HIGH STREET. Prime High Street Retail Investment

Transcription

1 1 Prime High Street Retail Investment

2 INVESTMENT SUMMARY Prime reversionary retail investment situated in a historic Cathedral and University city Regional dominant retailing centre with an affluent catchment Prime location, directly adjacent to John Lewis Secured to the strong national covenants of Waterstones and Halifax Average Weighted Unexpired Lease Term of 11.2 years Halifax and Waterstones have both recently committed to 10 year reversionary leases Reversionary asset Freehold PROPOSAL Net Income: 657,328 per annum Offers in excess of: 11,200,000 (subject to contract) Net Initial Yield: 5.50% Net Equivalent Yield: 6.04% Net Reversionary Yield: 6.09% 2

3 Chelmsford Oxford Swansea High Wycombe 3 Swindon M4 M4 Cardiff Bristol Reading Southend-on-Sea LONDON Bath Weston-Super-Mare Guildford M25 Basingstoke M5 M3 Barnstaple A303 Taunton A39 Salisbury Crawley Maidstone Royal Tunbridge Wells Winchester Southampton A31 Brighton M5 A30 A30 A39 Bournemouth Exmouth Eastbourne Portsmouth EXETER Hastings Newport Weymouth A38 Newquay A390 Plymouth Torquay St Austell 0 A394 LO CATION Exeter is a historic Cathedral and University City located in the south west of England. Truro The city is the main commercial centre for Devon and is located approximately 45 miles (72 kilometres) north east of Plymouth, 81 miles (130 kilometres) south west of Bristol, and 175 miles (280 kilometres) west of London. Exeter benefits from excellent transport links being located two miles west of the M5 motorway, with junctions 29, 30 and 31 all providing access to the city centre. To the west of Exeter is the A38 (Devon Expressway) giving direct access to Plymouth and the A30 to Cornwall. The A30 also links the A303 to the east, providing a trunk road connection to the M3 motorway and thereon to London. The city has two mainline railway stations, Central and St David s, both of which have direct services to numerous towns and cities throughout the national rail network. The fastest journey time to London Paddington is approximately 2 hours and 30 minutes. Exeter International Airport is located 6 miles (10 kilometres) to the east of the city with a range of UK and International flights to destinations that include Madrid, Munich, Dublin, Geneva, Nice and Edinburgh.

4 DEMOGRAPHICS Exeter has an estimated primary catchment population of approximately 508,000. This population is boosted significantly by tourism as well as a large student population. The South West Tourism Alliance estimates approximately 500,000 staying visitors and over 1.5 million day visitors each year, spending in excess of 166 million per annum. In addition, Exeter University is one of the top Russell Group universities in the country which, together with Exeter College, attracts in excess of 28,000 students. Exeter has an affluent catchment which ranks 31 st out of the 200 PROMIS centres in terms of the volume of comparison retail spend available in the catchment area. It is also forecast to see above average percentage growth in the available pool of comparison spending between 2016 and Reflecting the demographic profile and spending habits of the catchment population, per capita retail spending levels are significantly above the PROMIS average. (Source: PROMIS) The city has strong industry and services sectors, with the Met Office being one of the three largest employers in the area, together with the University and Devon County Council. Other major businesses represented in Exeter include EDF Energy and British Telecom. 4

5 5 RETAILING IN EXETER Exeter is a well-established and thriving retail centre providing one of Devon s primary shopping destinations with a total floor space estimated to be in excess of 1.39 million sq ft. The prime retail pitches are located within the pedestrianised section of the High Street between the Guildhall Centre, the John Lewis department store and Princesshay Shopping Centre. Princesshay Shopping Centre was developed by Land Securities Plc and opened in The centre extends to approximately 530,000 sq ft of retail space, anchored by a 130,000 sq ft Debenhams store. Other retailers within Princesshay include: Guildhall Shopping Centre is located at the other end of the High Street and is a retail and restaurant location, anchored by Primark, Wilko and Sainsbury s. Approximately 12m was spent by Aviva investors in remodeling the Queen Street restaurant area to make it a destination for A3 occupiers within the city. Tenants include:

6 SITUATION The subject property is situated in a prominent position at the northern end of the pedestrianised High Street which forms part of Exeter s prime retailing thoroughfare. The subject property is within close proximity to the Princesshay Shopping Centre which includes retailers such as Reiss, Joules, Crew Clothing Company, Molton Brown and Debenhams. Other nearby occupiers include: DESCRIPTION The property is comprised of three levels set over ground, first and second floors and consists of two well configured retail units on the High Street with two smaller units fronting Roman Passage. The retail accommodation in Halifax is arranged to provide sales at ground and part first, with ancillary accommodation on the second floor. Waterstones comprises of sales on ground, first and part second floor with ancillary accommodation on the remainder. The retail units can be serviced from the front via High Street and the rear via Bailey Street. 6

7 7 TENURE Freehold ACCOMMODATION & TENANCY SCHEDULE Unit Tenant Lease Start Lease Expiry Rent Review Current Rent PA Zone A Rental Value PA Rental Value Zone A Ground Sales (sq ft) ITZA (units) First Floor Sales (sq ft) Second Floor Ancillary (sq ft) Total (sq ft) Comments Unit 1 High St Bank of Scotland t/a Halifax 20/02/2019* 19/02/ /02/ , , ,147 1,328 4,172 4,283 11,602 *Halifax currently occupy the unit on a 15 year lease, expiring 19/02/2019. Halifax have signed a new 10 year reversionary lease expiring 19/02/2029. Zone A analysis reflects A/10 on the first and 3 on the second floor. Unit 2 High St Waterstones Booksellers Ltd 22/12/2019* 21/12/ /12/2019, 22/12/ , , ,034 1,564 4,043 3,732 11,809 *Waterstones currently occupy the unit on a 5 year lease, expiring 21/12/2019. They have signed a new 10 year reversionary lease, with a day one rent review to open market value. The Zone A analysis reflects a 2.5% addition to the Zone A for return frontage, A/10.65 on the first and 4 on the second floor. Unit 2 High St Waterstones Bookseller Ltd 21/12/2019* 21/12/2029 3,677 3,677 *Lift & Air Conditioning fees expiring on 21/12/2019. A new 10 year license has been agreed, expiring 21/12/2029. Unit 3 High St Under Offer 14,500 14, Currently under offer at 14,500 per annum, on a 5 year term. Vendor will top-up the rent until completion of the new lease. Further information available upon request. Unit 4 High St Mohamed Wagih Ismail Ali Labib 24/06/ /12/ /12/ ,150 12, Tunnel Rooms Exeter City Council 25/12/ /12/ Total 657, ,327 23,863

8 COVENANT Bank of Scotland Plc (Company No. SC327000), trading as Halifax, is a commercial bank based in Edinburgh. In 2009, Bank of Scotland became a part of Lloyds Banking Group. Halifax operates from 672 branches in 487 towns across the UK. YEAR ENDING 31/12/ /12/ /12/2014 Sales Turnover 11,091,000,000 11,457,000,000 13,192,000,000 Profit Before Tax 3,395,000,000 2,653,000,000 3,400,000,000 Net Worth 13,330,000,000 14,684,000,000 20,910,000,000 Bank of Scotland Plc has a Creditsafe rating of 86 reflecting a very low risk of business failure. Waterstones Booksellers Limited (Company No ), is a British book retailer that operates from 275 stores and employs around employing around 3,500 staff in the UK and Europe. Year Ending 29/04/ /04/ /04/2015 Sales Turnover 387,973, ,732, ,017,000 Profit Before Tax 19,157,000 10,873,000 ( 1,890,000) Net Worth 1,756,000 ( 15,602,000) ( 34,547,000) Waterstones Booksellers Limited has a Creditsafe rating of 61 reflecting a low risk of business failure. 8

9 9 RENTAL COMMENTARY Zone A rents on the High Street have remained stable over recent years, setting a strong rental tone. We have detailed comparable evidence below: ADDRESS TRANSACTION TENANT DATE ZONE A 204 High Street OML Dr Martens Aug High Street OML Goldsmiths Jun High Street RR Specsavers Dec High Street OML Vodafone Dec High Street OML Jessops Nov High Street OML Smiggle Sep High Street OML Pret Sep We have devalued the passing rent on the Halifax and Waterstones units to reflect a Zone A of 180 and 145 respectively.

10 INVESTMENT COMPARABLES The subject property offers an excellent opportunity to purchase a prime multi-let commercial freehold investment in a dominant retailing centre. Below we have highlighted recent comparable transactions that have taken place: ADDRESS TENANT WAULT PRICE NIY DATE 229 High Street & Gandy Street Urban Outfitters and Bill s years 6,250, % Dec Gandy Street Zizzi s years 2,850, % Aug High Street Various including Jones, Office and Saltrock 4.57 years 11,500, % Jul High Street & 13 Martins Lane Sketchers USA Ltd 9.3 years 3,350, % Jul High Street & 3-8 Catherine Street House of Fraser 21 years 9,150, % Jan

11 11 R DE R UN FFE O CIL UN CO OR DO T OU A TT GA ING RE TH O CL TH RE E KI KO

12 EPC EPCs for the property can be provided upon request. VAT The property has been elected for VAT purposes. It is anticipated that the investment sale will be treated as a Transfer of a Going Concern (TOGC). PROPOSAL We are instructed to seek offers for our client s freehold interest in excess of 11,200,000 (Eleven Million and Two Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would reflect the following yield profile: Net Initial Yield: 5.50% Net Equivalent Yield: 6.04% Net Reversionary Yield: 6.09% FURTHER INFORMATION For further information or to arrange an inspection, please contact the sole agent: after allowing for purchasers costs of 6.71%. JONATHAN HEPTONSTALL T: +44 (0) M: +44 (0) jonathan.heptonstall@eu.jll.com CHRISTOPHER ROBINSON T: +44 (0) M: +44 (0) chris.robinson@eu.jll.com FRANKIE MADDOX T: +44 (0) M: +44 (0) frankie.maddox@eu.jll.com MISREPRESENTATION ACT JLL, for themselves and for the vendors of this property, whose agents they are, give notice that (i) the particulars and any further information communicated by any means to potential purchasers of the property described in the particulars, or their advisers, in connection with the possible sale of the property are provided solely for the purpose of assisting potential purchasers in deciding whether they wish to proceed with further investigation of the property and do not constitute either the whole or any part of an invitation, offer or contract for sale of the property; (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 as at the date of the particulars (or the date of the relevant information if earlier). However, potential purchasers are not entitled to rely on them as statements or representations of fact but should satisfy themselves by searches, enquiries, surveys and inspections or otherwise with regard to the accuracy of such details. No responsibility or liability is or will be accepted by JLL, the vendor(s) of the property or any of their respective subsidiaries, affiliates, directors, officers, representatives, employees, advisors, or agents for any loss or damage suffered by any party, resulting from reliance on the particulars or any other information communicated by any means to that party, or its advisers, in connection with the possible sale of the property. No person in the employment of Jones Lang LaSalle or the vendor(s) has authority to make or give any representation or warranty, express or implied, in relation to the property. References to JLL include any joint agents acting with Jones Lang LaSalle. Designed by Graphic Outlines Ltd