The Opportunity

The asset, New Horizons Court, is situated in Brentford TW8. It is a landmark, self-contained office campus comprising over 140,000 sq ft arranged in four self-contained office blocks, with more than 527 secure underground parking spaces, together with nine courtyard office buildings of 31,000 sq ft which benefit from a further 69 parking spaces.

It is located in a pivotal position between the central London and western corridor office markets and benefits from excellent access to both, with central London just nine miles away, Heathrow Airport within 15 minutes and Waterloo Station within 30 minutes.

A number of major employers have their office headquarters in close proximity, including those of BskyB, GlaxoSmithKline, Cable & Wireless, Kraft, General Electric, EMC2, and JC Decaux, thereby enhancing the potential demand for residential units.

We succeeded in acquiring the property ‘off market’ on particularly attractive terms at £270 per sq ft, whereas similar sites in the adjacent area have recently traded at circa £400 per sq ft.

The developer’s credentials are particularly robust, having undertaken over £160m of real estate trading and development transactions since January 2016.

Whilst prior approval has been obtained to convert the four office blocks into 268 luxury residential apartments, original planning consent prohibits the conversion of the courtyard buildings to residential.

An Article 4 direction is coming into force in January 2018 across the Borough of Hounslow prohibiting any further applications to convert office space to residential use under the current Permitted Development rules, significantly enhancing the value of the property as there will in future be significantly fewer development opportunities available for acquisition in the area.

The apartments will be eligible for the ‘Help To Buy’ scheme, with no requirement for an affordable housing element.

Strategy

Our strategy, therefore, is to:

  • implement current planning consent and develop the 268 apartments;
  • sell the surplus parking spaces;
  • refurbish and let the courtyard buildings, and dispose of the tenanted investment;
  • sell the freehold prior to the commencement of works.

We are pursuing a number of additional opportunities in order to optimise the GDV of the asset.

These include:

  • a further 40 apartments to be added to the four office blocks
  • construction of an entirely new 6-8 storey state-of-the-art office tower, or hotel, in place of the courtyard buildings
  • conversion of a raised car park (Building D) to provide a further 10 apartments.

The target timescale is set at 24 months for the full development.

Exit

We have formulated a number of potential exit routes

  • trade sale on an ‘as is’ basis
  • trade sale to a PRS operator
  • pre-construction sale of the apartments to UK and overseas investors on the basis of substantial deposits, followed by sale of the remainder to UK buyers.

Projected investor returns:

  • 12% per annum preferred coupon up to 25% of profit (pro rata to level of mezzanine investment)

Projected total GDV

£126.3m

Projected LTV

61.76%

Projected total cost

£82.0m

Projected profit (after disposal costs)

£42.3m

Get in touch

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