MID SUSSEX RETAIL PARK

Transcription

1 MID SUSSEX RETAIL PARK B&Q AND PETS AT HOME BURGESS HILL, RH15 9UG PRIME SOUTH EAST RETAIL WAREHOUSE INVESTMENT OPPORTUNITY WITH RPI LINKED RENTAL UPLIFTS 1

2 INVESTMENT SUMMARY Burgess Hill is situated in the county of West Sussex in the South East of England, 36 miles south of Central London. Affluent population with 42.3% of the 15 minute drive time catchment within the top Acorn Group Affluent Achievers. Very limited supply of retail warehousing in the town and the surrounding area. The property was developed in 2013 to a BREEAM standard of Very Good. The scheme extends to 54,429 per sq ft GIA. Let to B&Q plc and Pets at Home Ltd 5A1 covenants on 15 year leases with no breaks, giving a WAULT of years. Current income of 869,941 per annum, off low rents of per sq ft and per sq ft. The B&Q lease benefits from 5 yearly RPI linked rent reviews with collars and caps of 1.0% and 2.5% per annum compounded. Significant RPI related reversion in the B&Q rent and potential reversion in the Pets at Home rent, both in The property benefits from a wide bulky goods planning consent and unimplemented mezzanine consent. Freehold. We are instructed to seek offers in excess of 14,810,000 (Fourteen Million Eight Hundred and Ten Thousand pounds), subject to contract and exclusive of VAT. This reflects an attractive net initial yield of 5.50% (assuming purchaser s costs at 6.8%). The yield rises to an anticipated 6.09% following a rent review settlement at per sq ft, upon the Pets at Home rent review in July 2018 and the RPI linked B&Q rent review in August

3 LET TO B&Q AND PETS AT HOME WITH A WAULT OF 11.0 YEARS 3

4 CHARLES AVE JUBILEE WAY LOCATION Burgess Hill is located in the affluent county of West Sussex in the South East of England. The town lies approximately 11 miles north of Brighton, 26 miles south west of Tunbridge Wells, 15 miles south of Crawley and 36 miles south of Central London. The town benefits from excellent road communications, being adjacent to the A23, which provides access north to Crawley and Junction 11 of the M23 motorway, which, in turn, leads to the M25 motorway. Access is also provided south, via the A23, to Brighton and the A27, connecting east and west along the coast. London Gatwick International Airport is situated 20 miles north of the town. Burgess Hill railway station offers direct services to both London Bridge and London Victoria with fastest journey times of approximately 50 minutes, whilst also running local services to Brighton and surrounding towns. A31 A3 M3 Farnborough A331 Aldershot Farnham A272 A3 Haslemere Woking A3 Guildford Billingshurst A272 A3 A243 M25 A24 A24 Horsham Epsom A272 A217 Gatwick Airport A23 A23 Crawley Caterham M23 A22 BURGESS HILL M26 Edenbridge A22 A26 Uckfield A26 M20 A21 Tonbridge A21 Royal Tunbridge Wells M20 A228 A21 M2 SITUATION The subject property is situated approximately 1.5 miles from the town centre in a prominent and highly visible edge-of-town location, on the A273 (Jane Murray Way), circa 3 miles from the A23. A27 Chichester A259 Bognor Regis A280 Worthing A27 A23 Brighton A26 A22 A27 Eastbourne The scheme is positioned to the north west of the roundabout junction of Charles Avenue and Hammonds Ridge, adjacent to a Tesco superstore. The immediate surrounding area is predominantly office and light industrial, whilst there is a high concentration of residential areas to the north and east. Local bus services connect the property with the town centre. A273 JANE MURRAY WAY VICTORIA ROAD VICTORIA WAY LONDON ROAD CIVIC WAY CRESCENT ROAD MILL ROAD YORK ROAD A273 CHA RLES AVE VICTORIA CLOSE QUEEN ELIZABETH AVE STATION ROAD CONSORT WAY ALBERT DRIVE VICTORIA GARDENS STATION ROAD STATION ROAD BURGESS HILL RAILWAY STATION JANE MURRAY WAY SUBJECT PROPERTY A273 HAMMONDS RIDGE A273 JANE MURRAY WAY HAMMONDS RIDGE LONDON ROAD MEADOW LANE POTTERS LANE CHANCTONBURY RD A273 4

5 DEMOGRAPHICS Weekly Catchment Expenditure versus CACI Average Burgess Hill is a fast growing affluent town in West Sussex. It has a resident population of approximately 30,635 people, whilst the population of Mid Sussex is estimated at 155,900 people, according to the 2011 Census. The town is also seeing significant amounts of residential development with the Burgess Hill Town Wide Strategy aiming to deliver 4,000 new homes in the town. Within the subject property s 15 minute drive time catchment, 83.5% of households are categorised within the 3 highest Acorn Category Groups (ABC1), significantly above the CACI base average of 58.8%. The highest Acorn Group Affluent Achievers accounts for 42.3% of the catchment, significantly above the CACI base average of 22.7%. A summary of key Acorn sub-categories is provided below: Acorn Group Category % of Catchment Affluent Achievers % Versus CACI Base Average Executive Wealth Mature Money Rising Prosperity Career Climbers Comfortable Communities Financially Stretched Successful Suburbs Steady Neighbours Modest Means Striving Families CACI provide that within the 15 minute drive time catchment, the mean annual income is 47,644, which is 30.7% above the base average. 40k to 60k pa 22% above average Catchment = 21.4% Average = 17.5% 60k to 80k pa 51% above average Catchment = 12.4% Average = 8.2% 80k to 100k pa 76% above average Catchment = 7.4% Average = 4.2% 100k+ pa 105% above average Catchment = 8.2% Average = 4.0% Social Grade AB Description Higher and intermediate managerial / admin / professional CACI provide that 75% of households within the 15 minute drive time catchment are privately owned, 18% above the average. Conversely, just 10% of the catchment live in social rented homes, 42% below the average. Car ownership is 21% higher than the UK average. This information describes an affluent car-borne population. The level of unemployment for people aged between 16 and 74 stands at 1.3%, significantly less than the CACI base average of 2.0%. Mean Household Income Comparison to Base (GB) Average +45% C1 Supervisory / professional +13% C2 Skilled manual workers -11% DE Semi-skilled / unskilled workers / unemployed Southwater Steyning Henfield Southwick Hurstpierpoint -45% Haywards Heath Burgess Hill High 45k - 60k+ Very High 60k+ 15 min drivetime Lewes 5

6 RETAIL WAREHOUSE PROVISION There is a substantial undersupply of retail warehousing in Burgess Hill and the surrounding area. The only other retail warehouse provision in the town is located on the B2036 (London Road) and comprises a Wickes (19,776 sq ft), Halfords (7,676 sq ft) and Carpetright (8,907 sq ft). The Wickes was recently sold by Travis Perkins as part of a sale and leaseback portfolio and the Halfords and Carpetright are owned by Canada Life. The lack of retail warehouse supply in the town and the surrounding area, coupled with the prominent positioning of the subject property, provides B&Q and Pets at Home with a competitive trading platform from where we understand each tenant trades well. The table below identifies the DIY stores within a 15 mile radius of the subject property, and further highlights the lack of competition for B&Q in Burgess Hill. Town Retailer Size (sq ft) Distance (miles) 0-5 Miles Burgess Hill Wickes 19, Miles Hove Homebase 35, Miles Brighton B&Q 42, Wickes 28, Shoreham Homebase 23, Lewes B&Q 36, Shoreham B&Q 37, Crawley Homebase 35, There are no other national multiple pet shops/operators in Burgess Hill. The nearest Pets at Home stores are in Hove (9.4 miles) and Horsham (14.5 miles). FOODSTORE PROVISION The town s dominant food offer is the 78,000 sq ft Tesco store, situated adjacent to the subject property. The only other substantial food offer is the Waitrose in the centre of Burgess Hill. Sainsbury s, Morrisons and Asda are not in the town. TOWN CENTRE The retail provision in the town centre is focused around The Martlets Shopping Centre, which comprises 124,000 sq ft and is anchored by Lidl, Iceland, Argos and New Look. The owner, NewRiver Retail, are currently redeveloping the scheme to include a new cinema, hotel, residential apartments and improved retail and leisure offer. 6

7 DESCRIPTION The subject property was constructed in 2013 and comprises an attractive and modern development of circa 54,429 sq ft GIA, arranged across 2 units and there is also a garden centre. The units are of steel portal frame construction finished to a high specification with significant glazing and prominent tenant signage. Customer access and egress to the property is from a dedicated junction on the A273 (Jane Murray Way). The tarmacadam surfaced customer car park is situated to the front of the units with approximately 196 parking spaces, giving a good ratio of 1 space per 278 sq ft GIA. The service yard is situated to the rear of the property and is accessed from a dedicated service road, accessed off Charles Avenue to the east of the site. The property was designed and constructed to a BREEAM standard of Very Good and includes permeable paving, solar hot water and rainwater harvesting tanks. The fabric of the building exceeds the requirements of Building Regulations which minimises the property s future carbon footprint. EPC The EPC rating for both units is as follows: Unit Tenant Rating A B&Q A 16 B Pets at Home A 23 7

8 TENURE The site delineated in red is held freehold. This is provided for indicative purposes only. SIZE Access to Service Area The site extends to approximately 4.25 acres (1.7 hectares), giving a site cover of 26.8%. Jane Murray Way Charles Avenue PLANNING The property benefits from a wide bulky goods consent allowing the sale of: DIY builders merchant and home improvements Kitchens, bathrooms and associated accessories Wall and floor coverings Furniture, homewear and furnishings Electrical and gas products Motor parts/car accessories Pets and pet supplies and accessories Garden supplies and equipment (including plants) and seasonal goods (related to Christmas). Goods falling outside this range may be sold where they form a minor ancillary part of the store s operations. Copies of the planning consents are available on request. CURRENT INCOME OF 869,941 PER ANNUM, OFF LOW RENTS OF PER SQ FT AND PER SQ FT. 8

9 TENANCIES The scheme is let to 2 market leading 5A1 retailers and benefits from a WAULT of years. Unit Tenant GIA (Sq ft) Lease Start Date Expiry Date Next Rent Review Current Rent (per annum) Current Rent (per sq ft) A B&Q plc 45,272 19/08/ /08/ /08/2018* 699, B Pets at Home Ltd 9,157 15/07/ /07/ /07/ , , , Comments Original planning consent included a trading mezzanine of 10,000 sq ft. Assumed as 8,500 sq ft in the rent review clause. *The B&Q lease benefits from 5 yearly upward only rent reviews, linked to RPI, with collars and caps of 1.0% and 2.5% per annum compounded. B&Q RPI Linked Rent Reviews We set out below RPI information based on actual and forcasted RPI figures: Unit Year RPI figure (%) B&Q Cap (%) Rent ,440 A , ,238 B * 756, * 775,611 *Provided by the Office of Budget Responsibility. Based on the above, the B&Q rent will increase to 775,611 per annum at the August 2018 rent review. The Office of Budget Responsibility forecast that RPI will be in excess of 3.0% in years 2019, 2020 and It is therefore anticipated that the 2.5% rental cap will be achieved in these years, following the August 2018 rent review. 9

10 RENTAL COMMENTARY Good quality locations, especially in the South East of England, have continued to see strong levels of tenant demand over recent years. The lack of available sites and the high levels of consumer spending have resulted in increasing rental levels in locations such as Burgess Hill. In particular, we believe the DIY market is particularly strong at the current time, with good trading performances from established occupiers, being B&Q, Wickes and Homebase, and increased competition following Bunnings acquisition of the Homebase business. We would highlight recent relevant transactions: Wickes - Burgess Hill COVENANT INFORMATION B&Q is the largest home improvement and garden centre retailer in the UK, employing over 27,000 people across their 300 strong UK store portfolio. Their most recent accounts are as follows: Wickes have agreed to take a 15 year lease at a rent of 325,000 per annum equating to per sq ft. B&Q - St Albans We understand B&Q have agreed to pay a rent equating to circa per sq ft on a new 45,000 sq ft unit. Wickes - Kingston Year Ending Sales Turnover (000 s) Pre Tax Profit / Loss (000 s) Net Worth (000 s) 31/01/2016 3,704,000-68,900 4,493,200 31/01/2015 3,664,000 5,400 4,368,900 D&B Rating 5A1 We understand an uplift was agreed at the 2015 rent review to a rent equating to per sq ft on the 25,200 sq ft unit. They also agreed a 15 year reversionary lease. Tapi - Hove We understand that Tapi have agreed to take the 10,000 sq ft former Staples unit on Davigdor Road, at a rent equating to per sq ft with 9 months rent free. The B&Q rent review is related to RPI, subject to a 2.5% cap. Pets at Home is the UK s leading pet supplies retailer with more than 370 stores and 6,000 employees. Their most recent accounts are as follows: Pets at Home has a rent review in July 2018, to open market value, and we would suggest the unit is reversionary with an ERV in the region of per sq ft. A rent review settlement at this level would result in an uplift to 187,000 per annum, based on a floor area of 8,500 sq ft, as stated in the rent review clause. Year Ending Sales Turnover (000 s) Pre Tax Profit / Loss (000 s) Net Worth (000 s) 31/03/ ,726 81, ,310 26/03/ ,697 79, ,138 D&B Rating 5A1 VAT The property has been elected for VAT, however, it is anticipated that the transaction will be treated as a Transfer of a Going Concern (TOGC). 10

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12 PURCHASE PRICE We are instructed to seek offers in excess of 14,810,000 (Fourteen Million Eight Hundred and Ten Thousand Pounds), subject to contract and exclusive of VAT. This reflects an attractive net initial yield of 5.50% (assuming purchaser s costs at 6.8%). The yield rises to an anticipated 6.09% following a rent review settlement at per sq ft, upon the Pets at Home rent review in July 2018 and the RPI linked B&Q rent review in August The property is held in a Jersey based SPV and further details are available upon request. FURTHER INFORMATION Should you require any further information on the property or wish to arrange an inspection, please do not hesitate to contact: Hamish Whiteman hamish@stauntonwhiteman.co.uk Nick Staunton nick@stauntonwhiteman.co.uk Staunton Whiteman LLP 9-10 Savile Row London W1S 3PF Miles Marten T: / M: m.marten@wilkinsonwilliams.co.uk Jack Lloyd T: / M: j.lloyd@wilkinsonwilliams.co.uk Wilkinson Williams LLP Heathcoat House 20 Savile Row London W1S 3PR MISREPRESENTATION ACT 1967 AND DECLARATION Messrs Staunton Whiteman LLP and Wilkinson Williams LLP for themselves and for the vendors of this property whose agents they are, give notice that: i) the particulars are set out as a general outline only for the guidance of intending purchasers, and do not constitute, nor constitute part of, an offer or contract: ii) all descriptions, dimensions, references to condition and necessary permission for use and occupation and other details are given in good faith and are believed to be correct, but any intending purchasers should not rely on them as statements or representations of fact and must satisfy themselves by inspection or otherwise as to the correctness of each of them: iii) no person in the employment of Staunton Whiteman LLP or Wilkinson Williams LLP has any authority to make or give any representation or warranty in relation to this property. 12 Brochure by: Adrian Gates Design