Key statistics as at 30 September 2019

Valuation:

£6.78 million                                             

Size:

66,200 sq ft

Contracted rent:

£407,302 p.a.

Rent per sq ft:

£6.16

Occupancy:

100%

Key tenants:

Howden Joinery, Bluebay Building Products & Mexgrocer

What is it?

We purchased Stadium Industrial Estate as part of the IMPT portfolio in March 2018, comprising two terraces, each of four units, totalling 66,200 sq ft. At the time of purchase, the vacancy rate was 13%, the average passing rent was £5.27 p.s.f and both the estate and units presented poorly.

Why did we buy it?

The estate occupies a strategic location close to a large urban population, London Luton Airport, Rail access into central London and is only 1 mile from Junction 11 of the M1 and 15 miles from the M25. As a result of the strength of this South East location, we were confident the passing rent would be accretive.

What have we done since purchase?

Following acquisition, we negotiated a £100,000 dilapidations settlement with an outgoing tenant and invested £300,000 in a comprehensive refurbishment of units 12&13 in exchange for a new 10-year lease at £7.50 p.s.f, with 5th-year rent review. During the same period, we also let a previously vacant unit at a rent of £7.25 p.s.f on a new 5-year lease with a 3rd-year tenant break option (with a 3-month penalty). In 2019 we coordinated the redecoration of the Howden’s unit at the front of the estate in conjunction with other adjoining units, replaced estate signage and erected fencing to improve security, all of which has dramatically improved the estate appearance and management.

What is the future?

With recent letting evidence ranging between £7.25 - £7.50 p.s.f. there are significant opportunities to broaden the rental tone with current rent reviews across four units (totalling c33,000 sq ft) which currently have an average passing rent of £5.25 p.s.f. In addition, there are comprehensive plans in hand to repair the fabric of the estate’s forecourts and landscaping plus a desire to complete further building redecoration.

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