Protected: Lloyds Bank Investment – VAT Free – Alternative Use Potential

Planning

On 27th March 2024 a Certificate of Proposed Lawful Use or Development was issued by West Suffolk Council. The certificate permits change of use of the property from a bank to restaurant / coffee shop (class E commercial, business and service) without the need for planning permission. This helps establish an alternative use for the property should Lloyds vacate at some point in the future. A copy is available to download from the data room.

Asset Management

Potential exists to exploit the development potential in the future.

Based on the rental devaluation agreed between the vendor and the tenant, £10,281 of the total rent is attributable to the upper parts and the remainder is attributable to the ground and basement.

Therefore, based on the 8.0% purchase yield, this apportions £650,000 to the bank on ground and basement, leaving £120,000 for the upper parts which reflects only £48 per sq ft / £528 per sq metre.

Our research suggests that one- and two-bedroom flats in this location are worth in the order of £140,000 each / £280 per sq ft / £3,012 per sq m. We propose that there is the potential to create 4 flats on the upper parts, subject to planning permission. This would provide a potential future exit value from the upper parts in the order of £560,000.

Accommodation

The property has been measured by BKR Floor Plans and provides the following floor Net Internal floor areas:

A set of floor plans is available to download and the measured survey report will be re-addressed to a purchaser at a cost of £630 + VAT.

Tenure

Freehold.

Tenancy

The property is let to Lloyds Bank Plc on a full repairing and insuring lease for a term of 5 years from 25th March 2022, expiring 24th March 2027 at a passing rent of £65,000 per annum.

At lease renewal, the rent was rebased downwards from £72,500 per annum under the previous lease.

Therefore, there are approximately 3 years unexpired with no breaks.

Based on our analysis the passing rent equates to a Zone A rate of £51.80 per square foot.

The tenant has been in occupation for over 44 years.

Covenant

Lloyds Bank Plc (Co. No. 00002065), has reported the following figures:

Lloyds Bank was founded in 1765 and is one of the leading British retail and commercial banks with over 1,500 branches across the UK. The bank is the principal subsidiary of Lloyds Banking Group which is a publicly quoted company and the largest UK retail and commercial financial services provider with around 26 million customers. The Group’s main business activities are retail and commercial banking, general insurance and long-term savings, provided through well recognised brands including Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows.

For further information visit www.lloydsbankinggroup.com.

VAT

The property has not been elected for VAT and therefore VAT is not applicable on the purchase price.

Proposal

We are instructed to seek offers in the region of £770,000 (Seven Hundred and Seventy Thousand Pounds), subject to contract. This price reflects a net initial yield of 8.0%, assuming purchasers’ costs of 5.44%.

Please note that a purchaser will be re-charged the costs of the measured survey (£630 + VAT) and searches (£360) which are provided in the data room.

Please note that a purchaser will be charged a Transaction Fee of 1% of the Purchase Price plus VAT.

Investment Considerations

1. Newmarket is the Headquarters of British horse racing, attracting millions of visitors every year;

2. Let to the highly secure covenant of Lloyds Bank Plc (Revenue £17.4 bn , Pre-Tax Profits £5.7 bn, Net Worth £40.6 bn);

3. Repurposing potential via future development of the upper parts;

4. Apportioned price of the upper parts is only £48 per sq ft / £528 per sq m, compared to the potential residential exit value of £280 per sq ft / £3,012 per sq m;

5. Recently renewed lease at re-based rent;

6. Dual entrances from the front and rear;

7. The tenant has been in occupation for over 44 years;

8. Certificate of Lawful Use for change of use to restaurant / coffee shop (Use Class E);

9. 100% prime pitch location in the heart of the town centre;

10. VAT Free Investment

11. Attractive lot size to an investor;