Seneca Property exclusive investment – Greater Manchester

CLOSED

An exclusive opportunity for Wealth Club investors to co-invest with Seneca Property in a fully tenanted six-unit trade park in Greater Manchester with potential for further development.

The opportunity offers the potential for both income and capital growth with good downside protection. Total target return of up to 1.78x – not guaranteed.

Interested? Read our report and reserve an allocation now.

Highlights

  • Aims for income, 7% p.a., and capital growth – not guaranteed
  • Versatile, mixed-use freehold with A1 planning consent in great location
  • Projected upside total return of 1.78x (mid case 1.53x) on a “business as usual” basis – not guaranteed
  • Land development potential not included in projections
  • Attractive purchase price with good downside protection
  • Proven and professional investment team 
  • Exit targeted from year four – not guaranteed
  • Minimum investment £10,000
  • Application deadline 27 June 2018

Watch a video interview with Jeff Morton of Seneca Property

The offer

Tower Mill is a fully tenanted six-unit freehold trade park with development potential in Greater Manchester. 

Seneca Property has secured the attractive purchase price of £1.89 million, on the premise it would move quickly so the planned completion date is 30 June 2018. To fund the purchase, Seneca seeks to raise a total of £1.3 million equity from investors and £0.8 million senior debt from a bank (max LTV of 50%).

Wealth Club investors can exclusively participate and invest alongside Seneca (minimum investment £10,000).

The opportunity

Tower Mill is located in a prominent position, close to the main arterial route linking Manchester with the M60 motorway. Also nearby are Manchester City Football Club, Manchester Velodrome and a number of large retailers such as Halfords, Morrisons, Aldi and Matalan. More than 27,000 cars drive by the site every day.

Seneca Property Greater Manchester – Tower Mill mapSeneca Property Greater Manchester– Tower Mill

The property currently includes six units, which are all let, and generates annual gross rent £160,000. 75% of this comes from the three largest tenants: Machine Mart, J&S Accessories and Crown Decorating Centre – robust, specialist businesses with long trading histories and nationwide presence.

There is potential for development on the upper floors to provide office space as well as obtaining planning permission to develop a 0.4-acre parcel of land to the rear of the property. This additional land was negotiated as part of the purchase. The property has valuable A1 planning consent which provides flexibility allowing for a variety of alternative uses.

Target returns

Seneca has looked at three scenarios: upside, business plan and downside case, all of which have been prepared on a “business as usual” basis. All three assume an exit in year four and an annual coupon of 7% paid to investors quarterly.

The upside case assumes the property is sold for £3.15 million. If achieved, this will generate an investor total return of 1.78x – not guaranteed. 

The business plan case assumes Seneca sells the property for £2.57 million. If achieved, this could generate an investor total return of 1.53x – not guaranteed.

The downside scenario allows for Seneca having to sell the building on vacant possession (should all the tenants leave and Seneca fail to let the property again). The building has been valued at £1.4 million vacant possession. This is an extreme situation, however, in this instance, the forecasts show that investors should still be able to get their capital back, although this is not guaranteed.

For the business and upside case the target return for capital growth per £25,000 invested ranges from £38,250 to £44,500 after four years.

Exit strategy

The business plan aims to achieve an exit in year four. A sale to an institution or property company is likely – albeit not guaranteed – due to the strong property fundamentals.

Risks

This is an illiquid investment and capital is at risk. Property values could fall for any number of reasons. Investors should not invest money they cannot afford to lose. Before investing please carefully read the Investment Memorandum to satisfy yourself you are comfortable with the risks. 

Our view

Tower Mill is a versatile freehold property in a prominent position close to Manchester city centre. The property benefits from A1 planning consent and potential for further development, which are not fully factored into the target returns. 

Seneca is a highly experienced asset manager and this is not a complicated operation for the team. Furthermore, they invest in all their deals and this one will be no exception, bringing their interests in line with those of other investors. The property benefits from rental income from a good spread of high-quality tenants and favourable market conditions in Manchester, making the business plan achievable, in our view.

We believe this is an attractive offer for experienced investors, although you should form your own view. The deal offers quarterly income and capital returns with good downside protection. 

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. 07.06.2018

The details

Type
Commercial property investment
Target raise
£1.3 million
Target total return
1.53x (mid case)
Target income
7% p.a.
Target exit
4 years
Minimum investment
£10,000