Key Management Issues at Purchase
- The property is located in a district of Paris traditionally associated with the clothing industry and at purchase most of the occupiers were light industrial users.
- 400m2 of storage area on basement (16% of the property) was vacant.
- 1,530m2 had been vacated by five tenants.
- Common entrance for cars and people.
- Significant security and refurbishment works required.
- Vacant premises on lower floors were dark and difficult to re-let for office use.
- Over four years Rynda has had a strategy of replacing tenants with office occupiers who appreciate large floor plates and the gentrifying location e.g. architects. This repositioning of the asset to “trendy” office lofts has changed the rental profile of the building.
- The change in passing and market rent between purchase and 31/03/11 is shown below:
- In June 2010, the client sold to an owner-occupier the ground floor and basement units (722m2) for €850,000, 45% higher than net purchase price.
- The remaining parts of this property were sold to a private investor in October 2011 for a net price of €3,450,000,
a 4.1% premium compared to the last valuation, and a 126.7% premium compared with the net acquisition cost.