Poseidon House is a modern office building on the banks of the River Plym on the outskirts of Plymouth.
The building was constructed in 2001 and consists of 17,500 sq ft of offices and 60 car parking spaces. The building is effectively divided up into 7 office suites, 4 of which are occupied.
The building had been owned by a zombie fund which had let everything slip: tenants holding over with no leases in place or being negotiated, service charge out of control, common parts getting very run down etc.
We had the cost of re-building the property estimated for insurance purposes. The figure was £3.4 million. Our costs including those of purchase were a fraction of this. The property was purchased by our investors for cash
The plan is to get the common parts up to scratch and the service charge under control and then let the remaining vacant units. The estimated yield from the property once fully let should be in the region of 23-25% pa.
This is a classic recession buy. Three things define a classic recession buy:
· The price of the property must be lower than the cost of construction.
· The property must be in a reasonable area
· There must have been demand previously for the use of the property even if at the time of the purchase such demand is low due to the prevailing economic circumstances
Letting offices in Plymouth is hard but as the recession recedes demand is picking up and we anticipate letting the 3 vacant suites within the next few months.