Summary
BHP purchase the part let unbroken terrace of industrial units with an intention of breaking the estate up into units for freehold sales.
The well documented financial crisis impaired the ability of buyers to secure bank finance. As a result, BHP altered its business plan from one of freehold disposal to include leasing should potential tenants prefer.
BHP successfully leased the vacant property and re-geared and extended existing tenants on the estate. BHP now only holds a single unit which is fully let on a 10 year lease.
Business Case
STRENGTHS
- Unbroken terrace of industrial units
- Low capital value psf
OPPORTUNITIES
- To improve the value of the vacant units through a limited refurbishment
- To benefit from the value arbitrage between the acquisition price and Freehold VP values
WEAKNESSES
- Not a core industrial location in Ashford
- CAPEX required on the vacant units
- Weakening Freehold market
THREATS
- Void risk
- Freehold demand dependent on primarily bank finance