Office Investment: 45 Clarendon Road, Watford, UK

– Client Property (SIPS)
– Purchase (Sep 2016): £7.90m
– Sale Price (Dec 2017): £11.10m
– Total net profit: £3.06m
– Hold period: 1.25 years
– IRR: 29% (unlevered)

We acquired this 23,000 ft2 office building in September 2016 at a yield of 6.8%. Net operating income (NOI) at purchase was £580,528 per annum and included an 18-month rent guarantee over the second floor, which was vacant. In May 2017 we re-let the first floor (following lease expiry and receipt of £48,000 in settlement of dilapidations) and the vacant second floor at headline rents of £25 and £32.50 per ft2 respectively, with the latter representing a new rental high for Watford.

In December 2017 we sold the property to Essex County Council at 5.5% yield having increased NOI by 12.2% to £651,435 per annum. The net capital gain amounted to £2.63 million, a 31% uplift on cost. The total net profit was £3.06 million, representing an IRR of 29% IRR (ungeared).