Investment Details

Property Summary

Phoenix Mill - Failsworth, Manchester

Return
38%

Term
12 months

Phoenix Mill - Failsworth, Manchester

Property Details

Phoenix Mill - Failsworth, Manchester


Site Background

The site is located in Failsworth, an urban commuter town, an arterial route connecting Manchester city centre to Oldham. Manchester lies approximately 3.7 miles to the south west with Oldham 2.4 mils to the north east.

There are good amenities within walking distance of the site, including a Co-op convenience store, a Natwest bank and a small number of pubs. In addition, Failsworth benefits from having three schools: Higher Failsworth primary, Failsworth secondary and New Bridge special needs school. Furthermore, Failsworth centre features a range of shops, includin

g both Aldi and Tesco Extra supermarkets, and The Quayside Medical Centre.

The site extends to approximately 3.6 acres (1.46 hectares). It currently comprises an operational industrial estate, predominantly car repaid and motor trade related, with some other workshop and distribution uses. The site is non uniform in shape but allows for easy development through numerous access points and is largely level.

The property benefits from planning consent for 89 units subject to the signing of a s106 and currently produces a passing income of £147,000 per annum by way of a number of short-term leases.

This site is in receivership and the agents are looking for a quick unconditional sale. There are a number of developers interested to purchase the site subject to vacant possession.

The exit price in this location is circa £25k per plot giving a global value of £2.25m.

However, there is a provision for S106 at £100k and we believe taking out an allowance for this and ground costs of £100,000 - £200,000 we will be netting £1.95m as an exit value to a housebuilder. An affordable housebuilder has already offered us £1.75m on this basis so it follows that a private housebuilder would pay more.

We have agreed a purchase of the site for £1m. The site has been mismanaged due to receivership status and the opportunity exists to increate income from £147,000 - £189,000 just by letting the vacant units. 

There are other potential revenue streams such as letting of the billboard fronting the main road into Manchester City Centre and driving up rents on the units. This is our primary strategy whilst keeping the planning angle available for any onward purchaser.

We would look to sell the site as an investment after holding for 12 months. As a worst-case scenario, we would assume debt on the site up to 70% of value and repay investors their initial investment in full.

Investors would then share in the rental income in perpetuity or until the investment is sold where projected profits will then be distributed amongst investors. 


Financials

Purchased

January 2017

Sold

January 2018

Return

38%

Term

12-18 months

Acquisition costs

£1.13m

Sale price

£1.75m

 

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