I have a commercial property with a sitting tenant and the tenant wants to buy the property.
It is a factory unit of 17,500sq ft with offices, a derelict factory building of 6400 sq ft(used as storage currently on a licence to occupy free issue at present and not part of the lease, but this would be part of the purchase) and the overall site is 1.25 acres in Prudhoe, Northumberland with good access roads.
The lease is secure and the rent is £36,000pa with a revue (upwards only) in 2015. The lease runs to 2020 (8 years or so left of a 15 year lease).
The main building (17,500 sq ft) is in reasonable condition and I am currently upgrading the roof to a fully insulated type at a cost to me of £100,000.
I dont want to sell myself short, and there are no other properties similar anywhere nearby (heavy industrial) to compare.
Are there any rules of thumb to assess the property value based on the rental value?
I was looking to sell at £500,000 but the tenant was looking at nearer £350,00.
My view was that the value of the lease (in terms of rent) is at least £300,000.
Can anyone help with some advice?