business plan for the asset.
The warehouse was purchased in April 2010 for £0.4 million with an annual rent of £74,000 as part of the acquisition of Rugby REIT. During Picton’s ownership, it secured planning consent to change the use from industrial to leisure, completed a full refurbishment, acquired adjacent land for car parking and subsequently let the transformed asset to The Gym Group Limited until 2031 at an annual rent of £150,000.
The sale price reflects a net initial yield of 6.4% and a 10% premium to the 31 December 2016 external valuation. Net of the £0.8 million of costs incurred since acquisition, the asset was sold at an 80% profit.
Michael Morris, Chief Executive of Picton Capital Limited, commented: “This is a good example of how we used our knowledge of the local market and asset management expertise to double the income and capture a significant increase in value. The proceeds can be used, together with existing funds, to opportunistically acquire assets in larger lot sizes that we believe will generate attractive future returns.”
Empty warehouse Drury Lane Oldham
Empty warehouse Drury Lane now a thriving gym
Click here to read about Nottingham City Council purchasing this property