stop government-office-investment-dudley - Singer Vielle Sales

Government-Let Town Centre Office Investment

Regent House | 87-88 King Street | Dudley | DY2 8PR

£865,000

subject to contract

EXCHANGED

Summary

  • Let to Dudley Metropolitan Borough Council

  • Undoubted Government Covenant

  • 10 year lease from 2012

  • £500,000 refurbishment in 2012

  • Staff amalgamated from 8 locations into Regent House

  • Town centre location with designated car park

  • Offers in the region of £865,000, subject to contract

  • 8.5% net initial yield

  • £75.50 per sq ft capital value

Location

Dudley is a West Midlands borough located within the Black Country conurbation approximately 16 km (10 miles) west of Birmingham and 9.5 km (6 miles) south of Wolverhampton. The town benefits from good communications being served by a number of major roads. Junction 2 of the M5 Motorway which links with the M6 and M42 Motorways is approximately 6.5 km (4 miles) to the west.

Dudley Bus Station is situated immediately behind the subject property on Fisher Street providing many connections to the surrounding town, cities and communities including Birmingham, Halesowen, Smethwick, Stourbridge, Walsall, West Bromwich and Wolverhampton. In addition, there are coach services run by National Express serving London and Wolverhampton as well as Blackpool, London Heathrow and London Gatwick.

Situation

The subject property occupies a prominent town centre position fronting King Street and running parallel to the retail thoroughfares of High Street and Castle Street within easy walking distance to the town centre shopping centres including Dudley Bus and Coach Station.

Junction 2 of the M5 Motorway is within close proximity via the A461 and A4123 with Sandwell and Dudley Train Station situated approximately 6 km (3.8 miles) to the east.

Dudley Castle and Dudley Zoo is located on Castle Hill to one end of Dudley town centre. Dating back to the time of Oliver Cromwell in the 11th Century the castle today is significant visitor attraction with Dudley Zoo situated in its grounds.

Description

Regent House comprises a detached four storey office building, plus basement, constructed of steel frame beneath both pitched and flat roofs with brick effect cladding to the front and elevation to one side with the other elevations having been rendered.

The property is occupied by the HR and Payroll department for Dudley Metropolitan Borough Council. The Council enlisted a comprehensive refurbishment of the building in 2012 at a cost of approximately £500,000 moving staff from 8 locations to the subject property.

Copies of the Specification of Building Works and the Electrical Specification at the time of refurbishment are available to download and summarised as follows;

• Roof works
• Structural timber to wall and roof structures
• Internal passenger lift
• Ceiling works
• New internal and external lighting
• Installation of a fire alarm system
• General painting and decorating
• New security gate and fencing
• External and landscape works including tarmacadam surfaces

Please note, the refurbishment works to the building in 2012 are tenants.

The building also benefits from 21 car parking spaces providing a ratio of 1:50.70 sq m / 545 sq ft.

Rateable Value

The rateable value for the property effective from 1st April 2017 is £47,500 and the Uniform Business Rate for 2017 / 18 is 46.6 pence per pound.

Accommodation

We are advised the property provides following net internal floor areas;

  Sq M Sq Ft
Basement 143.54 1,545
Ground 168.43 1,813
First 242.85 2,614
Second 242.85 2,614
Third 267.00 2,874
Total 1,064.67 11,460

Tenure

Freehold.

Tenancy

The property is let to Dudley Metropolitan Borough Council on a Full Repairing and Insuring lease for a term of 10 years from 26th March 2012 expiring on 25th March 2022, therefore providing approximately 5 years unexpired lease term.

The current passing rent is £77,500 per annum (£72.80 sq m / £6.76 per sq ft) overall.

The March 2017 rent review has not been actioned.

Covenant

The property is let to and fully occupied by Dudley Metropolitan Council, an undoubted UK Government covenant.

Market Commentary

Our enquiries of the office market in Dudley reveal that the passing rent is in line with current market levels for office accommodation in the town centre. For example, we understand that new lettings at the multi-let Trafalgar House which is diagonally opposite the subject property are being achieved at £5.00 per sq ft to £6.00 per sq ft exclusive.

Rents in Dudley town centre are at a discount to the out of town office markets such as Brierley Hill where we understand rents are currently from £10.00 per sq ft to £14.00 per sq ft.

VAT

The property has been registered for VAT. Therefore, VAT will be payable by a purchaser however it is envisaged the transaction will be treated as a Transfer of a Going Concern (TOGC).

Proposal

We are instructed to seek offers in the region of £865,000 (Eight hundred and sixty-five thousand pounds), subject to contract, reflecting a net initial yield of 8.5% after purchasers’ costs of 5.59% and a capital value of £75.50 per sq ft.

Investment Consderations

  1. Investment opportunity let to the UK Government providing undoubted secure income;

  2. Town centre office building benefitting from its own designated car park;

  3. The property was the subject of a comprehensive refurbishment in 2012 at a cost of approximately £500,000 demonstrating long term commitment to the property;

  4. A workforce from 8 other locations were amalgamated together into the subject property;

  5. Attractive lot size for an investor providing an equally attractive yield and capital value.

Contact Us

Singer Vielle   +44 (0) 207 935 7200
Neil Singer neil@singervielle.co.uk +44 (0) 203 478 9120
Dale Henry dale@singervielle.co.uk +44 (0) 203 701 1356
Richard Wolfryd richard@singervielle.co.uk +44 (0) 203 701 1353
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Mishcon de Reya +44 (0) 20 3321 7446
Robert Mander robert.mander@Mishcon.com
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