The Base Case business plan is to acquire the asset, hold the asset for 6.5 years, enjoy RPI linked rental uplifts and secure rental income. Sell with 6 years unexpired.
The forecast returns are 8.77% p.a. average cash-on-cash, 8.62% p.a. IRR. The project equity requirement is £6.19m. The acquisition will be part financed with a 55% LTV investment facility. The lease includes 5 yearly RPI linked rent reviews, annually compounded, subject to a cap and collar of 3% and 1%. The next rent review is in December 2022. Our client will top up the rent to the 2022 review based on a conservative 2.0% per annum to £831,038 per annum (£18.71 per sq ft)