89/91 CLARENCE STREET & 2/6 CASTLE STREET KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE

Transcription

1 89/91 CLARENCE STREET & 2/6 CASTLE STREET KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE

2 INVESTMENT SUMMARY Kingston-upon-Thames is one of the UK's most significant and renowned retail centres located in south west London. Freehold. Rarely available retail and office block, occupying a prime position on Clarence Street, well positioned to take advantage of British Land and USS s development of Eden Walk. Excellent rental growth prospects given demand for the town. 59% of the income secured to the undoubted covenants of Starbucks Coffee Company (UK) Limited and Office Angels Ltd with an overall WAULT of 6.06 years. Potential to convert the office accommodation to residential use, subject to planning. The current rent is 312,800 per annum. Our clients are seeking offers in excess of 4,950,000 (Four Million Nine Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this level would reflect a net initial yield of 5.60%, after allowing for purchaser s costs of 6.59% and the service charge shortfall. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 2

3 LOCATION Kingston-upon-Thames is one of the UK s leading commercial and retailing centres and is one of only six Royal Boroughs in England and Wales. The town is located in the affluent south west area of Greater London, approximately 5 miles (8 km) south of Richmond, 11 miles (17.7 km) west of Croydon and 12 miles (19.3 km) south west of Central London. The town benefits from excellent communications, with it being in close proximity to the M25, M3 and A3. The town benefits from a regular commuter rail service to London Waterloo, with a fastest journey time of approximately 20 minutes. UXBRIDGE A40 London Heathrow Airport is located approximately 12 miles (19.3 km) west of the town and London Gatwick Airport is located 17 miles (27.3 km) to the south east, enabling easy access to a diverse range of domestic and international flights. A412 A 408 A 4020 A437 A312 A406 A406 SLOUGH M25 HAYES GREENFORD SOUTHALL EALING A 40 A 41 A40 A5 CENTRAL LONDON WINDSOR A332 OLD WINDSOR M4 J15/ M4 J4B M4 L ONDON RD A4 BAT H RD HEATHROW AIRPORT M25 HOUNSLOW A4 M4 RICHMOND HAMMERSMITH CHISWICK A4 A205 A4 PUTNEY A205 A214 A4 River Tha mes BATTERSEA A3 CLAPHAM A3 EGHAM A30 STAINES A308 FELTHAM A316 TEDDINGTON TWICKENHAM A3 WIMBLEDON A30 VIRGINIA WATER M3 A308 KINGSTON UPON THAMES MITCHAM 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 3

4 DEMOGRAPHIC PROFILE Kingston has an estimated primary catchment population of 887,000, significantly above the regional centre average and ranking the town 13th out of the PROMIS centres on this measure. The estimated shopping population of Kingston is 467,000, ranking the town 15th out of the PROMIS centres, reflecting the dominance of Kingston across its densely populated catchment area. The town also ranks 11th in terms of the volume of comparison retail spend available in the catchment area and is forecast to see significantly above average growth in that spending between Kingston has an affluent catchment population, with a 36% representation of ABC1 demographics. RETAILING IN KINGSTON Kingston-upon-Thames is one of the UK s most significant and renowned retail centres, arguably one of the strongest high street shopping destinations within the M25 outside of Central London. The town centre retail floor space in Kingston is estimated at 1.40m sq ft. Kingston ranks 16 on the base of its PMA retail score and 16 on the PMA fashion score. The town s high ranking on the PMA retail and fashion scores, reflects an extensive range of fashion and non-fashion retailers in the town. Key fashion retailers include Cos, H&M, Hollister, Primark, New Look, Monsoon and River Island, as well as upper middle quality operators such as Karen Millen, Jigsaw, Reiss, L.K.Bennett and Massimo Dutti. Kingston offers two quality department stores in John Lewis and Bentalls, with variety stores including Marks & Spencer and Primark. The main focus of prime retail activity in Kingston is the pedestrianised Clarence Street, home to Marks & Spencer s two stores and the main entrance to The Bentall Shopping Centre. The prime retailing extends into The Bentall Shopping Centre, which comprises approximately 600,000 sq ft of retail floor space and trades over 4 floors. The other main managed shopping centre is Eden Walk, which comprises approximately 290,000 sq ft of retail floor space and is anchored by Boots, Sainsbury s and Habitat. Primark is extending its store on Eden Street by approximately 59,000 sq ft, which will further strengthen Eden Street. In addition to this, Kingston Council has now granted permission for British Land and the Universities Superannuation Scheme (USS) to commence a transformative redevelopment of the Eden Walk Shopping Centre. The southern end of Memorial Gardens, to the back of the centre, will also be reopened, providing improved links between Eden Walk and the rest of the town centre. The scheme will feature new stores, a dining terrace, a boutique cinema and a sky restaurant. The complex will also include 385 residential flats, from studio apartments to three bedroom homes. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 4

5 EDEN WALK SHOPPING CENTRE INVESTMENT SUMMARY LOCATION DEMOGRAPHICS RETAILING IN KINGSTON GOAD SITUATION DESCRIPTION ACCOMMODATION TENURE TENANCIES SERVICE CHARGE RENTAL VALUE COVENANT VAT EPC PROPOSAL FURTHER INFORMATION N BENTALL CENTRE VODAFONE ITSU ALDI EXTENDED PRIMARK STORE For illustrative purposes only 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 5

6 SITUATION The subject block, which is highlighted in green on the Goad plan, occupies a prime trading location at the junction of Clarence Street and Castle Street, adjacent to Uniqlo, whilst in close proximity to Pret A Manger, and Metro Bank. Castle Street forms a busy pedestrianised cut through from Fife Road and Kingston Railway Station and offers a mix of national occupiers and cafes / restaurants. DESCRIPTION The ownership comprises a retail parade of 5 shop units, fronting Clarence Street / Castle Street, primarily arranged over ground floor and basement, with three floors of self-contained offices above, accessed from two self-contained entrances on Castle Street. ACCOMMODATION We have been provided with a measured survey report, undertaken by CBRE Limited on behalf of our clients, which sets out the floor areas as detailed in the tenancy schedule below. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 6

7 TENURE Freehold. TENANCIES The property is let in accordance with the tenancy schedule set out below, producing a current gross rental income of 312,800 pax and a net rental income of 294,954 per annum exclusive after deduction of service charge shortfalls. The majority of the leases are let on effective, full repairing and insuring terms recoverable via a service charge, details of which are available from this office. SERVICE CHARGE Based on current budgets there is an anticipated service charge shortfall of 17,846 going forward due to service charge caps, with potential to reduce this figure following renegotiation of contracts. The historic service charge shortfall in part relates to amounts accrued in relation to a refurbishment of the common parts of the Clarence Street offices, which the purchaser may seek to carry out in the medium-term. At present, the total amount accrued for a refurbishment is 54,000. A further 20,000 is being accrued over the service charge year end 31 March Further information on the service charge will be available in the data room. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 7

8 DESCRIPTION TENANT LEASE START 89/91 Clarence Street 89a Clarence Street 2 Castle Street Jin Sung Suh & Hyun S Suh t/a JOA 4 Castle Street Rak-Kyu Park t/a Kokoro 6 Castle Street Gerald O'Neill t/a G&E Jewellers Clarence Street 1st flr offices 89/91 Clarence Street 2nd/3rd flr offices 4/6 Castle Street 1st/2nd offices LEASE EXPIRY NEXT REVIEW (BREAK OPTION) ACCOMMODATION (SQ FT) Starbucks Coffee 07/01/ /01/ /01/2018 Ground Floor - 1,237 ITZA Basement - 1,007 CG Milkshake Co. Ltd 25/07/ /07/ /07/2017 (LT: 24/07/17) Ground Floor ITZA Basement /02/ /05/ /05/2015 Ground Floor ITZA First floor (Kitchen) /05/ /05/ /05/2014 Ground Floor ITZA /05/ /05/ /05/2020 Ground Floor ITZA Office Angels Ltd 24/06/ /06/ /06/2020 (T: 24/06/2020) JJ Horstman & JS Perry t/a Palmers Solicitors Caroline Fitzpatrick & Charlotte Adler Solicitors CURRENT RENT P.A. (ITZA) 155,000 ( ) 20,000 ( ) 15,500 ( ) 15,500 ( 71.50) 17,500 ( 82.00) First floor - 1,450 30,000 ( 20.75) 06/08/ /08/2020 T: 06/08/2018 Second floor - 1,974 Third floor /03/ /03/2017 First floor Second floor ,800 ( 17.90) 11,500 ( 13.50) ERV P.A. (ITZA) 155,000 ( ) 18,000 ( ) 15,500 ( ) 18,000 ( 85.00) 17,500 ( 82.00) 30,000 ( 20.75) 47,800 ( 17.90) 17,200 ( 20.00) LANDLORD SHORTFALLS TOTAL 312, ,000 17,846 COMMENTS Mutual break clause 24/07/2017 and rolling annual there after. Rental deposit of 20,000 Rental deposit of 6, Original tenant Yoko Jewellery Company Limited 624 Tenant to pay expenses in relation to common parts. Rental deposit of 6,900 17,222 Service charge cap of 18,000 New 5 year reversionary lease from 09/03/2017 in solictors at a rent of 17,200 p.a. Further details available from this office. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 8

9 RENTAL VALUE It is our opinion that the estimated rental value as of today s date would lie in the region of 319,000 per annum. The apportioned rental values are set out in the tenancy schedule. Prime Zone A rents are now at approximately 300 on Clarence Street, Kingston. The principal office evidence relates to the Adeco reversionary lease effective May 2015 agreed at per sq ft and the new reversionary lease to Fitzpatrick & Adler Solicitors, which has been agreed at circa per sq ft. The most salient rental evidence can be set out as follows:- a) 36 Clarence Street (Vodafone) Open market letting in June 2015, at a rent of 247,500 pa, which reflected a headline Zone A rent of 288 per sq ft. b) 22 Clarence Street (ITSU) Assignment of Arcadia s leasehold interest to Itsu in March 2016 for a 9 month rent free period. The rent passing of 350,000 pax devalues to a Zone A rent of 311 per sq ft and the tenant was proposing significant works to the frontage to create double height glazing at a cost considerably in excess of the incentive received. c) 75/77 Clarence Street (Tiger) Open market letting June 2012 at a rent of 265,000 pax, which reflects a Zone A rent of 260 per sq ft. d) 11/13 Castle Street (Coral) Rent review March 2015, agreed at a rent of 61,000 per annum exclusive (increased from 57,500), which devalued to a ZA rent of 75 per sq ft, applying 5 to the 1st/2nd floors ancillary and 20 to the 1st and 2nd floor offices, less 10% for management. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 9

10 COVENANT Starbucks opened its first shop in 1971 and now has more than 15,000 stores in 50 countries. For more information, please go to Office Angels is part of the Adeco Group, the world s leading provider of HR solutions, employing over 31,000 dedicated members of staff and operating across 5,500 offices in more than 60 countries worldwide. The summary accounting information for Starbucks Coffee Company (UK) Limited and Office Angels Limited is set out below:- STARBUCKS COFFEE COMPANY (UK) LIMITED 27/09/ /09/ /09/2013 GBP GBP GBP Turnover 405,641, ,721, ,405,183 Pre-tax profit 34,216,739 1,056,196-20,465,123 Net Worth 57,705,649 35,513,082 43,838,060 Office Angels Limited 31/12/ /12/ /12/2013 GBP GBP GBP Turnover 79,038,000 82,231,000 87,940,000 Pre-tax profit 2,777,000 3,366, ,000 Net Worth 17,635,000 15,602,000 12,371,000 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 10

11 VAT We understand that the property is elected for VAT and therefore VAT will be payable on the purchase price. It is envisaged that the sale will be dealt with as a Transfer Of a Going Concern (TOGC). EPC Copies of the EPC ratings and reports are available from this office. PROPOSAL We are instructed to seek offers for our client s freehold interest in excess of 4,950,000 (Four Million Nine Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this level would reflect the following yield profile after allowing for purchaser s costs of 6.59% and the service charge shortfall. Net initial yield % Reversionary yield % Equivalent yield % True equivalent yield % The most recent transactions in Kingston can be set out as follows: /88 Eden Street, Kingston (Halifax) Retail investment let to Bank of Scotland until May 2026 was sold in November 2015 for 4,250,000, which reflected a net initial yield of 4.44%. The property was let at a rent of 200,000 pa, which reflected a Zone A rent of 110 per sq ft /181 Clarence Street, Kingston Secondary retail investment comprising 5 retail units with a WAULT of 8.05 years sold to Clearbell in December 2015 for 5.55m, which reflected a net initial yield of 6% /40a Clarence Street, Kingston (North Face & EE) We have recently concluded the sale of the subject two shop property to a Middle Eastern investor for 10,350,000, which reflects a net initial yield of 3.91%. The property was let to EE and VF Northern Europe Services Limited t/a The North Face with a WAULT of 5.93 years. The rents devalued to Zone A and Zone A respectively. 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 11

12 DESIGNED BY TCC Messrs. Jackson Criss for themselves and for the vendors or lessors of this property whose agents they are to give notice that: (i) the particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of Messrs. Jackson Criss has any authority to make or give any representation or warranty whatever in relation to this property. JC0090. June For further information, please contact: Philip Hay Brook Wannop phay@jacksoncriss.co.uk brookw@jacksoncriss.co.uk 89/91 CLARENCE STREET & 2/6 CASTLE STREET, KINGSTON-UPON-THAMES PRIME RETAIL / OFFICE INVESTMENT BLOCK FOR SALE 12