Seneca Property off-market investment – Macclesfield
ALERT: Offer now closed (28 February 2019)
This offer has now closed. Any applications already submitted will be processed on a first come, first served basis.
Notice to investors
This is a new property deal from Seneca Property, promoted by Seneca Partners Ltd.
Seneca is raising £1.70 million of investor capital to fund the opportunistic off-market purchase of a freehold Grade II listed mill building in Macclesfield. The building has been fully converted to 28,000 sq ft of modern office space and is fully occupied by a large tenant, giving circa three years of contracted income. The estimated business plan target return is 1.5x-1.75x, although there are no guarantees.
Seneca is aiming to complete the purchase by 18 January 2019 and the fundraise is expected to close soon.
Due to the tight timeframes we have not reviewed the offer details and produced a research report, as we normally do for property deals. However, we believe the offer might be attractive to some investors. To read more, please download the Information Memorandum and application form. The minimum investment is £25,000.
Risks – important
This is a single property investment with no diversification.
Like all investments available through Wealth Club, it is only for experienced investors happy to make their own investment decisions without advice. If you’re unsure, please seek advice.
Property investments are high-risk and for the long term, so should only form part of a balanced portfolio. They are also illiquid and hard to sell and value. Property values could fall for any number of reasons. You should not invest money you cannot afford to lose. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
Wealth Club Limited and Seneca Partners Limited are authorised and regulated by the Financial Conduct Authority (FCA). Seneca Property Investments Limited, the property manager, is not regulated by the FCA.
Offer overview from Seneca
The property is an opportunistic purchase of an attractive, freehold, Grade II listed mill building in the Centre of the Cheshire Market town of Macclesfield;
- The building has been fully converted to 28,000 sq ft of modern office space and is 100% occupied by a large tenant giving c.3 years of contracted income (£301k per annum) which in total is equal to c.33% of the purchase price;
- Given the quality of the asset, Seneca is using debt to leverage investor returns, at a modest level of c.46% LTV (£1.2m debt vs purchase price of £2.6m). Terms have been sourced from Lloyds at a margin of 2.35% above Base Rate;
- The intention is to use the contracted revenue to amortise debt, such that at the end of the three year period, the senior debt is forecast to be c.20% of purchase price and c.30% of the property’s vacant possession value (valuation determined by the bank’s valuer). There are two possible business plan scenarios, not guaranteed: a) The current tenant renews for a further 5 years and Seneca then sells the property for a profit with the benefit of this longer lease in place; b) The current tenant vacates. Seneca breaks up the building into multi-let areas and runs it as a “Biz Hub” business centre. Biz Hub is a portfolio of 12 business centres in the North of England which is owned and managed by the Seneca Property team.
Seneca believes the property lends itself nicely to this model given it is close to the town centre/train station, has ample on-site parking and has benefited from extensive recent capital expenditure, including the installation of kitchen and breakout areas on each floor. In addition, the property is a listed building which means it will not incur Rates on empty offices which will reduce Seneca's holding costs.
Key investment highlights
- Three years of secure income to a strong covenant which should navigate the investment through a period of potential economic turbulence in the wider economy over the next three years
- High rental yield enabling the senior debt to be aggressively amortised during the hold period, resulting in a low level of gearing at the forecast lease expiry
- Good property fundamentals with Macclesfield being an affluent town in Cheshire with direct rail connections to London (c.1hr45) and Manchester (c.22mins), as well as Manchester Airport (11 miles away)
- Strong optionality, with both versions of the business plan forecast to deliver strong capital growth for investors at 1.5–2.25x investor capital – not guaranteed
When you invest, Seneca Partners will pay Wealth Club a commission of 3%: there is no additional cost to you. Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 15.01.2019
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Commercial property investment
- Target raise
- £1.7 million
- Target return
- Target completion date
- 18 January 2019
- Minimum investment
- Closing date