PRIME MULTI-LET CITY CENTRE OFFICE AND RETAIL INVESTMENT
BRIGHTON STATION QUEENSBERRY HOUSE 104-109 QUEENS ROAD BRIGHTON
INVESTMENT SUMMARY Fully let prime city centre office and retail investment Comprehensively refurbished in 2009 Energy efficient office accommodation (EPC B rating) Total floor area of 35,622 sq ft - 25,957 sq ft of office and 9,665 sq ft of retail accommodation Multi-let to eight substantial tenants providing a diverse income stream Annual rent of 808,327 pa 35% of income reviewed to RPI Ideally placed to benefit from rental growth due to constrained office supply in Brighton WAULT of 4.8 years to breaks, and 6.59 years to lease expiries Freehold PROPOSAL Offers in excess of 11,750,000 Net initial yield of 6.5%
BRIGHTON PIER CHURCHILL SQUARE SHOPPING CENTRE A259 ROYAL PAVILION THE LANES A259 CLOCK TOWER AMERICAN EXPRESS SOVEREIGN HOUSE THE GRAND HOTEL CIRCUS STREET VICTORIA GARDENS QUEENSBERRY HOUSE 104-109 QUEENS ROAD BRIGHTON BRIGHTON UNIVERSITY GRAND PARADE CAMPUS TRAFALGAR PLACE BRIGHTON STATION NEW ENGLAND QUARTER CITYVIEW
BRIGHTON Brighton is the cultural and creative capital of the UK s South Coast, with significant art, advertising and music industries, together with a burgeoning alternative culture. Brighton is a major retail and visitor destination city. Its 5.4 mile length of shingle beach and location less than one hour from Central London has made it one of the UK s most popular day trip destinations, attracting over 8.5 million visitors annually. Brighton s history as a seaside resort dates from the Georgian era, when members of the Royal Family frequented the town, and much of the town s architecture is in Regency style. Brighton, located approximately 54 miles from Central London, benefits from excellent transport links, with Gatwick Airport situated approximately 28 miles to the north, and a regular fast train service to both London Bridge and London Victoria, with a fastest journey time of 54 minutes. The city also benefits from being on the Thameslink line, providing direct access to London Blackfriars, London St Pancras, and Luton Airport Parkway. The town is easily accessible by car, with the A27 providing access across the South Coast, to Worthing, Chichester and Portsmouth to the west, and to Eastbourne and Hastings to the east, whilst the A23 runs north, becoming the M23, leading to the M25. A259 DAVIGDOR ROAD WESTERN ROAD MONTPELIER ROAD DENMARK TER. VERNON TER. OLD SHOREHAM ROAD CHATHAM PL. BUCKINGHAM PL. TERMINUS RD. DYKE ROAD Churchill Square Shopping Centre NEW ENGLAND RD. CHURCH STREET NORTH STREET KINGS ROAD GRAND JCT RD. WEST STREET QUEENS ROAD D. Brighton Station VIADUCT RD. LONDON ROAD TRAFALGAR STREET The Lanes A23 GLOUCESTER ROAD NORTH ROAD OLD S TEINE GLOUCESTER PLACE OLD STEINE YORK PL. GRAND PARADE U PPER LEWES RD RICHMOND PLACE LEWES ROAD EDWARD STREET ST. JAMES'S STREET A259 A270 ELM GROVE QUEENSBERRY HOUSE 104-109 QUEENS ROAD BRIGHTON FRESHFIELD ROAD Maidenhead West Pier Palace Pier STA MARINE PARADE MADEIRA DRIVE Reading M4 A339 Basingstoke M3 Guildford A34 A31 A3 Petersfield A272 Southampton A3 M27 A27 Portsmouth Bognor Regis Isle of Wight London Croydon M25 A24 M23 Gatwick Crawley A22 Horsham A24 A23 Worthing Heathrow BRIGHTON Lewes M25 M20 A21 Tonbridge A26 A27 Eastbourne SITUATION Queensberry House is positioned in Brighton s best business location. It is prominently located on Queens Road, the arterial route between the train station and the seafront, and the Brighton s prime retail facilities comprising The Lanes and Churchill Square Shopping Centre. The property is located approximately 250m from the train station, and approximately 700m from the seafront. The city s retail heart is within a short walk, with The Lanes, Brighton s famous shopping streets approximately 500m to the south east and Churchill Square the same distance to the south west. Volks Electric Railway
An alternative economy super-city and a dynamic centre for innovative companies forging novel ways of doing business DEMOGRAPHICS AND BUSINESS/EMPLOYMENT QUEENSBERRY HOUSE Brighton has a significant services sector and a population with high level service and communication skills. Alongside its retail, tourist, arts, entertainment and recreation assets, Brighton also has significant education, financial services, business/professional services and health sectors. Brighton s population is approximately 273,000. There are now over 120,000 people working in the city, including 8,000 entrepreneurs, many in the professional, scientific and creative industries. Between 1998 and 2008 employment in Brighton grew by 20,000 and the value of Brighton s economy doubled compared to a 70% increase nationally. Centre for Cities is an independent think tank that produces an annual report that profiles economic and labour market conditions across 64 major urban areas in the UK. Its 2015 Cities Outlook Report provides the following statistics relating to Brighton: 4th (of 64 cities) highest growth in net jobs between 2004 and 2014 9th highest employment rate in 2014 of 75.5% 6th highest qualified population (44.1% to NVQ4 +) 2nd highest digital connectivity (super fast broadband) of 89.3% of postcodes 7th lowest CO2 emissions per capita Traditional businesses with a major presence in Brighton include American Express, Domestic & General, Lloyds Banking Group and Legal General. Other large private sector employers include Kimberley Clark, BUPA, Kineo, Riot Games and icrossing. These last three are indicative of Brighton s popularity with Creative, Digital and IT (CDIT) businesses with 16,000 people now working for creative businesses in the city and CDIT employment having grown by over 25% between 2010 and 2013, a 10% faster rate than the national average. In 2011 HSBC Business described Brighton as an alternative economy super-city and a dynamic centre for innovative companies forging novel ways of doing business
DESCRIPTION Queensberry House is a purpose-built office building, constructed in the 1960s and comprehensively refurbished and extended in 2009. The building also provides retail accommodation at ground and basement levels. As part of the refurbishment, a penthouse office suite was added, which benefits from an extensive rooftop terrace and panoramic coastal views. The property is arranged over basement, ground and six upper floors, with an office reception at ground floor. The property benefits from nine car parking spaces at the rear accessed off Frederick Street. Further parking is available nearby at the 162 space NCP North Street, and the 587 NCP Brighton Theatre on Church Street. Following the full refurbishment in 2009, at a cost of approximately 115 per sq ft, the property provides Grade A office accommodation with amenities including: New heating and cooling to the offices via VRV systems New raised access floors New windows comprising double glazed aluminium units New metal suspended ceilings with LG7 compliant lighting Two new 8-person DDA compliant lifts serving basement to 5th floors New electrical supplies, meters and switchgear New water and gas supplies and drainage New fire alarm system New roof and elevations painted
6 5 QUEENSBERRY HOUSE FLOOR PLANS TENURE Typical upper floor plan: Freehold. The site area total approximately 0.28 acres (0.11 hectares). 100 23 40 to 42 43 to 46 Shelter QUEEN'S ROAD 103 to 105 102 101 1 to 12 The Ocean Building Queensberry House 15 16 to 20 12 21 FREDERICK STREET 53 47 50 51 52 48 49 107 54 55 56 57 58 111 62 57a 58 63 Freehold Demise Right of way for car park access Not to scale - for identification only
TENANCIES The property is let on effective full repairing and insuring terms, in accordance with the tenancy schedule below: Tenant Floor/Unit Sq ft Rent pa Rent psf Lease Start Lease Expiry Break Date Review Date Comments Tesco Stores Limited 104/105 4,827 84,177 17.44 25/06/2009 24/06/2024 25/06/2019 Rent is reviewed to RPI (uncapped) Arranged over ground and basement Parks Residential Limited 107 1,524 30,000 19.69 25/12/2008 24/12/2023 25/12/2018 Arranged over ground and basement McClelland Music Limited 108 1,524 32,500 21.33 23/04/2014 22/04/2024 22/04/2019 23/04/2019 Rent is reviewed to RPI (uncapped Arranged over ground and basement Subway Realty Limited 109 1,790 37,500 20.95 25/03/2014 24/03/2029 24/03/2019 Rent is reviewed to RPI (uncapped) 25/03/2019 Sublet to Rajeev Sharma t/a Subway 24/03/2024 Arranged over ground and basement Dyn Limited First 4,998 131,328 26.28 31/03/2015 31/03/2025 31/03/18 Rolling break thereafter on 6m notice 31/03/2020 Lockton Companies International Limited Second (part) 3,638 90,950 25.00 01/02/2011 31/01/2021 01/02/2016 Optical Express Limited Second (part) 1,454 29,000 19.94 12/12/2012 11/12/2017 Third 5,001 Brighton Business Centre Fourth 4,950 372,872 23.50 06/05/2010 05/05/2020 06/05/2015 Limited (t/a Regus) Fifth 4,998 Sixth 918 Total 35,622 808,327 Lease is reviewed to higher of RPI or OMV + 10% 6 month rent deposit Lease guaranteed by Dynamic Network Services Inc Rent payable by tenant is based on a combination of guaranteed and turnover rent. Further details below. Tenant has a contractual right to renew lease for a further 5 years. REGUS OCCUPATIONAL HISTORY: Regus took occupation in 2010 and following a 6 month fit out traded up over an 18 month period. Following an initial emphasis toward larger spaces and occupiers, the accommodation has recently been reconfigured to provide more smaller spaces, increasing the capacity from 150 desks to 260 desks. Recent trading figures, since the works completed in June 2015, demonstrate a strong uptick in revenue, with average desk rents now at 280 per month, and occupancy levels forecast at 90-95%. At these trading levels there is strong potential for a landlord to enjoy profit rent in the region of 12,000-25,000 per annum. REGUS RENT CALCULATION MECHANISM: Rent payable by Regus is calculated as follows: Guaranteed Rent 50% of quarterly market rent, reviewed 5-yearly and currently 93,218 per quarter ( 372,872 per annum). Basic Rent 50% of quarterly turnover, capped at 50% of quarterly market rent (current cap of 46,609 per quarter). To achieve a rent that equates to the market rent, quarterly revenue must be a minimum of 186,436. Profit Rent When 50% of quarterly revenue exceeds 50% of quarterly market rent, a profit rent is payable, calculated as follows: (Quarterly revenue (quarterly market rent * 2)) * 30%. This is capped at 20% of quarterly market rent. At current market rent, a quarterly revenue of 186,436 is required to generate a Profit Rent. The most recent quarterly revenue exceeds this. Further information available on request.
TENANT INFORMATION Tenant Turnover from latest account Profit Net worth D&B rating Tesco Stores Limited, Company no. 519500 42,547,000,000 1,696,000,000 3,038,000,000 5A1 Parks Residential Limited, Company no. 02984119 Not disclosed Not disclosed 200,322 B2 McClelland Music Limited, Company no. 04295879 Not disclosed Not disclosed 368,757 A2 Subway Realty Limited, Company no. 04174473 28,613,501 1,946,179 655,859 A3 Dyn Limited, Company no. 07938282 Not disclosed Not disclosed 255,784 B2 Dynamic Network Services Inc Not disclosed Not disclosed Not disclosed 1R3 Lockton Companies International Limited, Company no. 01211673 Not disclosed 2,647,031 25,558,493 4A1 Optical Express Limited, Company no. SC161469 79,479,693-3,589,047-1,830,278 N1 Brighton Business Centre Limited (t/a Regus), Company no. 7226401 876,000-184,000-759,000 N2 Tesco Stores Ltd is a subsidiary of Tesco PLC, one of the world s largest grocers, with over 500,000 staff in 12 countries. In the UK, Tesco have over 3,500 stores. Founded in 2001, Dyn is an internet performance company. Queensberry House is the company s European headquarters. Parks Residential Letting Agency is a leading Brighton and Hove lettings and property management company, established in 1992. The world s largest privately owned insurance brokerage firm, founded in 1966 McClelland Music trade as Hobgoblin Music, established in 1976, selling music instruments, with a particular focus on the folk market. They currently have nine branches across the UK. One of the UK s leading eyecare providers. A franchised sandwich shop, operating in the UK since 1996 with1,400 stores in the UK. Subsidiary of Regus PLC, established in 1989 and now one of the global leaders in serviced offices. SERVICE CHARGE: The 2015 service charge budget is 5.53 per sq ft for the office accommodation and 1.21 per sq ft for the retail units. Each tenant also pays into a sinking fund which will be transferred on sale and currently amounts to circa 160,000, subject to confirmation.
BRIGHTON OFFICE MARKET Brighton and Hove established itself as a major office centre in the 1970s, when several predominantly financial institutions relocated from London, to join public sector occupiers led by Brighton & Hove City Council. Alongside these financial occupiers, the Brighton market has been characterised in recent years by an influx of media and technology companies attracted by the culturally diverse lifestyle available to employees in the city. These companies now account for circa 50% of total office take up. However, Brighton s office stock has hardly changed since the mid 1980 s with an estimated 85% of Brighton s 4 million sq ft of stock built before 1987. The only major schemes within the city centre in the past 25 years have been Trafalgar Place (250,000 sq ft) and Amex s 220,000 sq ft new HQ building at 1 John Street which replaced its previous HQ fronting Edward Street comprising circa 300,000 sq ft. It is estimated that circa 750,000 sq ft of city centre offices have been removed from Brighton s office stock in the past decade as demand for housing and student housing made change of use away from offices profitable for owners of tired office buildings. This has further accentuated the effects of a long term lack of office development and led to a supply shortage. KEY RECENT INVESTMENT TRANSACTIONS IN THE SOUTH EAST AND SOUTH COAST MARKET INCLUDE: Two new office schemes are now being promoted into this relative vacuum of which McAleer & Rushe s speculative CityView, located north of the train station, will provide 32,000 sq ft of office accommodation and is under construction with completion due at the end of 2015. Agents are not formally quoting a rent, however prospective tenants are being issued with leasing terms based on a rent of 28 per sq ft which will conceivably rise to 30 per sq ft at completion. This scheme is likely to appeal to financial and mature tech companies. The second potential scheme is Cathedral Group s Circus Street scheme where a 30,000 sq ft building is likely as part of a 100M mixed use development and will be targeted towards smaller and fast growing tech companies. The site is currently being cleared and development is planned to commence towards the end of 2015. A lack of supply is helping to drive rental growth with top headline rents currently over 25 per sq ft, as evidenced by the recent letting to Dyn in Queensberry House at 26.28 per sq ft. Elsewhere in the city, Sovereign House has regularly achieved rents of 23-23.50 per sq ft and 25 per sq ft at Trafalgar Place. In similar sized South East office centres, such as Maidenhead, Woking and Staines, headline rents are now 35 per sq ft, 30 per sq ft and 33 per sq ft respectively. In this context, Brighton s headline rents are very sustainable and offer strong potential for rental growth in the short term. Date Sold Address Tenants WAULT Size (sq ft) Rent (per sq ft) Sale Price NIY Purchaser Aug -15 The Atrium, Uxbridge Multi Let 4.3 years 156,529 24.95 55,900,000 5.68% Blackrock May -15 Argentum, Hammersmith Regus 5.2 years 25,424 30.78 16,226,000 4.10% Royal London May -15 Apex Plaza, Reading Multi Let 3.2 years 221,231 26.13 90,000,000 5.63% Legal & General Apr -15 One City Park, Hove Legal & General 11.8 years 78,121 18.83 23,170,000 6.00% Kames Dec -14 Chiswick Gate, Chiswick Multi Let 2.1 years 13,339 26.67 6,510,000 5.50% Private Oct -14 Newplan House, Epsom Multi Let 4.3 years 23,100 19.73 6,900,000 6.25% Cornerstone Sep -14 Goldvale House, Woking Multi Let 4.1 years 20,556 21.64 6,450,000 6.50% LaSalle Aug -14 80 Moorbridge Road, Maidenhead Multi Let 5 years 18,894 21.88 6,840,000 5.66% Legal & General Dec -13 Two City Park, Hove Legal & General 10 years 67,296 18.90 18,080,000 6.65% M&G Nov -13 One Gloucester Place, Brighton Multi Let 3.8 years 37,721 20.60 11,025,000 6.66% Royal London
View from Queensberry House roof EPC PROPOSAL The office accommodation benefits from an excellent EPC rating of B 39. The retail units benefit from the following EPCs: 104/105 C 68 107 C 75 109 D 78 108 C 58 We are instructed to seek offers in excess of 11,750,000 (Eleven Million Seven Hundred and Fifty Thousand Pounds) reflecting an initial yield of 6.5%, net of the usual purchaser s costs of 5.8%. CAPITAL ALLOWANCES CONTACT The vendor has not claimed CAs during its ownership. Owing mainly to the 2009 full refurbishment of the building there is an estimated pool of 1.75m- 2.2m of qualifying expenditure, which assuming Corporation Tax of 20% would result in a tax saving of circa 350,000-440,000. Capital allowances are available to the purchaser by separate negotiation. Richard Talbot-Williams 0207 338 4244 richard.talbot-williams@bnpparibas.com Hugh Yates 0207 338 4336 hugh.yates@bnpparibas.com Misrepresentation Act 1967: BNP Paribas Real Estate Advisory & Property Management UK Limited for themselves and for the vendor(s) or lessor(s) of this property whose agents they are, give notice that: 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact. 3. Any intending purchaser or lessee must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor(s) or lessor(s) do not make or give and neither BNP Paribas Real Estate Advisory & Property Management UK Limited nor any person in their employment has any authority to make or give, any representation or warranty whatever in relation to this property. Finance Act 2013: Unless otherwise stated all prices and rents are quote exclusive of VAT. The Business Protection from Misleading Marketing Regulations 2008: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. September 2015 04589 / 020 7355 2500 / taylerreid.co.uk