ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY

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1 ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 1

2 INVESTMENT SUMMARY Bournemouth is an attractive and affluent south coast town, benefitting from excellent transport communications. Total population within the catchment area is 442,000, which is projected to see above average growth in population over the period The subject property is situated on the eastern side of the prime, pedestrianised Old Christchurch Road. Substantial retail, restaurant and student accommodation block. Total rent is 971,866 per annum with a net income of 953,399 after deduction of shortfalls.. Excellent WAULT to expiry of years (10.35 years to break). Total gross area of lettable units 98,000 sq ft. Freehold. 80% secured against multiple covenants. Excellent sales performances from the key occupiers within the block. Offers in excess of 12.4m (Twelve Million Four Hundred Thousand Pounds), subject to contract and exclusive of VAT, which provides an attractive net initial yield of 7.2% and a net equivalent yield of 8.3%, after deduction of purchaser s costs of 6.7%. This reflects a capital value of 126 per sq ft. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 2

3 LOCATION Cardiff M4 Bristol Bath Swindon Salisbury High Wycombe Reading M4 LONDON Southend-on- Hastings Bournemouth is an attractive south coast town, approximately 100 miles south west of London, 22 miles south west of Southampton and 6 miles east of Poole. Road communications are excellent with motorway / dual carriageway to the centre of the town connecting to the M27 and M3. In addition, there are frequent rail services to London Waterloo, with a fastest journey time of 1 hour 45 minutes. Bournemouth International Airport is located approximately 4 miles north of the City Centre, whilst Southampton International Airport is located approximately 33 miles to the north east. Taunton A30 M5 A35 A37 A303 Weymouth A303 A350 A354 A31 A35 BOURNEMOUTH Basingstoke A31 M3 Winchester J14 M27 Southampton M27 A3 J5 Portsmouth Isle of Wight M3 Guildford A3 M25 Crawley Brighton Maidstone Royal Tunbridge Wells Eastbourne ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 3

4 ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 4

5 RETAILING IN BOURNEMOUTH Bournemouth s retail offer comprises approximately 1.1 million sq ft which includes three managed shopping centres and two prime pedestrianised retail pitches. The town s central shopping area is effectively split into two parts, Commercial Road (running west) and Old Christchurch Road (running east), either side of an open pedestrianised area known as The Square. In addition to three department stores, comprising Debenhams (fronting The Square), Dingles - House of Fraser (located upon Old Christchurch Road) and Beales (also fronting Old Christchurch Road) with return opposite the subject property, the town benefits from retail occupiers including Arcadia, River Island, Next, Fat Face, Zara, Russell & Bromley, Karen Millen, Monsoon and Timberland. In 2016 the town centre occupied a retail socre position of 50 out of the top 200 PROMIS Centres. Of the three managed shopping centres within the town, The Avenue occupies a small and dated centre of approximately 65,000 sq ft with part frontage to Commercial Road and a large SportsDirect occupying the upper floor. This Centre changed hands in 2015 and redevelopment options are being considered. Richmond Gardens, previously known as Dalkeith Arcade, is located diagonally opposite the subject property upon Old Christchurch Road in the north east of the central area and comprises a convenience centre with Wilko and Lidl occupying almost the entire ground floor. The subject property known as St Peter s Quarter is located upon the corner of Beales Place and St Peters Road, directly opposite Beales department store and further benefits from prime frontage onto the pedestrianised Old Christchurch Road. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 5

6 DEMOGRAPHICS & POPULATION The total population within the Bournemouth primary catchment area is 442,000 ranking the town 54 of the PROMIS Centres upon this measure. The estimated shopping population of Bournemouth is 172,000 ranking the town 88 of the PROMIS Centres. Furthermore, the town is projected to see above average growth in population over the period The town has a relatively extensive primary catchment area extending to the north beyond Ringwood and into the New Forest, Christchurch and New Milton to the east and stopping just short of Poole to the west. In addition, Bournemouth is an important destination for tourists and visitors from further afield. In 2014 in was reported by Visit Dorset that tourism was worth an estimated 499 million to the town, supporting an estimated 8,800 jobs in Bournemouth. The development of Bournemouth as a major conference venue has added a new dimension to the more traditional tourist industry, helping to reduce the inevitable seasonality. The Bournemouth catchment population is moderately affluent ranking 86th out of 200 on the latest PMA Affluence Indicator. In 2011 the Bournemouth area contained a moderately above average proportion of adults of working age categorised within social group C1 (which includes junior non-manual employees); the most affluent AB social group (which includes those in managerial and professional occupations) is also represented. In contrast, the least affluent D&E social groups (which include those in skilled and unskilled manual employment, the unemployed and those on state benefits) are particularly underrepresented within the Bournemouth area. Bournemouth is an important back office location for a number of major firms including Standard Life and JP Morgan Chase. JP Morgan Chase, which has an international operations HQ at Littledown and employs some 4,000 people. The town benefits from a large university with over 17,000 students presently enrolled. In addition to over 40 English as a Foreign Language Schools. In September 2016 the local claimant count was 1% of the population age compared to the national claimant count at September 2016 of 1.3%. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 6

7 Home Investment Summary Location Situation Description Accomodation Rentals Asset Management Charges Aerial Retailing Demographics Goad Developments Tenure Covenant Tenancies Tenancy Schedule EPC VAT Data Room Proposal Contact NORTH ES AL BE PL E AC First floor ES AL BE E AC PL ES AL BE PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY E ST PETER S QUARTER, BOURNEMOUTH BH1 2AD AC PL Lower ground floor Ground floor. For Identification purposes only 7

8 FUTURE DEVELOPMENT Bournemouth is set to benefit from significant future developments in and around the town centre being pioneered by Bournemouth Development Company bournemouthdevelopmentcompany.com including residential, student accommodation and commercial developments with projects at the Citrus Building at Leyton Mount and Madeira Road having already been completed. Additionally, the Council are promoting the development of the Lansdowne as a major technology and education site to the east side of the town and in close proximity to the subject premises lansdownebournemouth.co.uk. SITUATION The subject property sits diagonally opposite the entrance into Richmond Gardens with frontages onto Old Christchurch Road, Hinton Road and St Peters Road. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 8

9 DESCRIPTION The subject property comprises approximately 98,000 sq ft of lettable accommodation. JD Wetherspoon occupy a self-contained pub/restaurant over ground and basement floors with frontages to St Peters Road (an integral part of the leisure/ night time circuit) and Beales Place. Day s Restaurant offers a variety of oriental and international buffet foods (comprised in one of the largest restaurants on the South Coast), arranged over ground and basement floors and is accessed via Old Christchurch Road and St Peters Road. Superdry benefits from a large frontage to Beales Place which in turn fronts and adjoins the prime retailing area of Old Christchurch Road. TK Maxx, Flight Centre and STA Travel all face the prime pitch Old Christchurch Road. The second and third floor accommodation is let to Kings College Limited and accessed via an entrance on St Peters Road and consists of a language school, kitchens & common areas and student accommodation comprising 29 newly built ensuite student bedrooms. The Kings College accommodation has been fitted to a high specification with network cabling, air conditioning and high performance sound proofing. At second floor mezzanine are two wellappointed office suites let to tech companies. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 9

10 ACCOMODATION St Peter s Quarter comprises a total gross internal area of approximately 98,000 sq ft and is arranged in accordance with the tenancy and accommodation schedule overleaf. TENURE Freehold. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 10

11 COVENANT A summary of the covenant strength of the main occupiers is set out below. Key Occupiers Covenant Check GBP Tenant Turnover Pre-Tax Profit Net Worth Experian Score Percentage of Income JD Wetherspoon PLC 1,595,197,000 66,049, ,397, (Very Low Risk) 16.67% C-Retail Ltd 311,248,000 27,807,000 18,823,000 STA Travel Limited 35,018, ,000 11,459, (Very Low Risk) 100 (Very Low Risk) 13.89% 6.17% Flight Centre (UK) Limited 244,605,000 18,724,000 63,122, (Very Low Risk) 5.66% TJX UK 2,434,000, ,300, ,400, (Very Low Risk) 16.46% Prime Education and Training Limited 39,495,070 57, , (Very Low Risk) 20.58% Total Percentage of income 79.43% TENANCIES St Peter s Quarter is multi-let in accordance with tenancy schedule and produces a current gross rental receipt of 971,866 per annum. The net current rent after landlord s deductions is 953,399. The current annual shortfall for the shopping centre is 18,467 which is made up of a number of service charge and insurance shortfalls as highlighted in the attached tenancy schedule. The estimated gross rental value is 1,113,566 per annum. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 11

12 TENANCY SCHEDULE Unit Tenancy Lease Start Basement Store Rooms 1 and 2 Lease Expiry Next Rent Review Tenant Breaks Rent pa ERV Total short fall Total Gross Area (sq.ft.) Comments JGH Scaffolding Ltd 01/12/16 04/05/19 4,000 4, ,962 Inclusive of Service Charge and Insurance. Basement Units 1 and 2 Vacant 0 50,000 16,547 8,000 Interst from local serviced office provider. Grd & Bsmt Unit 3-3A Sageight Bournemouth Ltd (Guarantee from Days Restaurant Bournemouth Ltd) 31/10/11 30/10/31 31/10/16 160, , ,349 Unit Grd & Bsmt J D Wetherspoon PLC 24/06/11 23/06/31 24/06/21 162, , ,890 Unit 9 C-Retail Ltd 26/06/10 25/06/25 26/06/15 135, , ,725 Unit 18 Sangita Khatri and Surendra Prasad Thapaliya Review completed. Rising rent to 180,000 in 2017 and 200,000 in 2018 Fixed increases at review to 174,150 in 2021 and 187,211 in Service charge cap of 40k per annum subject to annual RPI increases Upwards only rent review to Market Value. Review notice served. ITZA 2366 sq ft 01/10/15 30/09/20 30/09/18 15,000 15, The tenant break is subject to the provision of 6 month s notice Unit 20 STA Travel Limited 30/06/14 29/06/24 30/06/19 29/06/19 60,000 60, ,046 Unit 21 Flight Centre (UK) Limited 25/04/16 24/04/26 25/04/21 25/04/21 55,000 55,000 1,051 1,818 First Floor Retail / Mez Office and 2nd Floor Store TJX UK 10/12/14 09/12/24 10/12/19 160, , ,604 2nd floor Mez A Digital Storm Ltd 30/10/14 29/10/17 12,300 14, ,184 2nd floor Mez B Hamilton Finance Solutions Ltd 13/06/16 12/06/18 8,566 8, Rent deposit of The tenant break is subject to the provision of 6 month s notice. Upwards only rent review to Market Value. Service charge cap of 6k per annum subject to annual RPI increases. ITZA sq ft. Basement Store 1097sq ft. The tenant break is subject to the provision of 6 month s notice. Upwards only rent review to Market Value subject to maximum increase to 63,760. Service charge cap of 3k per annum subject to annual RPI increases. ITZA sq ft. Basement Stores sq ft Upwards only rent review to Market Value subject to maximum increase of 115% above the passing. Service charge cap of 55k per annum subject to annual RPI increases. In discussion for a new lease. Service charge cap of 3k per annum subject to annual RPI increases 2nd floor Kings Colleges Ltd (Guarantee from Prime Education and Training Ltd) 15/09/16 14/09/38 15/09/21 115, , ,552 Upwards only review to RPI Service charge cap of 20.5k per annum subject to annual RPI increases 3rd floor Kings Colleges Ltd (Guarantee from Prime Education and Training Ltd) 30/06/14 29/06/29 30/06/19 30/06/24 85, , ,696 The tenant break is subject to the provision of 6 month s notice. Upwards only review to RPI. Service charge cap of 25k per annum subject to annual RPI increases Electric Substation Southern Electricity Board 01/01/ /11/ Quad TOTAL 971,866 1,113,566 18,467 98,001 Net Income = 953,399 ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 12

13 INCOME ANALYSIS The centre benefits from an excellent WAULT of years to expiry (10.35 years to break). CONTRACTED INCOME /P.A 1,200,000 1,000, , , , ,000 0 YEAR Contracted income 968, , , , , , , , , , ,000 National multiple representation from the property is high with 80% of the income secured against national covenants including J D Wetherspoon, T K Maxx, Superdry and Flight Centre. Top 6 Multiple Tenants by Income Tenant Passing rent ( pa) % of Total Passing Rent Kings Colleges Limited 200, % J D Wetherspoon Plc 162, % TJX UK 160, % C Retail Limited 135, % STA Travel Limited 60, % Flight Centre (UK) Limited 55, % 79.7% ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 13

14 ESTIMATED RENTAL VALUES Rents in Bournemouth are expected to rise commensurate with the ongoing substantial development in the town centre and the planned improved infrastructure and pedestrian areas. In particular the rent upon Superdry is considered reversionary with an outstanding 2016 review and current rental evidence indicating a 15-25% increase in value. The unit us currently let at 135,000 indicating a Zone A value of with evidence in the area above 90 Zone A Kings Colleges at 3rd Floor is let at approximately 85,000 per annum and considered reversionary with an ERV above 110,000 (based upon market evidence of 10 per sq ft). ASSET MANAGEMENT INITIATIVES Undertake forthcoming rent reviews on STA Travel, T K Maxx and Kings Colleges and conclude outstanding review upon Superdry. Re-gear with T K Maxx given success of the store. Let vacant basement accommodation with dedicated frontage/signage and entrance to St Peters Road. Consider additional educational or residential accomodation above the 3rd floor. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 14

15 MANAGEMENT / SERVICE CHARGE The operating costs of St Peter s Quarter are covered by a comprehensive service charge. The service charge year is from 1st January to 31st December and the service charge accounts for the past 3 years are as follows: , , , budget 188, Based on the current budget, service charge payable by the tenants amounts to approximately 3.65 per sq ft. There are presently 3 service charge shortfalls of which the vacant basement accommodation accounts for 90% of the total shortfall. EPC EPC will be provided within the Secure Data Room. VAT We understand the property is elected for VAT. DATA ROOM There is a Secure Data Room containing legal and useful information including: CVL file Excel Tenancy Schedule Service charge information EPC information PROPOSAL Our client is seeking offers in excess of 12.4M (Twelve Million Four Hundred Thousand Pounds) for their freehold interest, subject to contract and exclusive of VAT. A purchase at this level will reflect a net initial yield of 7.2% and a net equivalent yield of 8.3% after the deduction of purchaser s costs of 6.7%. ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 15

16 For further information, please contact one of the sale agents: JACKSON CRISS ELLIS & PARTNERS DESIGNED BY TCC Jonathan Milburn Jon Tizzard 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. JC0111 August ST PETER S QUARTER, BOURNEMOUTH BH1 2AD PRIME RETAIL, RESTAURANT AND STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY 16