PropLens · 128-130 Gray Street, Broughty Ferry, Dundee DD5 2DG

Offer range · Income hold

£180,000

£195,000

Lower end · 20% Upper end · 15%

Offers Over £280,000 sits c. 44% above the upper end of the conventional-finance range. Stated NIY 9.13% is gross; net is c. 6.9% after landlord costs.

Net Initial Yield at asking c. 6.9% on £19,350 NOI lands in Avoid against the secondary-retail Strong threshold of 12%.

Income basis Passing rent £26,250 pa across two tenancies (Premier Store with Post Office; Partners Hairdresser). Lease expires July 2030 (c. 4 years WAULTC). Landlord-paid insurance £4,800 and management 8% (£2,100) deducted.

£26,250 − £6,900 → NOI £19,350

Offer explorer

Your offer

£195,000

Equity required

£0

Lender lends £159,250 against VP £245,000

Cash-on-cash

DSCR @ 8%

1.52×

Same at any price

Net cash flow

£6,610

NOI − debt service (fixed)

Lender lens · five ratios

DSCR @ 8% rate 1.52× Viable

Stress DSCR @ 10% rate 1.22× Marginal

Debt Yield (NOI / Loan) 12.2% Strong

Yield on Cost 0% Viable

Net Initial Yield 0% Viable

65% LTV · 8% IO · 7% costs · NOI £19,350 · VP £245,000 (lender basis)

Thesis

A corner tenement on Gray Street in Broughty Ferry, an affluent Dundee suburb, comprising basement and ground floor (Premier Store and Post Office) plus first floor (Partners Hairdresser). The combined passing rent is £26,250 pa with lease expiry July 2030. Asking 'Offers Over £280,000' implies a gross NIY of 9.13%, which is presentationally attractive but reduces to c. 6.9% net after landlord-paid insurance and management. On a term-and-reversion lens with c. 4 years WAULTC and SME covenants, the value is c. £245,000.

What's wrong with it

Both tenants are owner-managed SMEs; covenant strength is presumed limited.
Lease expiry July 2030 puts the reversion only 4 years out; the term lens is short.
Asking is priced on the gross yield headline; the net yield is materially tighter.

What's right with it

Broughty Ferry is an affluent and popular Dundee suburb with low retail vacancy.
Premier Store with Post Office is a long-established convenience use that supports tenant retention.
Corner location provides two-frontage exposure and the building has good public visibility.

Risks

Tenant non-renewal at July 2030 (or earlier break) exposes the full income; replacement letting at lower rent is plausible.
Post Office contract renewal is a separate covenant; loss of Post Office status would weaken the convenience offer.
Hairdresser is a service business with sub-5-year payback on fit-out; lease end may not see renewal.

DD gaps

Full lease copies for both units: term, break, repair, rent review, tenant covenant.
Last 3 years tenant accounts or trading evidence supporting the rent affordability.
Rateable values, EPC, building survey and any historic maintenance schedule.

Considerations

Tenement upper-floor structural condition and roof are landlord responsibility under Scottish tenement law.
Post Office network conditions may affect future Premier Store covenant.
Loopnet 'Investment' marketing pitches on gross yield; investor buyers should underwrite to net.

SSAS variant. Class 1A retail is SSAS-eligible. At 50% LTV the range tightens to c. £140-150k.

Property & Valuation

Facts, condition, comparables, valuation stack, and purchase-cost schedule for due-diligence reference.

Facts

Address	128-130 Gray Street, Broughty Ferry, Dundee DD5 2DG
Asking	Offers Over £280,000
Type	Retail tenement (2 tenants)
Tenants	Premier Store / Post Office (GF + basement) + Partners Hairdresser (1F)
Passing rent	£26,250 pa
Lease expiry	July 2030
NIY (stated)	9.13% gross
NIY (net)	c. 6.9%
Tenure	Heritable (Freehold)

Photos

Physical assessment

Corner tenement at Gray Street / Queen Street junction in Broughty Ferry.
Basement, ground and first floor accommodation, separately accessed.
Mixed-use commercial split: convenience store + hairdresser.
Fair condition consistent with continuing trading occupancy.

Per-unit income

See income basis on deal sheet.

Yield selection

Broughty Ferry retail ARY 9.75%: prime Edinburgh retail 5.5% + 250 bps strong secondary town (Broughty Ferry/Dundee suburb) + 175 bps sub-£500k lot, rounded to nearest 25 bps. Cross-check vs Dundee retail evidence (data thin).

Valuation stack

Basis	Value	Note
T&R (Term + Reversion)	£245,000	Term: £26,250 × YP(4.2y, 9.0%) = £86,127. Reversion: £22,610 ERV × YP perp(9.75%) × PV(4.2y) = £158,005.
Rack Rent	£232,000	£22,610 ERV ÷ 9.75% (rack)
Asking	£280,000	14% over T&R; 21% over Rack

Acquisition benchmark

Broughty Ferry retail typically transacts £125-200/sqft for tenanted investment stock. Asking £147/sqft is mid-range; reflects gross-yield pricing rather than secondary-retail fundamentals.

Purchase costs

LBTT (£195k - £150k @ 1% = £450)	£450
Legal fees	£4,500
Disbursements	£650
Broker fee (1%)	£1,950
Lender arrangement (2% of loan)	£2,535
Lender legal	£2,500
Surveys	£2,000
Total purchase costs	c. £14,585

Strategy & Appraisal

Value-add angles, holding-structure recommendation, and supporting analyses for the bid thesis.

Value-add angles

Income hold (both leases run to expiry)

T&R £245,000 reflects 4-year term certain + reversion at lower ERV. Range solves £180-195k. Asking sits 44% above. Weak at asking.

Re-gear leases pre-expiry

Negotiate 10-year extension with Premier and Partners ahead of July 2030 to extend WAULTC. Successful re-gear moves the lens to conventional, supporting £210-230k. Moderate, depends on tenants.

Vacant-possession resale (post-2030)

Broughty Ferry corner retail is sought-after for owner-occupier; resale on vacant possession in 2030 could reach £250-280k if condition holds. Moderate, 4-year hold.

Holding structure

Class 1A retail is SSAS/SIPP-eligible. Purchase via SSAS reduces effective cost of capital and removes income/CGT exposure. SSAS variant range at 50% LTV is materially tighter; personal-name BTL with SBB-eligible commercial is the alternative.

Sources

Loopnet listing 40307099
Knight Frank Scotland Report 2025 — retail yields
Ryden 90th Scottish Property Review 2025
PropLens internal Broughty Ferry retail benchmark research

Jurisdiction

Scotland