Seneca Property co-investment opportunity
Seneca Property Investments Limited has secured another off-market opportunity to acquire a portfolio of four high-yielding multi-let business centres in the North of England, run as serviced offices.
Seneca Property 101BD Limited (“SP101BD” or “the Company”) has been set up for this acquisition. Using its strong reputation and network in the region, Seneca has successfully secured the four properties for £13.3 million, an estimated £950k below market value.
The total cost of the acquisition is £14.4 million. Seneca is seeking £4.5 million of investor capital, with the balance (£9.9 million) being funded by senior debt provided by Seneca. We believe this demonstrates Seneca’s confidence and commitment to this deal.
Investor capital will be deployed into an interest-bearing loan note and ordinary shares. This offers the potential for both income and equity upside: an annual coupon of 7.15% paid quarterly in arrears, and a total projected return between 1.53x (12.5% IRR) and 1.84x (18.3% IRR) over 4 years – note that neither the income nor the equity upside are guaranteed.
The four business centres will complement Seneca’s existing six-site business centre portfolio, Seneca Property 101 Limited (“SP101”). The latter is trading well and Seneca has already increased annual rent by £75k since the deal completed in August 2017.
Whilst the two portfolios will trade under two separate legal entities, Seneca considers them to be an excellent geographical and commercial fit which should help achieve operational efficiencies such as better rates for utilities, waste collection, maintenance and broadband. This could ultimately benefit investors in both companies. In addition, the plan is to sell the combined enlarged portfolio, which could attract a premium sales price due to the scale and diversity of the estate.
Completion is planned for the end of March.
About the four sites
Northbridge House is situated in the town of Burnley, approximately 20 miles north of Manchester, close to junction 10 and 11 of the M65 motorway with Burnley central train station a short walk away. The centre offers a mix of high-quality office and storage accommodation with 96 car parking spaces.
Deakins Park is 3 miles north of Bolton Town Centre providing easy access to both the M61 and M60 motorways as well as Bromley Cross railway station. The centre has just under 55,000 sq ft of recently refurbished high-spec office accommodation. There is an onsite café and ample parking.
City View House is located close to Manchester city centre and minutes from the motorway network and Manchester Piccadilly train station. This centre currently has 100% occupancy, reflecting its quality offering combined with high demand within the area. There are 134 years remaining on the lease.
Lodge House is situated a five-minute walk from Burnley Central Station. This centre is a converted mill and provides high-quality office accommodation and individual offices alongside excellent parking.
- Off-market commercial property investment
- Target raise
- £4.5 million
- Target return
- 1.53x to 1.84x
- Target income
- 7.15% a year
- Target exit
- 4 years
- Minimum investment
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