Nova Parkway 78 Pension and LLP Syndicate

1500 Parkway North, Stoke Gifford, Bristol, BS34 8YU

NOVA PARKWAY 78 PENSION & LLP SYNDICATE - 1500 Parkway North, Stoke Gifford, Bristol, BS34 8YU

Purchase Price £2,250,000

Tenure Freehold

Tenant Tenant 1st Floor – The Bristol Diocesan Board of Finance

Tenant G Floor – Atrium Software - break exercised June 2018

Lease Term Tenant 1 Expiry June 2027 (break/review June 2022)

Tenant 2 Break exercised

Repairs Tenant responsible for all repairs through a service charge

Rent Tenant 1 £99,050 per annum

Tenant 2 VACANT (estimated at £99,050)

The Property

Hillside House is an attractive detached office building, prominently located on the corner of a desirable business park within walking distance of Bristol Parkway rail station, with a current fastest journey time to London (Paddington) of 86 mins with anticipated reduction to 79 mins following electrification at the end of this year. Other tenants on the park include The MOD, Handelsbanken, Gleeds and Cunningham Lindsay. The park also includes a Virgin Active Health club and local shopping parade, both within a short walk of the building.

The building itself is a high quality modern office building with an excellent parking ratio (1/204sq ft), comprising approximately 11,410 sq ft over ground and first floors, with the first floor let to the Bristol Diocesan Board of Finance and the Ground floor let to Atrium Software, who have exercised their break and will be leaving in June. Demand for office space is strong in and around Bristol with a low supply and we are confident it will let quickly after a modest refurbishment.

The rents at approx. £17 per sq ft are very sustainable with best in-town rents at £32.50 per sq ft, in addition the price being paid reflects vacant possession value of £195 per sq ft (this was achieved for the neighbouring property which was recently bought by an owner occupier) so the underlying value is strong. Furthermore, with build costs for offices at circa £170 per sq ft with no allowance for land or profit, rents will need to massively increase to make development of new offices viable.

Liquidity Issues

• Commercial property is a long term holding.

• Generally a syndicate member should not invest

for less than 6 years.

• A member can leave the syndicate at any time and

there are a set of rules that provide a first option

to the remaining members and it is only if they do

not purchase the whole share, then it is offered

out to non syndicate members.

• If no-one wishes to purchase the share to be sold,

then the property will be sold.

Description Total including VAT

(£)

Purchase price 2,250,000

Stamp duty 102,000

Legal costs 21,600

Mortgage arrangement fee 6,000

Agents fees 20,250

Lewis purchase fee 74,250

Carey/float 175,900

Valuation 6,000

Total 2,656,000

The objective is to form a syndicate whose members can transfer in circa £2,056,000 of funds. The syndicate will

then borrow circa £600,000 secured against the property. The loan will be from a bank or possibly a private

lender. Investing in the LLP (non pension) will result in taxation.

Lewis’ annual fee 4% plus vat of rental income (currently £3,962 plus VAT per annum), paid quarterly in

advance.£7,924.00 plus vat per annum once ground floor let). Lewis Property Services UK Ltd annual fee 2% plus

vat of rental income (currently £ 1,981.00 + VAT per annum), (£3,962.00 per annum once ground floor let).

VAT will be reclaimed of circa £20,350 at first VAT quarter.

Please note that the float account and VAT refund will

act as a buffer for empty property rates on the ground

floor and to provide some internal improvements that

will help attract a tenant. We are being cautious.

The Investment

We are inviting pension and LLP investment

• The capital growth (Deferred Income) class will have a share of the mortgage.

• The immediate income class will receive their share of rent from day one.

We are only accepting appropriate investments from suitably knowledgeable and experienced investors. For further information please contact your personal adviser at Lewis.

Potential Return

The syndicate is buying this property at a gross yield of 4.40%, based on one floor only leased, 8.80%

upon achieving a tenant on the ground floor at the same rental.

Immediate Income

Income will be paid monthly in advance at 3.50% per annum before tax, estimated at 7.00% once the

ground floor is let.

Therefore an investment of £ 50,000 will receive income of £145.80 per month (estimated at £291.60

once ground floor is let).

Deferred Income

For those that want a deferred income stream an investment of £20,560 together with a £6,000 share

of the mortgage, makes a total investment of £26,560.

This will acquire an estimated 1.00% of the property and the following estimated returns:-

• Immediate share of the rent of £ 931.10 per annum after the annual charge (£1,862.20 once

ground floor let). This is used firstly to repay your share of the mortgage.

• This rent represents 4.5% per annum (9.05% once ground floor let) from the original investment

or 7.50% per annum (15.09% once ground floor let) for a pension investor who has received

higher rate tax relief at 40% on the investment.

• The mortgage is likely to have been repaid in 4.50 years, assuming an average interest rate of

5% per annum.

• The immediate variable mortgage interest rate is circa 3.50% per annum

If the ground floor is not rented within 2 years, then the mortgage will be repaid over a longer term,

estimated to be 7.75 years.

NOVA PARKWAY 78 PENSION & LLP SYNDICATE - 1500 Parkway North, Stoke Gifford, Bristol, BS34 8YU

41 Commercial Road Poole, Dorset

BH14 0HU tel: 01202 718400 fax: 01202 718810

email: action@lewisinvestment.co.uk web: www.lewisinvestment.co.uk

Lewis Investment is a trading name of Lewis & Co (Investments & Pensions) Ltd

We are delighted to recommend this investment property to you for the following reasons:-

• As can be seen from the adjacent property sale, we are buying this property at vacant possession value.

• The location close to Bristol Parkway train station and the new fast city centre metro bus route and the M4 and

M5 motorways make this an excellent out of city office area.

• Office rents at this location are much lower than city centre rents and too low for new builds to compete.

• Although we have allowed for some immediate improvements to the building in the float account, we believe

this will benefit the syndicate in the rents achieved now and in the future.

• Although we are paying 3.5% per annum income now, this will increase once a new rent commences on the

ground floor.

• We believe this is a good opportunity to buy into a strong location at a very reasonable price and that this

property will provide good income over the longer term.

Best wishes

Lee van Hoyland

Lewis Investment is a trading name of Lewis & Co

(Investments & Pensions) Ltd which is authorised and

regulated by the Financial Conduct Authority. Investment via

your pension is regulated and will be covered by the

Financial Services Compensation Scheme (FSCS) and the

Financial Ombudsman Service (FOS). Direct investment into

commercial property, outside of a pension, is not regulated

and as such, may not have recourse to the FOS or FSCS.

Risk Factors will be detailed in your personal recommendation report, but key risks to consider are:-

Inflation can have positive and negative effects on commercial property. Low interest rates tend to be

beneficial where a mortgage is being repaid.

Vacancy risk is twofold. Firstly an empty property will have certain liabilities, like maintenance. Additionally, a

failed tenant or lease expiry may require that the mortgage is paid whilst a new tenant is found. A location’s

general economic profile and demand for property may change over time.

Although rent reviews tend to be upward only, there is no guarantee that the rent will increase (however you will

note that on page 2, the leases have pre-determined increases set for the 5 year reviews. Property yields and

values can fall as well as rise and the costs tend to be high at purchase.

The value of the property and the income from it may fall or rise. Past property market values are not a guide to

future property values and you may not get back what you invested.