Independent Leyton Orient Forum

This is current, I must have been nosey when this last went on sale and signed up to allsop to download the brochure, as they mailed me to say its back on the market at a knocked down price, so must never have sold before.

It's something I'd love to see the current owners buy and find some way of integrating it back into the club for the future revenue stream barry always promised us

A Pedant wrote: ↑Mon Mar 09, 2020 1:17 pm The club in turn has a 999-year peppercorn rent on its part of the West Stand (i.e. the facilities for fans, office space and facilities).

According to the brochure we own the stand and the 2 999 year leases are at peppercorn rent, guess that's much the same though

Adz wrote: ↑Mon Mar 09, 2020 8:48 pm It's something I'd love to see the current owners buy and find some way of integrating it back into the club for the future revenue stream barry always promised us

The same thought occurred to me. They could in theory loan the money to the club to buy the stand back, use the rental income to initially pay off their loan, then future income after that point to boost club income.

What’s the point in owning that when you don’t own the rest of the ground?

RedO wrote: ↑Tue Mar 10, 2020 9:12 am What’s the point in owning that when you don’t own the rest of the ground?

Rental income - Hearn's big selling point about redevelopment in the first place.

But that’s the same as the club purchasing any commercial property and renting it out.

It’s irrelevant when we don’t own the ground.

A Pedant wrote: ↑Tue Mar 10, 2020 11:33 am

RedO wrote: ↑Tue Mar 10, 2020 9:12 am What’s the point in owning that when you don’t own the rest of the ground?

Rental income - Hearn's big selling point about redevelopment in the first place.

So if it's earning over £500K per year (if that yield in the OP is correct), then that would cover Hearn's rent (£180K ?) with the rest to help with ongoing running costs?

Well yes, just as would any other asset that the club purchased which brought in £500k p.a. (Not taking into account the financing costs on £6m borrowings).

Why is this asset any different to any other asset that the club could buy?

It's not - but still looks like a good investment ( or maybe too good to be true?).

Not owning our ground is irrelevant to whether it's a good deal or whether there's any point in investing in it.

Given no one has snapped it up in over a year, I'd suggest it's not that good a deal.

If we owned the ground and were able to buy this back then yep,it would make sense. But as it is, this may just as well be a block of flats in Hackney or an industrial park in Slough.

Why would the owners want to buy the stand or the ground?

Its simply not a sensible financial proposition

A classic case of heart saying want it, but sensible head saying no

StillSpike wrote: ↑Tue Mar 10, 2020 12:16 pm It's not - but still looks like a good investment ( or maybe too good to be true?).

Not owning our ground is irrelevant to whether it's a good deal or whether there's any point in investing in it.

From a brief look at the details that came over yesterday, the income is only guaranteed until 2026, at which point the lease to WF Primary Care is due for renewal. This represents 90% of the income at £32 per square foot which is due to rise in line with RPI from May 2021. The remaining income is from the pharmacy and the lease there expires in 2027.

Initially, the yield looks attractive at circa 9% however it merely reflects the heavy risk of having 17,000 sq.ft of clinical space vacant in 2026 and the possibility of a very short queue of potential tenants. Based on the service charges alone, it would cost a potential landlord circa £100,000pa and that's without business rate liabilities.

I'm a commercial surveyor and none of my higher risk investment clients are going anywhere near this one.

Interesting, thanks for that Admin

Admin wrote: ↑Tue Mar 10, 2020 2:10 pm

StillSpike wrote: ↑Tue Mar 10, 2020 12:16 pm It's not - but still looks like a good investment ( or maybe too good to be true?).

Not owning our ground is irrelevant to whether it's a good deal or whether there's any point in investing in it.

From a brief look at the details that came over yesterday, the income is only guaranteed until 2026, at which point the lease to WF Primary Care is due for renewal. This represents 90% of the income at £32 per square foot which is due to rise in line with RPI from May 2021. The remaining income is from the pharmacy and the lease there expires in 2027.

Initially, the yield looks attractive at circa 9% however it merely reflects the heavy risk of having 17,000 sq.ft of clinical space vacant in 2026 and the possibility of a very short queue of potential tenants. Based on the service charges alone, it would cost a potential landlord circa £100,000pa and that's without business rate liabilities.

I'm a commercial surveyor and none of my higher risk investment clients are going anywhere near this one.

Pretty interesting.

Does it change anything that they are building all the new flats, health centre, shops, etc... over the road at the score centre?

I think it does hence why admins people won't invest. If they are building a heath centre etc then why would they need another one within the west stand?

Apple Wumble wrote: ↑Wed Mar 11, 2020 7:10 am

Admin wrote: ↑Tue Mar 10, 2020 2:10 pm

StillSpike wrote: ↑Tue Mar 10, 2020 12:16 pm It's not - but still looks like a good investment ( or maybe too good to be true?).

Not owning our ground is irrelevant to whether it's a good deal or whether there's any point in investing in it.

From a brief look at the details that came over yesterday, the income is only guaranteed until 2026, at which point the lease to WF Primary Care is due for renewal. This represents 90% of the income at £32 per square foot which is due to rise in line with RPI from May 2021. The remaining income is from the pharmacy and the lease there expires in 2027.

Initially, the yield looks attractive at circa 9% however it merely reflects the heavy risk of having 17,000 sq.ft of clinical space vacant in 2026 and the possibility of a very short queue of potential tenants. Based on the service charges alone, it would cost a potential landlord circa £100,000pa and that's without business rate liabilities.

I'm a commercial surveyor and none of my higher risk investment clients are going anywhere near this one.

Pretty interesting.

Does it change anything that they are building all the new flats, health centre, shops, etc... over the road at the score centre?

As Thor’s said already, the new medical centre planned over the road will probably impact on this space. The key question for any investor is if they can find an alternative user for the space. 17,000 sq.ft is roughly 0.4 of an acre to give you a perspective of how much internal space there is to deal with. Hard to imagine an office occupier taking that much room in this location (with little parking available) so you’d have to be a bit imaginative and maybe look at alternatives like teaching space, artist studios etc.

The question we always ask first is why would someone sell in this market? The return on the original price paid is really high but clearly there’s an end of the road scenario that’s fast approaching - personally I reckon the score centre plan has made whoever owns this decide to try and bail out now.

As I say, there’s too many downsides for any of my punters to buy this. Theres a reason it’s being marketed at 9% when most clean investments are asking 5-6%.