194,196 & 198 COMMERCIAL ROAD PORTSMOUTH

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1 194,196 & 198 COMMERCIAL ROAD PORTSMOUTH PRIME REBASED HIGH STREET RETAIL STORE INVESTMENT OPPORTUNITY

2 INVESTMENT SUMMARY Portsmouth is Hampshire s second largest city and a major commercial and retailing centre on the south coast 100% prime High Street retail investment forming the major part of the Boots store Located in a prime corner location on the pedestrianised Commercial Road, diagonally opposite the Cascades Shopping Centre. The unit has a return frontage onto Crasswell Street which leads to a major Tesco food store and a 903 space NCP car park Lease renewal with a rebased rent and upwards only rent review WAULT of 9.2 years Passing rent of 415,000 pax (reduced from 545,000 pa at lease renewal) 42,422 sq ft store Freehold Potential to convert upper floors to residential use subject to planning and securing vacant possession We are instructed to seek offers in excess of 6,100,000 (Six Million One Hundred Thousand Pounds), subject to contract and exclusive of VAT which reflects a net initial yield of 6.37%, after allowing for normal purchaser s costs of 6.33%.

3 LOCATION Portsmouth is Hampshire s second largest city and is a commercial and retailing centre situated on the south coast. The city has been home to the Royal Navy for over 500 years and also acts as one of the UK s main commercial ports. The city is located 19 miles (30 kilometres) east of Southampton, 20 miles (32 kilometres) west of Chichester, 29 miles (46 kilometres) south east of Winchester and 70 miles (112 kilometres) south west of London. Portsmouth benefits from excellent road communications with immediate access to the city centre via M275, which links to the M27/A27, the main coastal route. The M27 provides access to the west to Southampton, with the A27 providing access to the east to Brighton. London is easily accessible via the A3 (M) and A3, which links to the M25 and the rest of the UK s motorway network. There are regular rail services to London Waterloo, with a fastest journey time of 1hr and 33mins. The closest airport to Portsmouth is Southampton International Airport, which is situated 22 miles (35 kilometres) to the west of the city and provides both scheduled and chartered flights to the UK and European destinations. Bristol Bath A303 M4 Swindon A31 Bournemouth Salisbury A303 Winchester Basingstoke M3 Southampton Newport High Wycombe Reading A31 A3 Portsmouth M4 Guildford A27 A3 LONDON M25 Crawley A23 Brighton Maidstone Royal Tunbridge Wells Eastbourne Southend-on-sea Hastings

4 DEMOGRAPHIC PROFILE The total population within the Portsmouth primary catchment area is 506,000, ranking the town 40th of the PROMIS centres on this measure. The estimated shopping population is 255,000, which is above the average for towns of a similar measure. The city ranks 38th out of the PROMIS centres in terms of the volume of comparison retail spend available in the catchment area. The Portsmouth area contains a higher than average percentage of the population in the most affluent lifestyle groups and an under representation of social groups D and E. Consumer spending in Portsmouth is largely boosted by tourism. Tourism has become increasingly important to the local economy with the Tourism South East estimating that there were 9.25 million visitors to the city in 2014, providing a total expenditure of 444 million. Shaping Portsmouth is a community interest company that delivers both a strategic and operational partnership between Portsmouth City Council, Portsmouth businesses, and educational institutions at all levels in the city. Over the next 20 years Portsmouth is set to receive 1 billion of investment from both the public and private sectors, bringing 16,000 new jobs and 5,000 new homes. Portsmouth is one of the world s best known ports and home to the Royal Navy. The head-quarters of BAE Systems is located in the city with other employers including IBM and Zurich.

5 RETAILING IN PORTSMOUTH SITUATION The city centre provides an estimated 960,000 sq ft of retail floor space focused on the pedestrianised Commercial Road and the Cascades Shopping Centre. The Cascades Shopping Centre opened in 1989 and comprises 275,000 sq ft of retail accommodation, predominantly over ground floor, anchored by retailers including Next, Primark and TK Maxx. The pedestrianised Commercial Road is the prime retailing thoroughfare within the city and fashion multiples with representation include H&M, Topshop, New Look and River Island in addition to other key retailers such as EE, Shoe Zone, Mothercare, Sports Direct and WH Smith. There were proposals to develop a retail scheme to the north of the Cascades Shopping Centre, on a site known as the Northern Quarter. The plans for the site have been scaled down over the years and the latest proposals are for a predominantly leisure and residential based scheme, providing a total of 300,000 sq ft. Whilst the planning permission has now lapsed, the Council remain supportive and if this development does come to fruition it would be a positive addition for the town. The subject property is situated on the prime pedestrianised Commercial Road. The property benefits from being opposite the entrance to the Cascades Shopping Centre, and close to Crasswell Street which leads to a major Tesco foods store and a 903 NCP Car Park. Retailers in close proximity include H&M, New Look and Primark.

6 For Identification purposes only NORTH

7 DESCRIPTION The property comprises a purpose-built retail store, arranged on ground and two upper floors. The property provides sales accommodation on ground and first floors, with additional ancillary accommodation on the second floor. The subject property forms the major part of the Boots store, with 200/204 being in separate ownership. The store is serviced from the rear at Paradise Street. TENURE The property is held freehold TENANCY The property is let to Boots UK Limited on a 10 year full repairing and insuring lease from 26th May 2017, at a current rent of 415,000 pax, subject to an upward only rent review on 26th May Boots have taken a simultaneous lease over 200/204 Commercial Road. ACCOMMODATION We have been informed by our client that the property comprises the following approximate gross internal floor areas: Accommodation Area (sq ft) Area (sq m) Ground Floor Sales 13,703 1, First Floor Sales 13,670 1, Second Floor Ancillary 13,287 1, Third Floor Plant 1, Total GIA 42,422 sq ft 3, sq m

8 COVENANT Founded in 1849, Boots is the UK s largest pharmacy chain and operates over 2,500 stores throughout the country, employing over 70,000 staff. Their primary business is the sale of medicines, health and beauty products and a range of food and drink. They have an Experian Credit Score of 100/100. The summary accounts information can be set out as follows:- Boots UK Limited 31/03/2016 GBP 31/03/2015 GBP 31/03/2014 GBP Turnover 6,876,000,000 9,198,000,000 6,340,000,000 Pre-tax profit 523,000, ,000, ,000,000 Net Worth 1,204,000, ,000, ,000,000 Experian Score 100 RENTAL VALUE It is our opinion that the estimated rental value as of today s date would lie in the region of 415,000 p.a, which reflects an overall rent of 9.78 per sq ft. This rent was agreed at the lease renewal in May when the rent fell from it s previous level of 545,000 p.a ( per sq ft with a 5% allowance for fixtures). The rent offers a purchaser excellent growth prospect off a truly rebased rent. As an example, Boots agreed a reversionary lease on their Brighton store at 129 North Street at a rent of 1.3m for a 71,395 sq ft store, which reflected an overall rent of per sq ft. 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).

9 EPC The property has an EPC rating of D82. Further details are available from this office. PROPOSAL We are instructed to seek offers in excess of 6,100,000 (Six Million One Hundred Thousand Pounds), subject to contract and exclusive of VAT, which reflects a net initial yield of 6.37% after allowing for purchaser s costs of 6.63% The most salient comparable investment evidence can be set out as follows:- 200/204 Commercial Road Portsmouth (Boots) Freehold sale of adjoining Boots in January 2018 for 2.775m which reflected a net initial yield of 6.35% Commercial Road, Portsmouth (Holland & Barratt) A freehold shop let to Holland & Barrett occupying a good secondary location on Commercial Road was sold in February 2016 for 1.6m, reflecting a net initial yield of 6.25%. The property is in an inferior location to the subject property. 56 High Street, Ashford (Boots) Freehold retail investment let to Boots on a lease to expire October 2025 at a passing rent of 200,000. The property was sold in June 2017 for 2.85m reflecting a net initial yield of 6.59%.

10 For further information, please contact the sale agents, Jackson Criss: DESIGNED BY TCC Philip Hay Brook Wannop 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 of 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 March 2018.