Client: PRUPIM

Nicky Visick, an Associate in our Leeds office has advised PRUPIM on the forward funding of a speculative distribution scheme in Doncaster.

Stoford, the developer of Capitol Park, a new distribution warehousing development near Doncaster, recently offered two or three investors - including our client, PRUPIM - the opportunity to speculatively fund its scheme at a proposed price. 

Whilst our client was interested, its main issue of concern was that the investment was priced too highly – a common occurrence in a strong investment market. Some of the clauses and assumptions included within the detail of the contract were also unacceptable to PRUPIM, specifically regarding the units’ environmental credentials and specification. 

Thorough research is always at the centre of our investment advice, especially a detailed understanding of the factors that drive the occupational market. During this deal, we utilised the data and analysis undertaken by our research team, which complemented our own local investment market data. For instance, we were able to show that whilst South Yorkshire offers some of the best prospects for rental growth out of 24 UK distribution locations, the rental and yield assumptions made by the developer were unrealistic. 

A counter offer was made to Stoford which was accepted. The terms of the deal was to forward purchase two speculative units - of 80,000 sq ft and 140,000 sq ft – for £12.59m, representing a capital value of circa £57psf. 

PRUPIM will make the payment in two stages to developer Stoford, with the first phase payment for the development land already completed and the second tranche payable on practical completion of the buildings in 2008. The site will now be developed jointly between PRUPIM and Stoford on behalf of the M&G Property Portfolio.