The Last Drop, Sutton-in-Ashfield

A failing public house sold to MRP in December 2008 by a major pub company.
The usual residential development buyers were absent due to the poor market conditions. However, a less well-known recent change in planning law allows conversion of pubs (A4) to retail (A1) units without planning permission. MRP therefore negotiated a 15 year pre-let to a regional retailer for conversion of the ground floor to a 3,000 sq ft shop unit. The pre-let was agreed simultaneously with purchase, removing speculative development risk.
Planning permission was obtained for the remaining upper floors of the pub to be converted to apartments for the buy-to-let market and part of the substantial rear garden to be converted to three terraced houses. The land for new houses was sold off at auction to a local developer.
Despite current bank lending constraints, a bank facility of 100% of construction costs was obtained in October 2009.
The development was completed in July 2010. It generates a gross rental yield on cost of 12% and a development ROE of 75%.