Auction & Date: Allsop on 3rd July 2018
Lot #: 1
Town: London E17
Address: 400 Forest Road, Walthamstow E17 5JF
Investment Opportunity: Freehold Shop Investment with Vacant Flat
Tenant: Shop Let to Individual and flat vacant
Blue Alpine’s Proprietary Scoring: Pre-Auction
Locational Analysis:
Walthamstow has a population of approx. 109,424 and is within the London Borough of Waltham Forest approximately 8 miles north-east of Central London and is adjacent to the North Circular Road (A406). Waltham Forest has a population of 275,800 and the GDHI (gross disposable household income) per head of £20,321.
Snapshot of Property Pre-Auction:
Tenancy & Accommodation:
Blue Alpine’s Pre-Auction Commentary (PAC):
This property is let to an Individual on a new 10-year lease; therefore, the covenant is not as strong as if a more established company was the occupier. In a densely populated North East London location, the property forms part of a retail parade on the south side of Forest Road, close to the junction with Pearl Road. The shop serves the needs of the densely populated local neighbourhood. Walthamstow Central Station (Overground and Victoria Line) is some 0.6 miles to the south.
The property is arranged on ground and one upper floor. The majority of the ground floor comprises a shop trading as cycle shop, whilst a self-contained flat, access to which is from the rear, is located on part ground and first floors. The flat is offered vacant and has the benefit of a garden (excepting the outside WC which is for the use of the shop).
The current Rateable Value for the commercial shop unit is £8,900, while the rent is £7,800. The previous Rateable Value was £8,400 in 2010, so there was an appreciation of Rateable Value.
The pre-auction yield for the commercial unit is 2.84%, we consider average yields for the London area to be between 4% – 6%. When also considering the vacant residential unit, 2-bedroom flat, which based on comparable flats nearby should generate rent of at least £1,100 pcm. When considering the commercial and potential residential rental income together, the yield would then be approximately 7.63%. Therefore, if the property is acquired at the guide price, this is a good yield. However, we could see this property selling for above the guide price.
We consider this property as an asset management opportunity, in that, the commercial unit may be under rented by 14% and the vacant residential flat that can be tenanted. There is also an opportunity to break-up the property, that is, find a tenant for the residential unit and sell it off separately. The estimated value of the residential unit is approximately £265,000 – £300,000.
References:
Blue Alpine’s Proprietary Investment Scoring System:
At Blue Alpine, we consider many aspects of a property before investing. Therefore, we have created a proprietary scoring system for property investment opportunities. To name a few categories we consider for our proprietary scoring system, but this is not the exhaustive list: planning, property condition, occupier, surrounding properties, location, yield, the lease, rent versus rateable value, etc. The total score possible for any property is 40 points. Please find below the score ranges and their respective buying signal.
Disclaimer: All views expressed in this article are Blue Alpine’s and do not represent the opinions of any other agency, organisation, employer or company whatsoever. Assumptions made in the analysis are not reflective of the position of any entity other than Blue Alpine’s – and, since we are critically-thinking human beings, these views are always subject to change, revision, and rethinking at any time. Please do not hold us to them in perpetuity.
The authors and Blue Alpine are not to be held responsible for misuse, reuse, recycled and cited and/or uncited copies of content within this article by others.
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