Pinder, Fry & Benjamin specialises
in the structuring of property partnerships and the purchase of properties by those partnerships.
Its next purchase is Becket House, a building next to Waterloo Bridge occupied by Ernst & Young. Its Gold Nine Property Limited Partnership is an interesting and different form of investment that may appeal to those who have a fairly high-risk profile.
The Limited Partnership will buy the property for £73.1m, of which 80.5 per cent – £61.9m – will be borrowed and £15m will come from investors who can put a minimum of £25,000 into the property, which they will get back. The Partnership cannot ask for any further injection of cash. The net rent is expected to be £4,698,000 a year.
Ernst & Young is the tenant in the building and the lease has another 22 years to run under a standard commercial rental agreement, meaning that the rent can only go up.
On top of this, it is expected that there will be an initial rental yield of 6.11 per cent a year and standard industry assumptions predict an overall income of 10.9 per cent, although this is not guaranteed.
The positives are:
Enables geared property exposure.
Waterloo is arguably an up and coming area and is in the process of being regenerated.
Ernst & Young is a reliable tenant.
The negatives are:
Office investment can go wrong.
If there is a problem with the tenant, you can lose your income (rent) leading to a knock-on effect on the overall value of the building.
Mark Dear is business development manager at Charcol Holden Meehan