Prominently located at Lower Parliament Street, Nottingham adjacent to the existing Bio-City buildings within Nottingham’s creative quarter.
150 years long-leasehold interest at a peppercorn rent from Nottingham City Council.
Construction commenced in August 2015 on the new Biocity Science building over ground and 4 upper floors providing state of the art laboratory and office accommodation and extending to 52,475 sq ft NIA. Willmott Dixon is the appointed contractor.
To be let to Nottingham City Council for 30 years from completion of this transaction on a full repairing and insuring lease at an initial rent of £714,000 per annum equating to £13.61 per sq ft. The rent is reviewed every 5 years in line with the CPI index compounded annually.
Sub-let to Biocity the UKs leading Bioscience incubator organisation.
Total construction costs are £26million, however, by way of a grant and other council funds, the total price sought inclusive of stamp duty is £17,760,000 (Seventeen Million Seven Hundred and Sixty Thousand Pounds) reflecting a pre-tax yield of 3.95% adopting purchasers costs of 1.8%.
There are estimated £9,750,000 of available capital allowances to a purchaser which at a higher tax rate of 45% are worth £4,387,500 over a 5 year period.
Nottingham City Council is to provide a loan to the purchaser of £11,011,200 for a 5 years period at a fixed interest rate of 4.50% which equates to £495,484 interest per annum. No amortisation required during this period.
Purchaser equity requirement of £6,748,800 which after interest charges provides a net annual pre tax yield of 3.18%.
Post tax annual yields are Year 1 - 7.54%, Year 2 - 6.86%, Year 3 - 6.27%, Year 4 - 5.76%.
At year 5 Nottingham City Council have an option to purchase the building for £15,300,000. If the council exercise their option then the post tax IRR is 7.96% with an anticipated after tax profit of £2,528,419 which is a 37.5% return of equity.
If the option to purchase is not exercised then there will be 25 years remaining on the lease.
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