Target: Tower Hill Investment (E1)

Tower Hill split level apartment with light conversion potential and a motivated seller

  • Londinium Tower - superb Zone 1 positioning to the City
    Londinium Tower – superb Zone 1 positioning to the City

    733 sqft leasehold split level apartment in prime Tower Hill zone 1 location

  • 2 bedrooms / 1 reception room / 1 bathroom, across 2 floors. The existing layout can be optimised to create an additional bedroom
  • Close to Tower Hill / Tower Gateway / Aldgate / Aldgate East / St. Katherine’s Docks / Brick Lane / Spitalfields / the City
  • Marketed price: £525k. Expect competition at this level and bids to exceed this level even within the current market environment.

Investment Strategy

  • Existing layout lends itself to simple conversion to a 3 bedroom apartment
    Existing layout lends itself to simple conversion to a 3 bedroom apartment

    Purchase price of £531.5k purchase price (£733psf) representing an increase versus £525k guide due to anticipated competition.

  • Competitive price psf on acquisition and bid price still represents day 1 price arbitrage given motivated vendor. On an overall asset value, limited number of 2 bedroom apartments with potential value add that are not ex-council properties at this price point.
  • Forecast 24 month hold period assumed to carry out prospective 3rd bedroom creation and sale. Forecast works conservatively estimated at £2.5k.
  • Tenants in situ paying £423pw until September after which single AST expected with 3 sharing professionals paying £550pw. Expected without agency cost if self-advertised and managed. September 2017 rent expected to generated 8.3% ROE.
  • Debt assumed at 75% LTV and 3% p.a. interest rate ; dependent on availability. Seek independent valuation on rental to overlook existing rental from tenants in situ.
  • Assume sale at £700k (sub £1k psf at £955psf) as a 3-bedroom split level flat, which is competitive in today’s values given the location for both owner occupiers as well as BTL investors (4.3% exit yield). No earlier refinancing assumed given expected early repayment charges.
  • Projected 36.9% IRR and 1.84x cash multiple (pre-tax).
  • Considerations: Structural engineer sign off and freeholder consent required as per lease requirement.

    Financial Analysis:

    Tower Hill

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