Key statistics at 31 March 2020

Purchase Price at 26 March 2018

£5.2 million                                          

Valuation at 31 March 2020:

£6.9 million 

Size at 31 March 2020

66,200 sq.ft 

Contracted rent at 31 March 2020

£407,300 p.a.

Occupancy at 31 March 2020:

100%

Key tenants:

Mexgrocer Ltd, Bluebay Building Projects Ltd, Howden Joinery Properties Ltd

What is it?

Stadium Industrial Estate comprises eight units totalling 66,200 sq.ft. It is in a strategic urban location, one mile from junction 11 of the M1 and 15 miles from the M25. It is also close to London Luton Airport and rail access into central London. We acquired the estate in March 2018, as part of a portfolio.

Why did we buy it?

The low average rent of £5.27 per sq ft on acquisition meant there was good reversionary potential. The estate also had a 13.0% void on purchase, giving us the opportunity to capture rental uplifts on new lettings. There was also scope for targeted capital expenditure to drive rental levels.

What have we done since purchase?

Our active asset management programme has resulted in the estate being fully let, with a 23.8% increase in contracted rent. Key activities have included:

  • negotiating a dilapidations settlement of £0.1 million with an outgoing tenant and investing £0.3 million in a comprehensive refurbishment of units 12 and 13;
  • letting a 15,800 sq ft unit at £7.50 per sq ft to a specialist food importer, on a ten-year lease with a guarantee from a D&B 3A1 covenant; and
  • letting unit 4 at £7.25 per sq ft on a new five-year lease and co-ordinating the redecoration of the adjacent Howdens unit at their cost.

What is the future?

In the near term, we will continue to drive rental income by settling the current outstanding rent reviews of units 2 and 3, which have passing rents of £5.50 per sq ft, and units 13 and 14, where passing rents are only £5.00 per sq ft. We also intend to use available service charge funds to repair all forecourts and landscaping. In addition, we will complete the uniform redecoration of the estate by undertaking works on units 2 and 3.

Sustainability features

  • Location, fit-for-purpose buildings and upgraded services should ensure long-term demand for the space
  • Building lifespan extended via refurbishments and new fencing has improved security
  • Old gas-fired central heating boilers removed and fluorescent strip lights replaced with energy-efficient LED lighting
  • Low embodied carbon maintained by remodelling existing estate rather than full redevelopment
  • Close to public transport and served by both bus and rail links

Comment 

"This estate highlights the value of a strong “economically viable” location, clearly demonstrating uplifts in both rental and capital value ahead of market forecasts that can be achieved through active asset management. Working closely with our occupiers and local advisors, we have been able to deliver a quality product that is in strong demand. We continue to constantly review ways of improving estates for the benefit of our occupiers and Luton is a key example illustrating the successful implementation of this strategy."

Andrew Bird
Managing Director, Tilstone