Three Premium High Street Investments in Cheltenham, Chester & Ipswich The Oakley Portfolio
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Three Premium High Street Investments in Cheltenham, Chester & Ipswich The Oakley Portfolio A portfolio of three prime high street properties located in the dominant retailing centres of Cheltenham, Chester and Ipswich Income secured against established multiple retailers: Superdry, Royal Bank of Scotland, Holland & Barrett and H Samuel 100% of income secured against Experian rated very low risk or low risk covenants Attractive long average weighted unexpired term of eleven years Freehold Total portfolio income of 544,325 pa 03
We are pleased to offer a portfolio of three exceptional freehold High Street retail investments to the market Unexpired Lease Term by Income (Excluding Breaks) Over 10 Years 35% 5-10 Years 50% 0-5 Years 15% % of Portfolio Income by Tenant Superdry - (C-Retail) 35% Royal Bank of Scotland 35% Holland & Barrett 15% H. Samuel 15% Tenancy Schedule Town Address Tenant Lease Start Next Rent Review Lease Expiry (Break) Rent (Per Annum) Cheltenham 1-7 Clarence Street Supedry (C-Retail Ltd) 22/08/2006 22/08/2016 21/08/2031 195,000 Chester 15 Foregate Street The Royal Bank of Scotland PLC 23/10/2013 29/09/2018 22/10/2023 (23/10/2018) 190,000 Ipswich 5/5A Westgate Street H. Samuel Ltd 24/06/2012 N/A 23/06/2017 79,325 7 Westgate Street Holland & Barrett Retail Ltd 27/08/2013 27/08/2018 26/08/2023 80,000 Total 544,325 04
Newcastle upon Tyne Manchester 15 Foregate Street Chester Royal Bank of Scotland 5/5A & 7 Westgate Street Ipswich H. Samuel and Holland & Barrett Birmingham Bristol London 1-7 Clarence Street Cheltenham Superdry 05
1-7 Clarence Street Cheltenham Superdry Superdry was established in Cheltenham and the company s headquarters remain in the town. Location Cheltenham is an affluent and attractive spa town located in the county of Gloucestershire. The town is situated on the edge of the world renowned Cotswolds, which are designated as an Area of Outstanding Natural Beauty and is also famous for the Cheltenham Festival, home to one of the UK s flagship horse races, The Gold Cup. Cheltenham is located approximately 88 miles (141 km) west of London, 38 miles (61 km) north east of Bristol and 41 miles (66 km) south of Birmingham. Cheltenham benefits from excellent road connections with the M5 motorway being located 3 miles (5 km) west of the town centre, providing easy access to the South West and North West of England as well as the wider national motorway network beyond. The A40 also runs through the town and is a direct link to Oxford to the east and London via the M40. Cheltenham Spa Railway Station is located on the Bristol- Birmingham main line and provides regular services both locally and nationally; direct services include Bristol, Birmingham, Cardiff, London, Manchester and Edinburgh. London Paddington can be reached in a fastest journey time of 2 hours 6 minutes. Furthermore, Bristol International Airport is approximately 45 miles (72 km) to the south west of Cheltenham and Cardiff International is approximately 64 miles (102 km) to the west. Prime high street investment in the affluent spa town of Cheltenham Let to C-Retail Limited (t/a Superdry) until August 2031 Excellent prominent unit with 98 ft of frontage to Clarence Street Freehold Passing rent of 195,000 per annum Located in close proximity to Crabtree & Evelyn, Primark, Boots, Starbucks, L Occitane and Jones the Bootmaker 06
Cheltenham Chester Ipswich 07
The property is situated in a strategic position at the intersection of Clarence Street, High Street and Promenade and benefits from exceptional footfall as a result. Other national retailers in the immediate vicinity include Primark, Boots, Crabtree & Evelyn, L Occitane, Starbucks, Marks & Spencer and Jones the Bootmaker. Tenure & Tenancy The property is held freehold. Address Tenant Accommodation Area (sq ft) Lease Start Rent Review Lease Expiry Rent 1-7 Clarence Street C-Retail Ltd Gnd Flr Sales 4,862 22/08/2006 22/08/2016 21/08/2031 195,000 (t/a Superdry) ITZA 2,844 Grd Flr Office 101 Basement 5,776 1st Anc 1,395 Part 1 st,2 nd,3 rd Floors Paul Anthony Tily 25/12/2003 N/A 24/12/3002 Peppercorn Total 12,134 195,000 1-7 Clarence Street was let to Cult Retail LLP on a 25 year IRI lease from 22nd August 2006, expiring 21st August 2031. The lease was subsequently assigned to C-Retail Limited on 13th August 2010. The current passing rent is 195,000 per annum and subject to upwards only rent reviews every fifth year, the next being 22nd August 2016. The residential upper parts on part 1st, 2nd and 3rd floors are let to Paul Anthony Tily on a 999 year lease from 25th December 2003 at a peppercorn. We have measured the property in accordance with the Code of Measuring Practice, 6th Edition and believe it to comprise the net internal areas summarised in the tenancy schedule.
Cheltenham Retailing in Cheltenham Rent Review Chester Ipswich Cheltenham has a population of approximately 116,500 (2011 Census) and a primary catchment of 385,000. This includes a significantly above average proportion of adults within the most affluent AB social group (Promis). The catchment is boosted by a thriving tourist industry and it is estimated that the town welcomes in excess of 6 million visitors per annum, contributing 235m to the local economy and sustaining 8,000 jobs (Promis). Cheltenham s town centre totals 1.3m sq ft of retail floorspace and offers an attractive retailing environment. Traditionally the prime pitch was the pedestrianised High Street, however, in recent years the Promenade, has emerged strongly and it s northern end, close to the subject property, is now regarded as the prime pitch. The retailing environment of Clarence Street and the area immediately around Boots corner is expected to be further enhanced by the Council s traffic restriction plans for central Cheltenham. The town also benefits from two covered shopping centres. Regent Arcade, the larger of the two, totals 145,000 sq ft and is anchored by BHS and Beechwood Shopping Centre, anchored by Debenhams, totals 127,000 sq ft. Fashion, specialty and aspirational retailers are well represented and successful in the town due to the affluence and demographic mix of the population, coupled with the high level of annual visitors. Notable high-end fashion retailers include: Reiss, Molton Brown, Jigsaw, Whistles, Jones the Bookmaker, Hobbs, Jack Wills, The White Company, Austin Reed, Crabtree & Evelyn and L Occitane. Description The retail lease is subject to 5 yearly upward only rent reviews and the following is assumed at review: The revised rent shall be the higher of the market rent or the existing rent. The market rent is to be calculated using the following formula: Y x 1102.5 = Market Rent. Where Y equals the highest prime High Street Zone A rent per square foot in Cheltenham at the review date. The basement has not been rentalised as it is currently not in use, however should either the current tenant occupy or sub-let the accommodation then additional rent would be receivable on an agreed formula. Market Commentary Prime rents in Cheltenham peaked at 210 Zone A prior to the recession, as evidenced by the letting to Carphone Warehouse at 143 High Street in June 2006. Rents on the town s main retail thoroughfares of Promenade, High Street and Clarence Street have remained relatively resilient throughout the downturn, primarily due to the strength of Cheltenham s occupational market and constrained retailing pitches. This resilience is demonstrated by the June 2012 letting to Hotter Shoes at 58 Promenade, which reflected 183 Zone A. EPC The commercial accommodation has an EPC rating of D98. Tenant Covenant C-Retail Limited t/a Superdry is a subsidiary of SuperGroup Plc, an international branded clothing company, based in the UK. The business was established in Cheltenham in 1985 and has expanded throughout the world and now occupies over 640,000 sq ft (59,500 sq m) of sales accommodation in over 35 countries. Superdry currently trade from 79 stores throughout the UK. C-Retail Limited is rated low risk by Experian and its parent company, Supergroup PLC is rated very low risk. Their latest financial figures are set out below: C-Retail Ltd 28/04/2013 29/04/2012 01/05/2011 Turnover 170,667,000 144,199,000 121,989,000 The property comprises an attractive period building on basement, ground and three upper floors. The unit is an amalgamation of four retail units to provide a rare single large retail unit with a considerable frontage to Clarence Street of 98 ft. The unit provides modern regular retailing space with the benefit of large ancillary space at basement and part first floor. A full EPC is available upon request. Pre-Tax Profit 590,000-21,509,000 9,504,000 Net Worth 17,630,000 15,529,000 28,701,000 Supergroup PLC 26/04/2014 28/04/2013 29/04/2012 Turnover 430,900,000 360,400,000 313,800,000 Pre-Tax Profit 45,200,000 51,800,000 51,400,000 Net Worth 212,900,000 182,000,000 143,300,000 The remainder of the first floor also provides residential accommodation, as do the second and third floors, all of which are accessed via a separate entrance lobby on Clarence Street. The building s grand rendered façade is typical of the built environment of the historic Cheltenham spa town and we understand that the property is Grade II listed. Further financial information is available upon request. 09
15 Foregate Street Chester Royal Bank of Scotland Chester was recently ranked as the fifth prettiest city in Europe and benefits from a thriving tourist and retail industry. Location The historic cathedral city of Chester is located in Cheshire and lies approximately 17 miles (27 km) south of Liverpool, 40 miles (64km) southwest of Manchester and 72 miles (116 km) northwest of Birmingham. The city benefits from excellent road links, including the M53 motorway towards Liverpool and the M56 motorway towards Manchester. The M56 in turn links to the M6, a major arterial route along the west coast of England. Furthermore, the A483 links the city to nearby Wrexham and the A55 leads out of Chester along the North Wales coast to Holyhead, providing easy access to the city for the wider catchment. Chester further benefits from strong rail connections with direct services to London Euston (approximately 2 hours), Liverpool (approximately 40 minutes) and Manchester (approximately 1 hour). Chester has two international airports within a 40 minute drive; Manchester International Airport and Liverpool John Lennon Airport. Both airports offer domestic and international flights to the UK, Europe and worldwide. Prime bank investment located in a prime position on pedestrianised Foregate Street Chester ranks 15th out of all PROMIS retailing centres for its primary catchment Let to The Royal Bank of Scotland PLC until October 2023 (subject to break in October 2018) Freehold Passing rent of 190,000 per annum Located in close proximity to Disney Store, JD Sports, Boots, BHS and Marks & Spencer 10
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The property forms part of Chester s 100% prime retail pitch and occupies a prominent corner position on the north side of the pedestrianised stretch of Foregate Street, at its busy junction with Frodsham Street. Other national multiple retailers in the immediate vicinity include Marks & Spencer, The Disney Store, JD Sports, Holland & Barrett, WH Smith, Boots and Clarks. Tenure & Tenancy The property is held freehold and is not subject to VAT. Address Tenant Accommodation Area (sq ft) Lease Start Rent Review 15 Foregate Street The Royal Bank of Scotland PLC Lease Expiry (Break Clause) Gnd Flr Sales 1,816 23/10/2013 29/09/2018 22/10/2023 190,000 ITZA 814 Basement 596 (23/10/2018 - Tenant Mezz/1st Floor 864 to receive 6 months rent free if break not 2nd Floor 1,893 exercised) 3rd Floor 1,352 Total 6,521 190,000 Rent The property is entirely let to The Royal Bank of Scotland PLC on a 10 year FRI lease from 23rd October 2013 and expiring 22nd October 2023. The current passing rent is 190,000 per annum and is subject to five yearly upward only rent reviews, the next due on 29th September 2018. The lease is subject to a tenant only break clause on 23rd October 2018, subject to 6 months prior written notice. The tenant is to receive an additional 6 months rent free upon the break date if the break option is not exercised. We have measured the property in accordance with the RICS Code of Measuring Practice 6th Edition and these areas are included in the tenancy schedule to the left.
Cheltenham Retailing in Chester Market Commentary EPC Chester Ipswich Chester benefits from a primary catchment of 804,000 and is widely regarded as one of the best retailing destinations in the North of England. The city s significant catchment ranks it 15th of the PROMIS Centres by this measure and it also ranks 18th on the PROMIS Retail Score. Rents in Chester peaked at 225 Zone A prior to the recession and have remained strong throughout the downturn due to the city s well established position as the primary shopping destination for a significant catchment. We are aware of the following recent transactions in the area: The Property has an EPC rating of D95. A full EPC is available upon request. Chester s city centre is of historic, cultural and architectural importance and boasts some of the oldest retail frontages in the world. The city s highly distinctive and unique feature of The Rows level creates one of the UK s most attractive high street shopping environments. Chester s retail industry is bolstered by a thriving tourist industry and attracts over 8 million visitors a year with an annual spend in excess of 800m (Chester Renaissance). Chester has a significant retail offer with floorspace estimated at 1.47 million sq ft. The primary retailing thoroughfares are focussed along the main pedestrianised streets of Eastgate Street & Foregate Street, which in turn link into Northgate Street, Watergate Street and Bridge Street at their centre to create Chester s distinctive cross pattern retail layout. The prime pitch is regarded to run from The Cross at the western end of Eastgate Street, east onto Foregate Street and continue as far as Marks & Spencer. Address Tenant Transaction Date Rental Value The lease has recently been renewed and we analyse the passing rent to reflect 185 Zone A, adopting A/10 on first floor, 4 on second floor, 2 on third floor, 3 on the basement and making an addition of 7.5% to reflect the excellent return frontage. Given the evidence above we believe a reversion is achievable at the 2018 rent review. Covenant Rent (Zone A) 18 Eastgate Street Pykes Jewellers OML Jan 12 209 21 Eastgate Street Hobbs OML Aug 11 232 27 Eastgate Street Phones 4U OML Aug 11 209 The City has two shopping centres, the 178,000 sq ft Grosvenor Shopping Centre which is anchored by Browns of Chester (Debenhams) and the 110,000 sq ft Forum Shopping Centre home to Chester Market. The Royal Bank of Scotland PLC is one of the retail banking subsidiaries of The Royal Bank of Scotland Group PLC. The company was established in 1727 and currently has approximately 700 branches throughout the UK. Description The Royal Bank of Scotland PLC are rated low risk by Experian and their latest financial figures are set out below: 15 Foregate Street comprises a large, attractive Grade II listed banking premises which was constructed in the 1920s in a mock Tudor style. The accommodation is arranged over basement, ground and 3 upper floors. RBS Plc 31/12/2013 (000s) 31/12/2012 (000s) 31/12/2011 (000s) Pre-Tax Profit - 6,761,000-3,412,000-864,000 Net Worth 36,434,000 47,022,000 49,489,000 The property benefits from excellent prominence as a result of a substantial return frontage and has the further advantage of two entrances onto Frodsham Street, as well as the principal entrance off Foregate Street itself. The ground and first floors are used as sales accommodation, the basement as ancillary and floors 2-3 provide office accommodation. The upper floors benefit from separate access off Frodsham Street with both stairs and lift access to all floors. The property also benefits from an A2 Use Class and we understand this branch has been chosen to form part of the proposed Williams & Glyn bank, which is to be hived off from the Royal Bank of Scotland. Further financial information is available upon request. 13
5/5A & 7 Westgate Street Ipswich H Samuel and Holland & Barrett Ipswich is one of the UK s oldest towns and along with Norwich and Cambridge is regarded as one of the principal retailing destinations in East Anglia. Location Ipswich is the largest town in Suffolk and the administrative centre for the county. The town is located approximately 67 miles (108 km) north east of London, 16 miles (26 km) north east of Colchester and 45 miles (72 km) east of Cambridge. Ipswich is located at the junction of the A12 and the A14, meaning it benefits from excellent road communications with the surrounding towns and the national motorway network beyond. The town also benefits from regular train services into London Liverpool Street with a journey time of approximately 1 hour. Stansted Airport is approximately 40 miles (64 km) to the south west and provides numerous international and domestic flights. 100% prime high street investment located on pedestrianised Westgate Street Let to Holland & Barrett Retail Limited until August 2023 and H. Samuel Limited until June 2017 Freehold Total passing rent of 159,325 per annum Located directly opposite Debenhams and in the immediate vicinity of Primark, Next, Gap and Marks & Spencer 14
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The subject properties occupy a 100% prime retail position at the eastern end of the pedestrianised Westgate Street, directly opposite Debenhams. This location is at the heart of Ipswich s central retail core, with tenants in the immediate vicinity including Marks & Spencer, Primark, Next and GAP. Address Tenant Accommodation Area (sq ft) Lease Start Rent Review Lease Expiry Rent 5/5A Westgate Street H. Samuel Limited Gnd Flr Sales 1,240 24/06/2012 N/A 23/06/2017 79,325 ITZA 693 Gnd Flr Anc 53 First Flr Anc 1,054 Second Flr Anc 416 7 Westgate Street Holland & Barrett Retail Limited Gnd Flr Sales 1,471 27/08/2013 27/08/2018 26/08/2023 80,000 Gnd Flr Anc 63 ITZA 671 First Flr Anc 1,190 Total 5,487 159,325 Tenure & Tenancy The property is held freehold. 5/5A Westgate Street is let to H. Samuel Limited on a 5 year FRI lease from 24th June 2012 and expiring 23rd June 2017. The current passing rent is 79,325 per annum. 7 Westgate Street is let to Holland & Barrett Retail Limited on a 10 year FRI lease from 27th August 2013 and expiring 26th August 2023. The rent is 80,000 per annum. We have measured the properties in accordance with the Code of Measuring Practice, 6th Edition and believe it to comprise the net internal areas summarised in the tenancy schedule.
Cheltenham Chester Ipswich Retailing in Ipswich Ipswich benefits from a primary catchment of 383,000 (Promis) and its relatively isolated location means it benefits from high penetration within this catchment. It is regarded, along with Norwich and Cambridge, as one of the principal retailing destinations in East Anglia and has strong representation from the typical high street retailers. Spending is boosted by tourism and Tourism South East estimated that 3 million people visited the town in 2011, contributing approximately 165m of additional spend. Ipswich s town centre totals 1.3m sq ft of retail floorspace and offers an attractive and compact retail core, primarily focused around the historic Tavern Street and Westgate Street. The prime pitch is regarded to run from Marks & Spencer on Westgate Street east to Tavern Street s junction with Tower Street and occupiers represented here include Boots, JD Sports and Primark. Corn Hill, the town s main square, which sits between Westgate Street and Tavern Street, hosts a farmers market four days per week which significantly boosts footfall. The town also benefits from two covered shopping centres, Tower Ramparts Shopping Centre (133,000 sq ft) and Buttermarket Shopping Centre (260,000 sq ft); however, both centres are regarded as inferior to the high street offer. Rental Value We analyse the current passing rents to reflect 106.50 Zone A on 5/5A Westgate Street and 119 Zone A on 7 Westgate Street, applying 5 per sq ft, 4 per sq ft and 2.50 per sq ft on the ground, first and second floor ancillary respectively. We consider these rents to be broadly in line with current open market levels and therefore we expect that the properties will be reversionary at the next lease events, as the occupational market and wider economy continues to improve. Tenant Covenants H. Samuel is one of the UK s leading mass-market jewellery stores and currently trades from almost 400 stores nationwide. The company is part of Signet Jewelers Limited, the world s largest specialist jeweller. H. Samuel Limited is rated very low risk by Experian and their latest financial figures are set out below: H. Samuel 02/02/2013 (000s) 28/01/2012 (000s) 29/01/2011 (000s) Turnover 243,450 243,166 240,911 Pre-Tax Profit 9,902 13,097 13,339 Net Worth 90,232 90,373 81,180 Description and Accommodation The subject properties comprise two adjacent retail units providing high quality sales accommodation at ground floor with ancillary space at first floors. 5/5A Westgate Street benefits from a further floor at second floor level providing extra ancillary accommodation. Market Commentary Prime rents in Ipswich peaked at 150 Zone A prior to the recession in 2007. Similar to many retail centres, they have fallen back since and we now consider there to be realistic scope for growth from the current level. As at July 2014, Ipswich had 21 reported retail requirements, compared with a national average of 13 requirements (Promis). Holland & Barrett is Europe s leading retailer of vitamins, minerals and herbal supplements and operate 620 stores throughout the UK and Ireland. Holland & Barrett Retail Limited is rated very low risk by Experian and their latest financial figures are set out below: Holland & Barrett 30/09/2013 (000s) 30/09/2012 (000s) 30/09/2011 (000s) Turnover 349,637 335,286 307,766 Pre-Tax Profit 84,309 74,421 56,966 Net Worth 251,454 193,650 134,681 Further financial information is available upon request. EPC 5/5A Westgate Street has an EPC rating of D92. 7 Westgate Street has an EPC rating of E123. Full EPCs are available upon request. 17
VAT With the exception of Chester, it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC). However, should this not be the case, the properties have been elected for VAT and therefore VAT will be payable on the purchase price. Proposal Offers for all three freehold properties are being sought in excess of 9,500,000. A purchase at this level would reflect an attractive net initial yield of 5.42%, adopting standard purchaser s costs of 5.8%. For further information please contact: Chris Lewis T: 020 7152 5991 E: chris.g.lewis@eur.cushwake.com Sam Waterworth T: 020 7152 5149 E: sam.waterworth@eur.cushwake.com Or joint agents: Andrew Hoffbrand T: 020 7908 7033 E: andrew@hrh.uk.com Richard Ward T: 020 7908 7034 E: richard@hrh.uk.com Cushman & Wakefield LLP (and any joint agent appointed) on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract. (2) No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. (3) The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. (5) Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. Publication Date: [September 2014] 18
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For further information please contact: Chris Lewis T: 020 7152 5991 E: chris.g.lewis@eur.cushwake.com Sam Waterworth T: 020 7152 5149 E: sam.waterworth@eur.cushwake.com Or joint agents: 20 Andrew Hoffbrand T: 020 7908 7033 E: andrew@hrh.uk.com Richard Ward T: 020 7908 7034 E: richard@hrh.uk.com