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Monday, October 24, 2011

Predators versus Producers in Action

Leading property advisor DTZ has been instructed to sell the Finch Farm training complex on which Everton have signed a fifty year lease.

Finch Farm, designed by specialist sports facilities architects AFL and built by the construction company Kier for £9m, was completed in 2007. The building provides 70,000 sq ft of training facilities set in 55 acres, including a gym, medical village, media centre, canteen, offices and education centre for Everton Academy.

The prospective purchaser will have 30 years' secure income with 2.50%-a-year fixed uplifts, compounded and payable five-yearly. The starting price is £15.356m, representing a net initial yield of 7.75%.

Simon Lowe, associate director at DTZ in Manchester, said: "This is a very rare and exciting opportunity to make a long-term investment in a world class Premier League training complex - an alternative asset with sound underlying property fundamentals."

Current owners ROM Capital [Academy] Ltd, formerly New Blue Properties, paid Everton £2.1m for the land, £9m in development costs and have received £5.5m in lease payments over the past five years which will be coupled to the expected sale price in excess of £15.3m.

Everton are unexpected to exercise their right to purchase the property outright as they are of the opinion that this wouldn’t be an efficient use of capital at this time. A commercial mortgage would require a 40% deposit, approximately £6m, leaving annual payments in the region of £730,000 over a 25 year term. Everton’s new annual lease payment, following the recently applied increase, will be £1.26m and will be subject to minimum annual increases implemented every five years as outlined in the DTZ produced prospectus that can be downloaded here.

Everton’s previous owner, Sir John Moores, purchased their former training ground, Bellefield, in 1964 for £26,000. It was sold last year for £9.3m and was used to repay a previous working capital loan facility.

DTZ expect strong interest in this money for nothing opportunity.

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