Background

In 2015, Hallmark purchased this quality office investment, on behalf of a client, directly from the current tenant’s director with whom Hallmark had previously built up a strong and trusted business relationship. Although the tenant was a newly established call centre business, Hallmark viewed the tenant as low-risk, having witnessed the tenant’s successful achievements during previous engagements.

Initial Purchase & Outlook

As the purchase was a sale-and-leaseback, Hallmark employed their robust negotiating skills to achieve favourable terms with the tenant: a 15-year lease without breaks, and five-yearly upwards-only rent reviews. Passing rent is currently below open market value, providing reversionary potential for capital growth. At first rent review, this asset will present itself as an attractive opportunity for an investor seeking steady income from a tenant with an anticipated strong covenant.

Covenant Strength Solidifies

In 2016 (one year after purchase), the tenant signed a multi-million pound contract with hardware retailer B&Q, nearly doubling their total employees to 750, with further expansion to 1,000 employees during the course of 2017.

Case in Point

This case demonstrates how clients directly benefit from Hallmark’s ability to build long-term tenant relationships based on trust and professionalism.

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