In November 2013 Ducalian Capital acquired a 22,000 sq ft freehold industrial warehouse in Royal Leamington Spa, Warwickshire for £1,250,000.
The location was particularly attractive due to its affluent demographic, proximity to Warwick University and lack of competition.
Equity Raised £3,200,000
Projected EBITDA £537,585
Target IRR 25%
Structure Enterprise Investment Scheme
Following advice from RPS Group, Ducalian Developments submitted a change of use planning application which was granted prior to completion. Ducalian Developments will develop the warehouse into a high quality storage facility.
Once operational, the investment strategy was to increase the estimated rental value of the property from £100,000 per annum at acquisition to an EBITDA of £537,585 in year 5. Based on an 8% capitalisation rate, the exit value in year 5 would be in the region of £6,718,000.
Ducalian Developments has identified a further 2,000 sq ft of income generating space in the rear service yard that could generate £50,000 - £60,000 in additional revenue.
Forecasts are not a reliable indicator of future results