Logistics House Chorley
Logistics House, bottom right, is within Buckshaw Village alongside tenants GA Pet Food Partners

Chorley spends £33m on Buckshaw warehouse purchase

Jessica Middleton-Pugh

Chorley Council has bought a 300,000 sq ft warehouse at Revolution Park for £33m, in a sale-and-leaseback deal with tenant TVS Supply Chain Solutions.

The purchase forms part of what the council said is a revenue-generating plan in the face of Government cuts.

Logistics House off Buckshaw Avenue has been occupied by TVS since 2006, with more than 300 staff based in the site. TVS has signed a 15-year lease.

The council said it would make £400,000 each year from the warehouse, rising to £1m over the course of the lease period.

Leader of Chorley Council, Cllr Alistair Bradley, said: “With the huge cuts in government grant we have seen over the years if we are to continue to improve services for residents we have to generate our own income from commercial ventures particularly where that also supports our commercial sector and protects jobs.

“This deal came about in a similar way to the purchase of Market Walk, which has been a fantastic move for Chorley, with the imminent opening of the extension that will bring more visitors into the borough.

“As with any deal like this there is always an element of risk but we’re comfortable that it is an opportunity that we couldn’t turn down and it was supported by councillors of all parties who recognised the benefits to all residents of our borough.”

“The success of projects like Market Walk, which generates £1m per year, means we have been able to keep council tax rises to a minimum and we’ve been able to make investment in major projects across the borough, such as the Croston flood relief scheme, which has recently saved hundreds of homes from flooding in the recent bad weather.”

Knight Frank is understood to have acted for TVS, while Gerald Eve acted for the council.

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So it’ll take in excess of 40 years to recuperate the 33m investment? By then the unit will be looking at demolition or a major refurbish. Not sure this makes financial sense, even with the resale value of the asset.

By Desseisor

The vendor must be laughing all the way to the bank.
The value of the asset (based on the current return) is no more than £4M, with a potential capital worth of only £10M. It appears Government cut backs will have more of a marked effect on Councils squandering public funds under the guise of “investment”. Has anyone heard of T. Dan Smith?

By WM Ewington

Roughly the same amount of cash required for 200 + Affordable Homes with a strong Rent Roll and a shelf life of 60 plus years

By Whaaat !?

An incredible lack of return.

By ChesneyT

The profit element relates to the difference between the council’s cost of debt and the yield on the property. Remember that councils can borrow 100% LTV and their cost of capital is between 2.5%-3.5% so this is a sensible deal for the council. As to the property being worth £4m, WM Ewington obviously doesn’t understand commercial property investment

By sb

@SB – with the current rent of £400,000 pa that returns a yield of circa 1.21%, even at a hopeful future rent of £1,000,000 pa that only returns a yield of circa 3.03%. Well let industrial investment in the NW is currently being priced at 6%+ yield. Perhaps you don’t understand commercial property investment?

By Yield

15 years income and the net initial yield was approximately 5%. Good deal for both parties.

By In the know

@yield – £400k pa looks cheap for a 300,000 sq ft modern warehouse. Perhaps you don’t understand the occupational market? The ‘current and future rent’ hasn’t been mentioned….. Anyway at least you got to dust the calculator off!

By Rent

@Yield – The current rent is £1.66m p.a. The cost of servicing the debt with Minimum Revenue Provision is £1.22m p.a. which therefore generates a profit of £400k p.a. The income generated will more than cover loan repayment and running costs, leaving surplus income to fund local services and new regeneration projects. I think you need to establish the facts before making erroneous statements

By sb

£1.26m

By sb