PRIME SOUTH WEST LONDON OFFICE & RETAIL INVESTMENT
2 investment summary Rare opportunity to acquire a prominent freehold office and retail investment in a highly sought after location directly opposite Richmond Station in South West London. Desirable office location referred to as Silicon upon Thames due to an abundance of multi-national media and technology companies. Resilient retailing centre with nearby occupiers including various well-known national multiples. The building was significantly refurbished in 2014 and provides 5,897 sq ft NIA of office accommodation over 3 floors above 5,835 sq ft GIA of retail accommodation at ground and basement. Weighted average unexpired lease term of 8.7 years to expiries and 5.7 years when accounting for break options. Total passing rent of 420,231 per annum, with 60% of the income derived from the office tenants. The office rents reflect a low average of 42.43 per sq ft providing an opportunity for future rental growth. Offers are invited in excess of 7,500,000 subject to contract and exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 5.25%, after allowing for purchaser s costs of 6.66%, and reflects a low overall capital value figure of 639 per sq ft.
3 LOCATION A40 A41 THE REGENTS PARK A1 Richmond upon Thames in one of the most affluent boroughs in London and benefits from a strong and diverse retail and office offer located 8 miles (12.9 km) South West of Central London. The London Borough of Richmond upon Thames is a thriving tourist and retail destination with key London attractions including Hampton Court Palace, Richmond Park, Bushy Park, Kew Gardens, Twickenham Stadium, the Riverside and Richmond town centre itself. EALING M4 N CIRCULAR RD A406 ACTON A40 CHISWICK WHITE CITY SHEPHERD S BUSH HAMMERSMITH A4 A40 PADDINGTON HYDE PARK A4 BELGRAVIA MAYFAIR A501 SOHO WESTMINSTER LAMBETH A202 CITY OF LONDON SOUTHWARK A100 BRENTFORD CHELSEA ISLEWORTH A316 ROYAL BOTANICAL GARDENS, KEW A307 RICHMOND A316 A205 A306 S CIRCULAR RD PUTNEY HEATH A3 FULHAM BATTERSEA A214 BATTERSEA PARK BRIXTON A23 A202 CAMBERWELL DULWICH VILLAGE Kew Gardens TWICKENHAM RICHMOND PARK EARLSFIELD BALHAM A23 Riverside Hampton Court Palace
4 CONNECTIVITY Richmond is served by South Western Railway which provides regular direct services to London Waterloo (8 trains per hour) with a fastest journey time of 19 minutes and direct services to Windsor and Reading, with approximate journey times of 50 and 70 minutes respectively. The town also benefits from access to the London Overground and Underground via the District Line. Heathrow International Airport and London City Airport are located approximately 12 miles (19 km) west and 10 miles (16 km) east of the town respectively. The A307 (George Street) which runs through the centre of the town provides access to Junction 10 of the M25, via the A3. Access to Junction 1 of the M3 is also available via the A316 located to the north of the town. CONNECTIVITY: London Waterloo Windsor Reading Heathrow Airport (by car) London City Airport (by car) 19m 34m 1h 6m 26m 1h 20m Staines Windsor Ascot Reading Heathrow Terminal 5 Heathrow Terminals 1,2,3 Heathrow Terminal 4 Feltham Hampton Slough Hounslow River Thames West Ruislip Twickenham Whitton Teddington Ealing Broadway Ealing Common South Ealing Northfields Brentford St. Margarets Hampton Wick Uxbridge South Acton Acton Town Chiswick Park Kew Bridge Kingston Willesden Junction West Acton Turnham Green North Acton Acton Central Gunnersbury Kew Gardens Barnes Bridge North Sheen Norbiton Berrylands Guildford Surbiton Chiswick RICHMOND Watford Junction Shepherd s Bush Market Hammersmith Ravenscourt Park Mortlake Raynes Park New Malden Willesden Junction Webmley Central Dorking West Kensington Barnes Shepherd s Bush Kensington Olympia Wimbledon Park Paddington Earl s Court West Brompton Fulham Broadway Wandsworth Town High Street Kensington Wimbledon Uxbridge South Kensington Marylebone Edgware Road Knightsbridge Clapham Juction Wembley Park Green Park Victoria Vauxhall Baker Street Bond Street Oxford Circus Piccadilly Circus Westminster Waterloo Stockwell Lambeth North Brixton King s Cross Farringdon Liverpool Street Euston Bank Liverpool Street King s Cross Blackfriars Tower Hill Canary Wharf Elephant & Castle National Rail London Overground District Line Piccadilly Line Hammersmith and City Line Circle Line Crossrail (Under Construction)
5 SITUATION The property lies in a highly prominent position facing Richmond Railway and Underground Station. Situated adjacent to the pedestrian crossing, the frontage gains maximum exposure to passing footfall between the station, the prime retail pitch and the Riverside. Retailers in the vicinity include; Russell & Bromley, H&M, Crew Clothing, T.M. Lewin, Zara Home, Anthropologie, Reiss, Gant, Jo Malone, Whole Foods and Molton Brown. Nearby office occupiers include; ebay, PayPal, Gumtree and Not On The High Street. PARKSHOT MIDMOOR HOUSE VACANT OLD STATION PASSAGE KEW ROAD
6 DEMOGRAPHICS & CATCHMENT The London Borough of Richmond upon Thames has a population of approximately 187,000 (Census 2011) of which 80% are regarded as being within the most affluent AB and C1 demographic groupings, in comparison to the UK average of 53%. Mean earnings in excess of 58,000 per year facilitate per capita spending vastly greater than the national average. The town has a catchment population of over 250,000 and an estimated 1.9 million people within 20 minutes travel time of the town. Average house prices in Richmond upon Thames in March 2018 were recorded at 990,000, 55.4% above London average of 635,000. Upwards pressure on house prices is driven by factors including the town s proximity to Central London, its picturesque setting, an array of open green space and a selection of good schools. 5 M4 YIEWSLEY WEST DRAYTON 4 A4 TERMINAL 5 TERMINAL 1, 2 & 3 HEATHROW TERMINAL 4 A30 A30 HAYES M3 1 3 2 OSTERLEY PARK CRANFORD FELTHAM A315 M4 SOUTHALL HOUNSLOW A4 A316 TWICKENHAM TWICKENHAM NORTH CIR NOTTING HILL EALING SHEPHERDS BUSH PADDINGTON WE BROADWAY A40 S MARBLE ARCH EALING COMMON ACTON CENTRAL A219 HOLLAND PARK EALING ACTON HYDE PARK MAYFA ACTON TOWN KENSINGTON GUNNERSBURY 1 BRENTWOOD KEW BRIDGE CHISWICK KEW A315 KEW GARDENS Population 2km: 40,000 RICHMOND GUNNERSBURY PARK A307 RICHMOND A205 KINGSTON UPON THAMES RICHMOND PARK SOUTH ACTON CHISWICK PARK A205 SOUTH CIRCULAR BARNES HAMMERSMITH HAMMERSMITH A3 A40 Population 5km: 360,000 WIMBLEDON A4 PUTNEY PUTNEY A315 FULHAM EARLS COURT CHELSEA WANDSWORTH Population 10km: 1,900,000 KNIGHTSBRIDGE BATTERSEA CLAPHAM JUNCTION VICTORIA Kew Road, Richmond
RIVERSIDE M3/M25 A307 GEORGE ST 1 THE GREEN 5 6 7 8 2 LITTLE GREEN 9 THE QUADRANT 4 MIDMOOR HOUSE 3 A316 TWICKENHAM ROAD RICHMOND KEW ROAD 1 SHEARWATER HOUSE RETAIL OFFICE 2 ONSLOW HALL 3 ONE PARKSHOT 4 LLOYDS BANK 5 H&M 6 OLE & STEEN 7 LEON 8 ZARA HOME 9 WHOLE FOODS LONDON WATERLOO CENTRAL LONDON
Stairs 8 External Courtyard Midmoor House Shared Bin Store No Access Changing Room Stairs <1.5 headroom Service Changing Room Toilet Riser 10.53 6.45 Toilet Toilet Office Boiler Toilet Toilet Toilet WC Store Stairs WC Kitchen Stairs 14.21 14.26 Outside Terrace Toilets Store 18.01 Toilet Kitchen Office Service No Access Kitchen 17.52 Shaft Service 16.43 Riser 9.49 20.40 6.35 18.80 Stairs 18.66 13.05 Stairs 13.50 Basement Ground Floor First Floor Second Floor Third Floor DESCRIPTION The property comprises five storeys incorporating retail on the ground and basement with 3 upper floors of office accommodation. The building was refurbished in 2014 to provide high specification offices that are accessed via a private gated courtyard at the rear. In addition the property benefits from a ground floor return frontage allowing greater prominence to the retail occupier. The building has the following specification: Fully glazed reception area. LG7 compliant suspended 8 person, 650kg passenger lift. linear lighting. VRF fan coil air conditioning. Shower and changing facilities. 3 compartment power trunking Bike storage facilities. connected to floor boxes. Door security system. Suspended ceilings. Category A (BREEAM Very Courtyard feature lighting. Good) internal fit-out TENURE Plans for indicative purposes only This property is held Freehold. PLANNING The Permitted Use of the ground and basement floors is restaurant or two restaurants within Use Class A3 and the upper floors are offices within Use Class B1(a). The site area extends to 0.124 acres (0.05 hectares). Midmoor House Rear Entrance Main Stairwell
9 TENANCY SCHEDULE The 3 office tenancies provide 60% of the income and reflect a low average of 42.43 per sq ft. The retail accommodation is let to YO! Sushi at a rent of 170,000 per annum equating to 45.23 per sq ft overall, including ground store at 50% and basement at 33%. On a zoned basis the rent devalues to a Zone A rate of 105.42. The tenant has sublet part to Mexican Grill (t/a Tortilla). The total rent is 420,231 per annum, with an overall weighted average unexpired lease term of 8.6 years to expiries and 5.7 years when accounting for break options. The property has been measured in accordance with The Code of Measuring Practice (6th Edition, 2007) and IPMS 3-Office as set out in the IPMS Standards, RICS Property Measurement (1st Edition, May 2015). *YO! Sushi / Tortilla Area sqm Area sqft Ground Restaurant 244.24 2,629 Ground Store 33.72 363 Basement 264.12 2,843 SUB TOTAL 542.08 5,835 *Sub-tenant areas available on request Tenant Name Description Area Area Lease Break Rent Lease Rent Rent 1954 Comments sqm sqft Start Option Review Expiry p.a. psf Act YO! Sushi UK Ltd Ground Floor 542.08 5,835 21/07/2014-21/07/2019 20/07/2029 170,000 45.23 In Part sublet to Mexican Grill Ltd (t/a Tortilla) expiring 18/07/2029 at a rent of & Basement, see separate table* 70,000 per annum/ 48.00 per sq ft overall (basement at half rate). Rent Review assumes unexpired term. Crossword Cyber Security PLC First Floor Office 206.90 2,227 12/05/2016 12/05/2021 12/05/2021 11/05/2026 104,125 46.76 Out Lease assigned from Business of Involvement Ltd in April 2018. 6 months rent deposit (+ VAT) held of 62,474. 6 months notice required on break. 3 months rent free if break not operated, 12/05/2021-11/08/2021. MLM Building Control Limited Second Floor Office 205.87 2,216 13/07/2015 13/07/2020 13/07/2020 12/07/2025 92,106 41.56 Out 6 months notice required on break. Guarantor: MLM Holdings Limited. Haller Consultants Limited Third Floor Office 135.08 1,454 03/07/2015 03/07/2020 03/07/2020 02/07/2025 54,000 37.14 Out 6 months notice required on break. 3 months rent free if break not operated, (t/a LogicSpot) 03/07/2020-02/10/2020. 3 months rent deposit (+ VAT) held of 16,200. TOTAL 1,090 11,732 420,231 SERVICE CHARGE The service charge budget for the year ending 24th June 2018 is 63,632, which reflects 10.15 per sq ft for the office accommodation and 0.75 per sq ft for the retail. The service charge includes provision for the maintenance and upkeep of the common parts to include the passenger lift, integral air conditioning and shower facilities. Full details of the service charge are available upon request.
10 COVENANT INFORMATION Company No: 02994470 YO! Sushi has been in operation since 1997 when it introduced the UK s first kaiten conveyor belt with colour coded dishes via their restaurant in London s Soho district. They now have 100 restaurants around the world serving authentic Japanese street food and sushi. Year End Turnover Pre Tax NeT Profit(LOSS) Assets Nov-2017 84,841,912 ( 7,752,616) 19,009,954 Nov-2016 83,384,684 ( 1,946,742) 26,716,068 Nov-2015 81,640,353 3,323,415 28,873,336 Company No: 08927013 Crossword Cybersecurity PLC is a technology commercialisation company that focuses exclusively on the cybersecurity sector. Their specialist cybersecurity software engineering team work with university partners to develop research concepts into fullyfledged commercial products which are then taken to market. Crossword Cyber Security is an IASME Consortium GOLD standard certified company. Year End Turnover Pre Tax NeT Profit(LOSS) Assets Dec-2017 736,546 ( 1,240,245) 912,154 Dec-2016 344,736 ( 952,891) 1,692,870 Dec-2015 20,613 ( 755,250) 1,257,250 Ground Floor: YO! Sushi Ground Floor: Tortilla Company No: 02891295 With over 50 years of experience MLM Building Control Limited are one of the largest privately owned engineering, environmental and building control consultancies in the UK. The RICS regulated firm provide advice on spatial planning, building regulations, compliance requirements and performance of developments. Year End Turnover Pre Tax NeT Profit(LOSS) Assets April-2017 7,706,462 67,926 651,445 April-2016 7,208,945 67,184 613,420 April-2015 6,134,787 64,189 582,185 Company No: 02800922 Haller Consultants Limited (t/a LogicSpot) design, develop, host and support websites. They specialise in e-commerce, specifically using the Magento platform, closely integrated with word press and combine all technical expertise to deliver digital solutions for their clients. The company work in a range of sectors, with a focus on fashion and lifestyle, drawing on extensive experience developing both e-commerce and non-e-commerce websites. Second Floor: MLM Group Third Floor: LogicSpot
11 OCCUPATIONAL MARKET COMMENTARY Office The London Borough of Richmond upon Thames office market consists of Richmond, Twickenham, Teddington and Hampton. The strategic position and excellent communications have allowed the Borough, notably Richmond, to attract a diverse mixture of businesses. Prominent occupiers include; Haymarket Publishing, Not On The High Street, ebay, PayPal, Gumtree, Graze and LogicSpot at the subject property. The mix of TMT occupiers has led Richmond to become known as Silicon upon Thames and even during recessionary times the Richmond office market operates well. Many business executives have chosen to live in the environs of Richmond. The attractive town centre with the Riverside and The Green, in combination with a multitude of restaurants and pubs, renders it a desirable place to work, and therefore employers find it easy to recruit. CoStar s most recent market report (Q2 2018) states that there are 570 office buildings in the Richmond market, totalling circa 3.7 million sq ft of office accommodation. Current office supply in Richmond town centre amounts to circa 64,000 sq ft and CoStar estimate there to be a 3.7% vacancy rate (of total stock) across the Borough. The level of office supply is finite which reflects both take-up and the recent loss of stock to residential development. Prime rents in the last 5 years have increased from 42.50 per sq ft to the current tone of 47.50 per sq ft. Supply and demand dynamics suggest this trend will continue. Retail Richmond plays host to an extensive mix of international and national retailers, fashion designers, cafes, bars and restaurants. The established retail offer within Richmond maintains high occupancy through a limited potential to create new supply and healthy tenant demand. These market characteristics have combined to helped support rental levels. Prime activity in Richmond s centre is located along George Street and the intersection between Duke Street and The Square where prime Zone A rents are 225 per sq ft to 230 per sq ft. Hill Street is establishing itself as a high-end retail destination where Zone A rents are established at 180 per sq ft. RETAIL LETTING ACTIVITY Date RENT AREA TENANT Lease (psf/za) (sq ft) (Exp/Bks) 19-22 The Quadrant Q1 2018 142 6,394 Lloyds Bank 15 9-11 Hill Street Q1 2017 45.00 4,473 The Ivy Brasserie Undisclosed 18-20 George Street Feb-17 230 6,054 H&M Undisclosed 59 George Street Dec-16 230 2,569 Ole & Steen 15 31-35 George Street Nov-16 238 2,259 Leon 15/10 A schedule of recent letting activity is provided below: OFFICE LETTING ACTIVITY Date AREA RENT TENANT(s) Lease (sq ft) (psf) (Exp/Bks) Shearwater House, 21 The Green Apr-18 2,824 49.50 Northlander Commodity 5 Shearwater House, 21 The Green Feb-18 1,546 49.50 Darrall Macqueen Undisclosed One Parkshot Jul-17 6,339 47.50 PK Group 10 Onslow Hall, Little Green Jan-17 968 45.00 Northlander Commodity Undisclosed Peregrine House, 26-28 Paradise Road Sep-16 4,011 45.00 The Orange Square 10 Residential Richmond is a prosperous and appealing location for professionals and young families due to its proximity to Central London as well as its stunning parks and historical points of interest including Hampton Court Palace and Kew Gardens. The current housing stock boasts a mix of Georgian and Victorian terraces, quaint cottages and an array of apartment sizes. The average house price in Richmond sits at 990,000, 55.4% above the London average of 635,000, commanding an average rent in the region of 2,220 pcm. A combination of lasting popularity, good schools and a limited development pipeline suggests capital values could remain above 1,000 per sq ft ( 93 per sq m).
12 INVESTMENT MARKET COMMENTARY Prime office investment availability is at a record low which is putting pressure on yields. Against the backdrop of uncertainty created by Brexit, there has been encouraging investment levels over the course of 2018 in the Greater London and South East office markets. Pricing has remained robust as investors continue to be attracted by the relatively high yields achievable compared with the industrial sector, fixed income markets and the central London property market. Increased investor appetite has been further supported by the continuing supply and demand imbalance in occupational markets, resulting from relatively strong take up levels coupled with low levels of supply due to constrained development pipeline and the increasing impact of permitted development. Basement: Tortilla The investor base is becoming increasingly diverse and there remains considerable weight of demand from both domestic and overseas investors for assets with strong fundamentals. A schedule of recent investment activity is provided below: Ground Floor: YO! Sushi Property use Date Price NIY AREA TENANTS WAULT Rent Cap Val (sq ft) (Exp/Bks) (psf/za) (psf) 48-49 George Street Retail & Resi Under Offer Q: 8,570,000 4.31% 6,399 TM Lewin, Zara Home 5.3 230 1,339 Ground Floor: Tortilla Brewery Stores, Petersham Rd Office & Resi Aug-18 5,015,000 6.00% 6,919 TRO Group 10.0/5.0 44.81 725 55-56 George Street Retail & Leisure May-18 2,400,000 3.70% 2,984 Courlander Jewellers 52.5 220 804 19-22 The Quadrant Retail & Office Mar-18 12,000,000 N/A 17,866 Lloyds Bank 15 142 672 8 Red Lion Street Leisure Feb-18 3,250,000 4.05% 4,810 Franco Manca 15 40.00 650 53 George Street Retail & Office Feb-18 4,400,000 4.25% 3,482 Car Phone Warehouse 2.0 230 1,264 59 George Street Retail Oct-17 5,500,000 3.92% 2,359 Ole & Steen 14.0 230 2,331 44-45 George Street Retail Oct-17 7,600,000 4.06% 6,432 Massimo Dutti 7.0/3.00 200 1,182 Richmond Place, 15 Petersham Rd Office Dec-16 6,000,000 4.98% 8,666 Multi-let c.3.0 36.77 692 Ground Floor: YO! Sushi
13 EPC A full set of Energy Performance Certificates (EPC s) are available upon request. VAT The property is elected for VAT and therefore VAT will be payable on the purchase price. It is anticipated that the sale will be structured as a Transfer of a Going Concern. Proposal We are inviting offers in excess of 7,500,000 subject to contract and exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 5.25% allowing for purchaser s costs of 6.66%. This reflects a low capital value figure of 639 per sq ft on an overall basis. Third Floor: Outdoor Terrace Solar Roof Panels Communal Area Second Floor: MLM Group Third Floor: LogicSpot
14 FURTHER INFORMATION Should you require further information or would like to arrange a viewing, please contact: George Freeman: george.freeman@claystreet.co.uk M: 07787 541 437 T: 020 7935 2831 Chris Dickin: chris.dickin@claystreet.co.uk M: 07795 114 686 T: 020 7935 2831 Rob Atkins: rob.atkins@claystreet.co.uk M: 07703 753 088 T: 020 7935 2831 DATAROOM: Additional information to support the sale is held via a secure data site. Access details can be provided upon request. 11 St. Christopher s Place, London W1U 1NG T: 020 7935 2831 www.claystreet.co.uk IMPORTANT INFORMATION: 1. No description or information given by Clay Street Ltd whether or not in these Particulars and whether written or verbal ( information ) about the property or its condition or its value may be relied upon as a statement or representation of fact. Neither Clay Street Ltd (nor any joint agents) have any authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agents or the seller. 2.These particulars do not constitute, nor constitute part of, an offer or contract, nor shall they merge in any offer or contract which may hereafter be made between the sellers or lessors and the recipient of the information. 3.The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations to or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained.these matters must be verified by any intending buyer. 5. Any buyer must satisfy themselves by inspection or otherwise as to the correctness of any information given. Designed and produced by Diablo: www.diablodesign.co.uk September 2018