High-Quality Creative Media Education Investment | £61,500 Per Annum | EPC A18 | Asking Price £800,000
An opportunity to acquire a comprehensively refurbished, self-contained commercial investment within Spencer Yard, an established regeneration development in the heart of Royal Leamington Spa's Creative Quarter.
The property extends to approximately 3,173 sq ft (294.8 sq m) across ground and part first floor and is let to Cogent Elliott Limited on a 10-year lease, producing a passing rent of £61,500 per annum.
The investment benefits from an upward-only open market rent review in November 2028, providing an opportunity for rental growth. The building has undergone extensive refurbishment and modernisation, achieving an outstanding EPC rating of A18.
Investment Highlights
Asking price: £800,000, exclusive of VAT.
Passing rent: £61,500 per annum, equivalent to £19.39 per sq ft.
Net initial yield: approximately 7.31%, assuming purchaser's costs of 5.19%.
Potential net reversionary yield: approximately 8.86%, based on an illustrative rental value of £23.50 per sq ft and the same acquisition cost assumption.
10-year headlease to Cogent Elliott Limited, commencing 13 November 2023 and expiring 12 November 2033.
Upward-only open market rent review on 13 November 2028.
Occupational sublease to SAE Education Limited, supported by a guarantee from ADE Holdings SAS.
Comprehensively refurbished and extended during 2022/23.
EPC A18, incorporating energy-efficient building services and renewable technologies.
Approximately 3,173 sq ft of accommodation across ground and first floors.
Self-contained building with two parking spaces and an external roof terrace.
Long leasehold interest of 250 years from September 2023 at a peppercorn ground rent.
Potential purchaser capital allowances and Structures and Buildings Allowances, subject to specialist confirmation.
Property Description
2 Spencer Yard comprises a comprehensively refurbished and extended commercial building, providing high-quality accommodation currently configured as a specialist creative media education facility.
The property was extensively remodelled during 2022/23 to provide modern teaching spaces, computer suites, administrative offices, breakout areas and associated facilities.
The accommodation is arranged principally over the ground floor, with additional first-floor space and access to an external roof terrace.
The refurbishment incorporated a comprehensive upgrade of the building fabric and mechanical and electrical installations, including:
Air-source heat pump systems.
Mechanical ventilation with heat recovery.
Air conditioning.
Photovoltaic solar panels.
Energy-efficient LED lighting.
Modern electrical and data infrastructure.
Contemporary internal finishes and teaching facilities.
The property benefits from an EPC rating of A18, reflecting the quality of the refurbishment and its environmental performance.
There are also two dedicated car parking spaces.
Accommodation
The property provides the following approximate net internal floor areas:
Floor
Area
Ground Floor
2,560 sq ft
First Floor
613 sq ft
Total
3,173 sq ft
The accommodation has been configured for its current educational use but incorporates teaching, office and ancillary spaces.
Tenancy and Income
The property is let to Cogent Elliott Limited, an established creative marketing and communications business headquartered at The Fold, immediately adjoining Spencer Yard.
The principal headlease terms are:
Tenant: Cogent Elliott Limited.
Lease commencement: 13 November 2023.
Lease expiry: 12 November 2033.
Contracted rent: £61,500 per annum.
Rent review: 13 November 2028.
Review basis: Upward-only open market rent.
Repairing obligations: Full repairing and insuring, subject to the lease provisions and photographic schedule of condition.
Cogent Elliott has sublet the property to SAE Education Limited, which occupies the building as a higher education facility specialising in creative media.
The occupational sublease runs until November 2029 and benefits from a guarantee provided by ADE Holdings SAS.
Tenant and Occupational Covenant
Cogent Elliott Limited is an established creative marketing agency providing services including brand consultancy, digital marketing, content production, photography, media services and website development.
The company operates across a range of sectors including automotive, financial services, retail and consumer products. Its headquarters are located at The Fold, a refurbished creative workspace and production facility adjoining Spencer Yard.
SAE Education is an international provider of creative media education, offering programmes in disciplines including animation, audio, film, games, music business and digital content creation.
The Leamington Spa campus provides specialist teaching facilities and access to industry-standard equipment.
SAE forms part of the wider AD Education group. The occupational sublease is guaranteed by ADE Holdings SAS. This guarantee supports the sublease rather than the landlord's headlease with Cogent Elliott.
Rental Evidence and Reversionary Potential
The adjoining 1 Spencer Yard provides particularly relevant evidence of rental values within the development.
Following its comprehensive refurbishment, six office lettings completed during 2024 achieved headline rents ranging from approximately £22.28 to £23.85 per sq ft.
Of particular significance, EDAG secured three suites extending to approximately 2,003 sq ft across ground and first floors, with only one month's rent-free incentive.
The adjoining building is multi-tenanted, with occupiers also paying a service charge of approximately £4.50 per sq ft in addition to their rent.
Against this background, the passing rent at 2 Spencer Yard of £19.39 per sq ft provides an opportunity for rental growth at the November 2028 review.
For illustrative investment appraisal purposes, a rental value of £23.50 per sq ft would produce approximately £74,566 per annum, representing an increase of approximately £13,066 per annum over the current passing rent.
At the asking price of £800,000, this would represent an illustrative net reversionary yield of approximately 8.86%, assuming acquisition costs of 5.19%.
These figures are illustrative rather than a formal rental valuation. The outcome of the rent review will depend on the contractual provisions and market evidence at the relevant date.
Location
Spencer Yard occupies a central position within Royal Leamington Spa's Creative Quarter, an area that has benefited from substantial investment in the regeneration and repurposing of historic buildings.
The development provides a mix of creative workspace, education and commercial accommodation, with occupiers including established creative businesses and specialist education providers.
Royal Leamington Spa is an attractive Warwickshire town with a strong professional, creative and digital business community, supported by its proximity to Warwick, Coventry and the wider Midlands economy.
The town benefits from rail services to Birmingham and London Marylebone, together with convenient access to the M40 motorway.
Tenure
The property is offered by way of a long leasehold interest, held for a term of 250 years from 19 September 2023 at a peppercorn ground rent.
The freehold interest is held by Warwick District Council.
Capital Allowances
The property has undergone substantial refurbishment, with expenditure on mechanical and electrical systems, energy-efficient installations and other qualifying building works.
Preliminary assessments have identified potential plant and machinery allowances and Structures and Buildings Allowances associated with the refurbishment.
The availability and quantum of any purchaser tax relief remain subject to specialist review, the applicable tax legislation and purchaser-specific circumstances.
Further information can be made available to interested parties.
Proposal
Asking Price: £800,000 (Eight Hundred Thousand Pounds), exclusive of VAT.
The investment is offered subject to the existing occupational arrangements.
At the asking price, the current passing rent of £61,500 per annum represents a net initial yield of approximately 7.31%, assuming purchaser's acquisition costs of 5.19%.
The sale may qualify as a Transfer of a Going Concern (TOGC), subject to the relevant VAT requirements and purchaser circumstances.
Further Information and Viewings
For further information, copies of the investment particulars or to arrange an inspection, please contact:
James M Brookes MRICS
Complex Development Projects
Telephone:
Email:
All floor areas, financial information and investment projections are provided for guidance. Interested parties should satisfy themselves as to the accuracy of the information and obtain independent legal, financial and tax advice where appropriate.
