The Opportunity

A surfeit of relatively new, high quality commercial properties that are prime development opportunities has seen Milton Keynes become a hotbed of ‘Permitted Development’ activity in recent years, with a strong track record of residential conversion success. Unsurprisingly, this growth has also been fuelled by the proximity of Milton Keynes to London – journey times by train to and from London (Euston Station) are as short as 32 minutes. The location also offers excellent road communications, with easy access to the M1 motorway providing a direct route to the north and south by car, and just 30 minutes from London.

Reditum Capital was approached regarding the acquisition and development of a self-contained office building in the heart of Milton Keynes – 152 Silbury Boulevard – which is arranged over ground and two upper floors. It has recently been refurbished and is in very good condition, having been built in 1998. The building is currently all B1 office use.

The property is located in a prime position on the corner of Upper Second Street and Silbury Boulevard. The surrounding area is attractively landscaped, tree-lined and experiences low levels of road traffic, and the property enjoys largely uninterrupted views of the adjacent countryside. The main shopping centre, and therefore a number of major retailers, such as Sainsbury’s, Morrisons, Currys Digital and B&Q, are in close proximity.

By virtue of its central location, the property is well-suited to meeting the needs of those working in Milton Keynes itself, or those commuting to London in that it benefits from excellent access to Milton Keynes Central railway station, which is within seven minutes walking distance.

Strategy

In order to capitalise on the current surge in PD-related activity, the strategy is to:

  • submit a PD application for the conversion of the building to 29 residential apartments
  • submit a separate new-build planning application for an additional two-storey level, delivering a further 14 apartments (the adjacent building has recently submitted a planning application to enlarge the property to five storeys and we are therefore confident that the pre-application will succeed).

The total NIA, including the 14 additional apartments, is estimated at 24,184 sq ft, yielding an exit sq ft value of £443. The apartments are well-suited to the needs of first-time buyers and so will be eligible for the government-funded ‘Help to Buy’ scheme: a loan of up to 20% of the new-build purchase price, interest-free for five years.

The target timescale is set at 21 months for the full development.

Exit

Our proposed exit route is pre-construction sale of the apartments to UK and overseas investors on the basis of substantial deposits, followed by open market sales within the UK.

Projected investor returns:

  • Projected term: 21 months
  • Minimum interest term: 6 months
  • Projected interest rate: 1% per month

Projected total GDV

£9.2m

Projected LTV

67.65%

Projected  total cost

£6.8m

Projected profit (after disposal costs)

£1.8m

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