Damascus Developments

Damascus Developments has commenced the development of the Majestic Park Estate (see Figure
1 above). It consists of seven speculative logistics and distribution units. The Majestic Park Estate is
located in central England and has excellent transport links. The first unit to be completed is Unit 7
and a further six units are to be completed over the next two years. The local authority have granted
B8 use on all units.
You work as a trainee surveyor for a multi-disciplinary firm of Chartered Surveyors. Damascus
Developments have instructed you to act for them on the leasehold disposal on units on the
Majestic Park Estate. You have not yet started marketing Unit 7 Majestic Park Estate, and
construction is not yet complete, but you have already received unsolicited offers from two parties:
Offer 1. Kat’s Vintage Cave (CVC)
This is an international vintage clothing company that operates in the US, China, Brazil, India and
the UK. They tour the country with vintage clothing fairs. The unit would be used for storage and
cleaning of second-hand clothing. It is a limited company and has been trading for seven years.
CVC have offered to take a 10-year Internal Repairing and Insuring (IRI) lease subject to a fiveAccommodation Area
(sq.ft.)
Area
(sq.m.)
Warehouse 113440 10539
Offices 12550 1166
Gatehouse 290 27
TOTAL IPMS 2 126280 11732© University College of Estate Management 2021 Page 4 of 13
yearly upward only rent review with no break clause at an annual rent of £945,000 per annum. They
would like a one year rent free period to give them the opportunity to fit out the unit with high quality
shelving.
Offer 2. Reuben’s Revived Relics (3Rs)
This is an architectural salvage company that sells architectural antiques, salvaged building
materials and supplies. The company carry out spray painting and welding to enhance the
materials. Products are sold both direct from the unit and online. They are a national company and
have been trading for over 20 years. They want to consolidate their five existing units into one large
centrally located unit. They have offered to take a 20-year full repairing and insuring lease, subject
to five yearly upward and downward rent reviews, with a tenant’s only break clause at year 5 at an
annual rent of £885,000. They do not require a rent-free period.
Both companies have provided copies of their balance sheets and profit and loss accounts as
evidence of their ability to pay the rent. These are attached in Appendix I.
Although the Majestic Park is a new estate, there is some comparable evidence from two nearby
estates:
Perimeter Park was constructed 21 years ago and is located eight miles away from the motorway. It
is comprised of nine units ranging from 24,000 sq ft (2,230 sq m) to 88,276 sq ft (8,201 sq m)
The specification is commensurate with the age of the estate and the only offices are those
constructed by the tenants. Car parking provision is slightly limited.
• Unit B was let in April 2020 for use as a Covid testing centre and temporary hospital on a
six-monthly tenancy on an internal repairing only basis. The tenancy has been renewed
every six months on expiry. The unit is 38,360 sq ft (3,564 sq m) and is in a reasonable state
of repair. The passing rent is £230,160 per year and this has not changed since April 2020.
• Unit E is let on a 20-year FRI lease subject to 5-yearly upward only rent reviews to
Apparelicious clothing, a local private company. The lease is due to expire in March 2025.
The unit is 88,820 sq ft (8,252 sq m). The passing rent is £488,510 per year.
Eastern Estate was constructed five years ago and includes four high specification units
approximately a mile from the motorway. There is ample car parking and each unit has a high
quality two storey office element.
• Unit E3 is let to Amazing Booksellers, an international company, on a 10-year IRI lease from
September 2020 subject to five yearly upward only rent reviews. The unit is 124,000 sq ft
(11,520 sq m) There is a tenant only break clause with six months’ notice at any time after
the rent review in year five and a six-month rent-free period was granted at the start of the
lease. The passing rent is £837,000 per year.
• Unit E6 is let to Wholesale Foodstuffs on a 15-year FRI lease from March 2021 subject to
five yearly upward or downward rent reviews. The unit is 112,440 sq ft (10,446 sq m). A 12-
month rent free period has been granted. Wholesale foodstuffs are a well-established
national organisation with nine units throughout the UK. The landlords have paid for them to
retrofit their unit with many sustainable features including water recycling, solar panels,
insulation and a wind turbine. The passing rent is £730,860 per year