When we purchased 30 and 50 Pembroke Court in June 2015, we were confident from our acquisition due diligence that we could enhance value by extending the income profile. Whilst both properties were let to strong covenants, the average weighted lease length to earliest termination was only 2.9 years.
Our occupier focused approach enabled us to engage with the principal occupiers immediately on purchase. This quickly resulted in us re-gearing the lease of 30 Pembroke Court, with Canterbury Christ Church University taking a new 13 year lease (no break) at a rent of £0.61 million per annum in return for eight months rent-free.
At 50 Pembroke Court, we subsequently re-geared the two floors occupied by Vanquis Bank, securing a ten year term to the first break at an initial rent of £0.71 million per annum, with 2.5% per annum compound increases for the length of the lease. No incentive was given and the initial rent was 6% ahead of the estimated rental value.
Within seven months of acquisition, we had re-geared 80% of the income from this property increasing the average weighted lease length to earliest termination from 2.9 years to 9.5 years, and achieved a 15% increase in valuation.
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