Background
Waterstones approached Cited Property to support the acquisition and repositioning of 71/73 High Street, Guildford — a building the retailer had previously occupied before relocating to its current premises directly opposite at 50–54 High Street.
The freehold was being offered with vacant possession as part of a wider disposal programme by the vendor. For Waterstones, it represented a rare opportunity to secure long-term control of a prime Guildford retail asset and re-establish a flagship presence in the 100% prime pitch.
The challenge
The transaction carried several challenges. The vendor had no appetite for granting a lease, ruling out the conventional occupational route. Waterstones, in turn, needed a structure that supported reoccupation of the building while limiting upfront capital cost. The acquisition also needed to be structured carefully to avoid triggering unnecessary Stamp Duty Land Tax liabilities and to minimise cashflow pressures associated with a £2.6 million purchase.
Timing was tight. An exclusivity period required a fast, coordinated execution across acquisition and onward investment sale.
The solution
Cited Property designed a bespoke sale and leaseback strategy that allowed Waterstones to secure the property while unlocking material value from the transaction itself, which covered the capital costs associated with the relocation. The structure was also carefully designed to avoid triggering unnecessary Stamp Duty Land Tax liabilities and to manage the cashflow demands.
We negotiated terms for the freehold acquisition at £2.6 million and, in parallel, identified a targeted group of institutional and private investors capable of completing an onward purchase within the required timeframe. A draft lease was prepared in advance to streamline negotiations and give incoming investors confidence on day one.
The proposed structure included:
- A ten-year lease term with no breaks
- An initial rent of £250,000 per annum
- A fixed rental uplift to £275,000 in year five
- Simultaneous completion of the acquisition and onward investment sale
Alongside the structuring work, Cited ran a highly targeted off-market disposal process, approaching a select group of trusted and well-capitalised investors capable of moving at pace and with discretion.
The result
The strategy delivered a structure capable of generating substantial profit through the sale and leaseback while securing Waterstones a long-term flagship presence in one of Guildford’s strongest retail pitches.
Based on investor appetite and prevailing market pricing, the asset was projected to achieve a sale value of up to £3.6 million, reflecting a yield of 6.52% and generating a substantial cash profit.
Here, Cited Property combined our occupational expertise and capital market knowledge and reach with a strategic execution. Our solution balanced the occupational requirements of our retailer client, financial performance and transactional efficiency – all within the required timeframe.
