PropLens · 21-23 St Leonard's Lane, Edinburgh EH8 9SH

Offer range · Development (hold-intent)

£160,000

£185,000

Lower end · 20% Upper end · 15%

Asking £525,000 sits 184% above the upper end (£185,000). The deal pencils as a commercial income hold only at the income-lens range; alternative angles (residential conversion, flexible workspace) would require separate sell-intent or operator-led underwriting.

Asking £525,000 sits 184% above the income-lens upper end (£185,000). The deal pencils as an income hold only at the income-lens range.
Net Initial Yield on stabilised value (NOI £39,000 / VP £445,000) = 8.8%, Marginal band. The methodology range absorbs this with a 15% cash-on-cash hurdle.
Yield on Cost at upper end (£185k purchase + 7% + £195k refurb) = 9.9%, Viable band.

Income basis Income basis: stabilised ERV (£42,500 ERV less £3,400 management). Property 100% vacant. Year 1 effective cash-on-cash will be zero during the 6-month void and 6-month rent-free period.

£42,500 − £3,400 → NOI £39,000

Offer explorer

Your offer

£185,000

Equity required

£0

Lender lends £289,250 against VP £445,000

Cash-on-cash

DSCR @ 8%

1.69×

Same at any price

Net cash flow

£15,860

NOI − debt service (fixed)

Lender lens · five ratios

DSCR @ 8% rate 1.69× Viable

Stress DSCR @ 10% rate 1.35× Viable

Debt Yield (NOI / Loan) 13.5% Strong

Yield on Cost 0% Viable

Net Initial Yield 0% Viable

65% LTV · 8% IO · 7% costs · NOI £39,000 · VP £445,000 (lender basis)

Thesis

21-23 St Leonard's Lane is a 4,568 sqft vacant single-storey retail warehouse in Newington, Edinburgh's inner-city tenement district one mile southeast of the centre. The property sits in the South Side conservation area but is not listed. Ryden quote it at £50,000 per annum on a new FRI lease, or £525,000 for sale.

The deal at asking is priced as a let-up-already-completed asset. The income lens, valuing the property on stabilised rent at market yield less the cost of letting it, produces a purchase range materially below asking. Asking sits 184% above the upper end of the income range. Refurb-to-let capex of £195,000 is required to bring the property to lettable condition before tenant capture.

The Newington capital value benchmark (£200-257 per sqft) suggests the asset would trade at £900k-£1.16m fully refurbished and let. Asking £115 per sqft sits 43% below that benchmark, reflecting the vacancy, the awkward configuration (small frontage to St Leonard's Lane with deep open-plan rear), and the narrow tenant pool for 4,500 sqft single-let retail warehouse.

What's wrong with it

100% vacant with a narrow tenant pool: 4,500 sqft single-storey retail warehouse with restricted frontage and deep open-plan rear suits a limited list of occupiers (gym, distillery extension, training school, light industrial, storage).
Refurb-to-let capex of approximately £195,000 sits between purchase and stabilised income, drawn from equity rather than long-term debt.
Conservation area sensitivity in South Side: change of use, frontage works, and signage attract scrutiny even though the building itself is not listed.

What's right with it

Newington location: one mile from city centre, adjacent to Holyrood Park and Holyrood Distillery; tenement footfall and university overspill demand.
Quoting rent of £50,000 per annum gives an agent-anchored ERV signal; capitalised at 8.5% this yields a stabilised rack value of £500,000.
Asking £115 per sqft sits 43% below the Newington capital value benchmark, leaving room for stabilised exit valuation above purchase plus refurb if let-up succeeds.

Risks

Letting risk: 4,500 sqft single-let retail warehouse in Newington has a thin demand pool; void could exceed the 6-month default.
Rates exposure during void: rateable value £21,350 produces approximately £10,500 per annum in rates with no small business relief at this size.
Refurb scope discovery: traditional building with prior vehicular access alterations may surface M&E, fire-separation or structural items not visible in current photos.

DD gaps

EPC certificate (available on request per brochure); MEES compliance for commercial letting in Scotland.
Conservation area constraints on shopfront, signage, and any change of use; pre-application consultation with City of Edinburgh planning.
Building survey for the historic vehicular-access alteration (now retail frontage): structural integrity, roof condition, services.

Considerations

Asking £525,000 sits at the upper end of typical SSAS lot sizes; SSAS-eligible commercial retail allows pension-fund acquisition at 50% LTV.
South Side conservation area: any internal subdivision or change of use that affects external fabric will require listed-area planning.
Class 1A retail in Scotland: alternative uses (gym, leisure, training, light industrial) require change of use under Scottish Use Classes.

Property & Valuation

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

Facts

Address	21-23 St Leonard's Lane, Edinburgh EH8 9SH
Asking price	£525,000 (no VAT)
Quoting rent	£50,000 per annum, new FRI lease
Property type	Retail warehouse, single storey
GIA	4,568 sqft (424 sqm), measured to RICS Code 6th ed.
NIA (estimated)	3,883 sqft (GIA × 0.85)
Rateable value	£21,350 combined; rates payable approx £10,500 per annum (2024/25)
EPC	Available on request
Tenure	Heritable (Scottish freehold equivalent)
Listed status	Not listed; within Edinburgh South Side conservation area
VAT	Not VAT registered; not payable on purchase or rent
Agent	Ryden (Cameron Whyte / Leo Masson)
Portal	Rightmove
Listing URL	rightmove.co.uk/properties/166628648

Photos

Physical assessment

Exterior: traditional stone tenement frontage onto St Leonard's Lane; small shopfront access historically altered from vehicular entry; building set behind tenement blocks at courtyard rear.
Interior: mix of cellular retail/office space at front, open plan studio at rear; stores, WC, and kitchen facilities present.
Layout: deep single-storey footprint, restricted frontage with bulk of NIA at rear courtyard; natural light limited beyond frontage.
Access: pedestrian access from St Leonard's Lane; no on-site customer parking; service access limited.
Surroundings: Holyrood Distillery and Police Scotland are immediate neighbours; tenement residential and student accommodation dominate the area; cafes, bars, shops nearby on St Leonard's Street.
Condition rating: Fair (default). No "newly refurbished" wording in brochure; "traditional features throughout" implies dated fit-out.

Per-unit income

Stream	Annual	Notes
Quoting rent (agent-anchored ERV)	£50,000	Ryden quoting rate, new FRI lease
Condition adjustment (Fair × 0.85)	(£7,500)	Per methodology, condition-linked ERV multiplier
ERV used in valuation	£42,500	Stabilised market rent on new lease
Management (8%)	(£3,400)	Single-let FRI, light landlord involvement
Insurance (recharged on FRI)	£0	Tenant repays under FRI
NOI stabilised	£39,100	Rounded to £39,000 for calculation

Yield selection

Selected ARY: 8.5%. Newington benchmark is 7-9% for secondary retail/office (Ryden 2025). Mid-point 8% adjusted up 50bps for vacancy and the narrow tenant pool that follows from 4,500 sqft of single-let retail warehouse with restricted frontage. Lot-size adjustment not applied (£525,000 asking sits above the sub-£500k +175bps threshold).

Yield	Capital value at £42,500 ERV	Δ vs base
8.0%	£531,250	+6.3%
8.5% (selected)	£500,000	base (rack)
9.0%	£472,222	−5.6%
9.5%	£447,368	−10.5%

Valuation stack

Basis	Value	Notes
Rack rent (£42,500 / 8.5%)	£500,000	Ceiling: market rent capitalised, no deductions
VP (vacant possession)	£445,000	Rack less voids (6mo), rent-free (6mo), reletting fees (10%), holding costs
Term & Reversion	n/a	100% vacant, T&R not applicable
MV1 / MV2	n/a	Not a multi-let conversion play in base case
90-day restricted (VP × 0.80)	£356,000	Lender stress test scenario
180-day restricted (VP × 0.90)	£400,500	Realistic exit horizon
Asking	£525,000	5% above rack rent ceiling; 18% above VP

Acquisition benchmark

Asking £525,000 ÷ 4,568 sqft GIA = £115/sqft. Newington capital value benchmark (acquisition-benchmarks): £200-257/sqft for sub-3,000 sqft town-centre retail; this 4,568 sqft lot sits above that size band so a discount to benchmark is expected. Asking sits 43-55% below the benchmark midpoint, consistent with vacancy, lot-size discount, and the single-let restricted-frontage configuration.

Purchase costs

Item	At £160,000 (lower)	At £185,000 (upper)
LBTT	£100	£350
Legal fees	£4,500	£4,500
Disbursements	£650	£650
Broker fee (1%)	£1,600	£1,850
Lender arrangement (2% of loan £289,250)	£5,785	£5,785
Lender legal	£2,500	£2,500
Surveys / DD	£2,000	£2,000
Total purchase costs	£17,135 (10.7%)	£17,635 (9.5%)
Refurb to let (3,883 sqft × £50/sqft)	£195,000	£195,000
All-in cost	£372,135	£397,635

LBTT calculated on Scottish bands: 0% to £150k; 1% £150k-£250k; 5% above £250k. At £160k purchase the LBTT band is 0-1% (£100 on the £10k above £150k); at £185k it is £350.

Strategy & Appraisal

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

Value-add angles

1. Conventional retail/leisure letting at quoted rent

Let to a single occupier (gym, distillery extension, training school, light industrial, storage, retail warehouse use). ERV £42,500 stabilised after Fair-condition adjustment; refurb £195,000; void 6mo, rent-free 6mo.

Max purchase at 15% c-on-c hurdle: £185,000. Key risk: tenant pool depth for 4,500 sqft single-let retail warehouse with restricted frontage. Viability: Moderate.

2. Subdivision into multiple smaller commercial units

Reconfigure into 4-6 smaller units (≈750-1,100 sqft each) to access the broader small-occupier tenant pool. Capex elevated by partition walls, separate metering, additional WCs. Newington multi-let demand outside office product is thin.

Indicative additional capex above £195k base: £75,000-£100,000. Viability: Weak without office-product orientation.

3. Flexible workspace / managed offices (multi-let conversion)

Split 3,883 sqft NIA into 12-18 desks/studios at Edinburgh licence rates (£40-50 per sqft). Newington has university overspill and student/freelancer demand. Conversion capex elevated: £125 per sqft (commercial-to-flexible workspace).

Indicative capex: £485,000. Stabilised MV1 at multi-let yield ~10%: indicative £900,000-£1,000,000. Lender appetite limited; SSAS or specialist lender required. Viability: Moderate contingent on operator competence.

4. Change of use to residential (NPF4 sympathetic, conservation area)

Convert single-storey retail warehouse to residential. Edinburgh resi £350-500 per sqft achievable in Newington. Conservation area planning risk; single-storey footprint and limited natural light constrain achievable unit count. Class 1A retail to residential is Scottish change of use, not permitted development.

Capex at £125 per sqft = £485,000. Indicative GDV at £400/sqft × 3,883 sqft = £1,553,000. Sell-intent calc requires explicit investor instruction. Viability: Strong conditional on planning consent.

5. Leisure use (gym, padel, climbing, distillery extension)

Large clear-span single-storey suits leisure/recreation operators. Holyrood Distillery is an immediate neighbour. Class 11A leisure under Scottish Use Classes; change of use from Class 1A requires planning consent. Holyrood Park footfall supports the location.

Operator-led letting at quoted rent £50,000 plausible. Viability: Strong as a tenant capture angle.

Holding structure

SSAS-eligible commercial retail. The income lens hold-intent calculation supports a SSAS purchase at 50% LTV (range £125,000-£160,000). Personal name or SPV are also viable at 65% LTV (range £160,000-£185,000), with the SPV preferred if the investor intends to add further commercial assets. PropCo/OpCo applies only if a multi-let or operator-managed angle is pursued.

Scenario	Year 1	Year 2	Notes
Trading state	Vacant → refurb → let	Let, year 1 of FRI lease	6mo void, 6mo rent-free assumed
NOI	£0 effective	£39,000	Stabilised post let-up
Revaluation basis	n/a	NOI / ARY	£39k / 8.5% = £459,000
Refinance LTV	n/a	65%	Specialist commercial lender
Refinance loan	n/a	£298,000	Subject to 12mo trading history
Equity released (vs initial)	n/a	£8,750	Above initial £289,250 loan

Sources

Ryden brochure (Cameron Whyte / Leo Masson), July 2025.
Rightmove listing 166628648.
Ryden 90th Scottish Property Review 2025 (yield benchmarks).
Knight Frank Scotland Report 2025 (market context).
Edozo Insight, March 2026 (lease rate benchmarks).
Revenue Scotland LBTT bands (frozen through 2026-27).
City of Edinburgh Council: South Side conservation area.

Jurisdiction

Scotland