WESTERN AVENUE, YEOVIL, BA22 8YQ HOUNDSTONE RETAIL PARK FOR SALE PRIME RETAIL PARK INVESTMENT

Transcription

1 FOR SALE HOUNDSTONE RETAIL PARK WESTERN AVENUE, YEOVIL, BA22 8YQ PRIME RETAIL PARK INVESTMENT

2

3 INVESTMENT CONSIDERATIONS A dominant prime retail park within an established out of town retail location on the densely populated western side of Yeovil. A 15 minute drivetime catchment of 63,000 people rising to 95,000 within 20 minutes and 164,000 within 30 minutes. A retail warehouse scheme comprising 10,604 m² (114,139 ft²) of accommodation on a 4.23 ha (10.46 acre) site. There are 448 car parking spaces which reflects a generous ratio of 1 space per 255 ft². Strong line up of national multiple retailers including Homebase, Currys, Halfords, Harveys, Carpetright, Land of Leather and Maplin. Mixture of part open A1 (including food) and part bulky goods retail planning permission. The property produces a current rental income stream of 1,924,044 pa which equates to current rents of between per m² ( per ft²) and per m² ( per ft²) with two outstanding rent reviews in September/October this year taking the rental income to 2,064,142 pa. Our client is seeking offers in the region of 21,400,000 (Twenty One Million Four Hundred Thousand Pounds), subject to purchaser s costs of 5.75%. A purchase at this level reflects the following attractive yield profile: Initial Yield 8.50% Yield upon settlement of outstanding rent reviews 9.09% Reversionary Yield 9.82% Equivalent Yield 9.74% True Equivalent Yield 10.36% Our client is seeking a further top up for the KFC drive-thru development, upon lease and practical completion of the unit, at 778,750, reflecting a net initial yield of 8.50%. HOUNDSTONE RETAIL PARK, WESTERN AVENUE, YEOVIL

4 HOUNDSTONE RETAIL PARK PROPOSED KFC HOUNDSTONE RETAIL PARK

5 LOCATION & SITUATION Yeovil is located approximately 28 miles east of Taunton, 40 miles south of Bristol, 49 miles east of Exeter and 130 miles south west of London. The retail park is located in Houndstone, approximately one mile west of the town centre and three miles south east of the A303 dual carriageway, linked by the A3088 Western Relief Road. The M4 motorway is accessible via Bristol whilst the M5 motorway can be joined at Bristol or Taunton. Houndstone Retail Park benefits from a roundabout access on Western Avenue which also provides access to an Asda foodstore diagonally opposite. Separate service access to the property is provided via Mead Avenue to the west. CATCHMENT With an Urban Population of 41,774 Yeovil represents one of the largest towns in the South West. The catchment population for the town extends to circa 63,000 within a 15 minute drive, 95,000 within 20 minutes and 164,000 within a 30 minute drivetime (Census). The 20 minute drivetime statistics indicate an affluent socio-demographic profile with 22.2% of the population within the AB1 High and Intermediate managerial/administrative/professional category compared to the national average of 21.57%. The catchment is a mobile one with 82.11% owning at least one car/van as opposed to the national average of 72.56%. The level of home ownership (72.69%) is well above the national average (68.32%) as is the economically active proportion which at 69.21% is also well above the national average of 66.49%. DESCRIPTION The scheme, which was constructed in 1990, comprises a modern retail park totalling 10,604 m² (114,139 ft²) of retail accommodation in nine units over two terraces. The individual unit sizes are set out in the tenancy schedule. There are two retail warehouse terraces comprising 9 units in total and separate access points for customer and service vehicles. The units offer modern flexible accommodation together with sufficient eaves heights to allow for the installation of mezzanines. Indeed mezzanines have already been installed by tenants in Units 2, 3, 4, 6 and 7A. The site extends to approximately 4.23 ha (10.46 acres) giving a low site cover of 25%. The units benefit from a total of 448 car parking spaces, providing a generous ratio to gross internal floorspace of 1:23.69 m² (1:255 ft²). TENURE Freehold. TENANCIES The property is let under 9 leases and 2 licences in accordance with the tenancy schedule and produces a total current income of 1,924,044 per annum. The leases are drawn on effective full repairing and insuring terms, subject to five yearly upward only rent reviews. There are two outstanding rent reviews on units 5 and 6 which on settlement, at our ERVs, will increase the total income to 2,064,142. HOUNDSTONE RETAIL PARK, WESTERN AVENUE, YEOVIL

6

7 TENANCY SCHEDULE Unit Tenant Floor Area** Lease Start Current Rent Rent Review Estimated Rental Value m² ft² (Expiry) Per annum Per m² Per ft² Date Per annum Per m² Per ft² 1 Homebase Ltd 3, ,749 25/12/ , /12/ , (24/12/2015) 2 Comet Group Ltd ,348 25/12/ , /12/ , (24/12/2015) 3 Harveys Furnishings Ltd ,095 16/01/ , /12/ , (24/12/2015) 4 Halfords Ltd 1, ,887 25/12/ , /12/ , (24/12/2015) 4A Maplin Electronics Ltd ,429 04/05/ , /05/ , (24/12/2015) 5 Carpetright Plc ,679 29/09/ , /09/ , (24/12/2015) ( 190,938) ( ) ( 22.00) (outstanding) 6 DSG Retail Ltd ,000 04/10/ , /10/ , (24/12/2015) ( 220,000) ( ) ( 22.00) (outstanding) 7 MFI Properties Ltd* 1, ,832 06/12/ , /12/ , (05/12/2022) 7A Land of Leather Ltd ,120 25/01/ , /01/ , (24/01/2023) Mary Elizabeth Mahasseb (Licence) 15/10/2008 7, , (Catering Van) (14/10/2011) Mr & Mrs Licata (Licence) 26/02/2007 3, , (Ice cream sales area) (25/02/2009) TOTAL 10, ,141 1,924,044 2,228,584 ( 2,064,142) * Tenant in administration. Vendor to provide a 3 year guarantee inclusive of rent, rates and service charge. ** Areas agreed with tenants at rent review or lease commencement. MFI s rent review on 6 December 2012 is subject to RPI indexed uplift, capped at 3%, with an open market rent review thereafter. HOUNDSTONE RETAIL PARK, WESTERN AVENUE, YEOVIL

8

9 MEZZANINE FLOORSPACE SCHEDULE Approximate areas of tenants mezzanine floors are as follows: Unit Tenant (type) Floor Area M² Ft² 2 Comet (stock)* ,574 3 Harveys (sales) ,597 4 Halfords (sales & stock) ,514 6 Currys (stock) ,136 7A Land of Leather (sales) ,000 Total 1, ,821 * Measured prior to their recent store fit out. COVENANT STATUS SCHEDULE The property is let to 9 national multiple retailers. The majority of the income (85%) is secured to covenants with D&B minimum risk and less than average risk rated retailers. Unit Tenant Dun & Bradstreet Percentage of Rent Rating Payable 1 Homebase Ltd 5A1 27.8% 2 Comet Group Ltd 5A1 9.4% 3 Harveys Furnishings Ltd 5A2 7.4% 4 Halfords Ltd 5A1 10.3% 4A Maplin Electronics Ltd 5A1 4.3% 5 Carpetright Plc 3A1 6.5% 6 DSG Retail Ltd 5A1 7.5% 7 MFI Properties Ltd In administration 14.7% 7A Land of Leather Ltd 3A2 11.6% Licence M E Mahasseb N/A 0.36% Licence Mr & Mrs Licata N/A 0.18% TOTAL 100% TOWN PLANNING The retail park was developed in two phases. Units 1-4 were granted planning permission in 1989 for non-food retail development subject to a bulky goods restriction on sales. Units 5-7 were granted planning permission in 1992 for non-food retail units subject to the same bulky goods restrictions. In December 2004 planning permission was granted for the subdivision of Unit 7 to create two new retail warehouse units. There were no restrictions of the range of goods attached to this planning permission and therefore Units 7 and 7A benefit from an unrestricted open A1 (including food) planning permission. The range of goods permitted to be sold from Units 1-6 are DIY, house improvements and builders merchants items, agricultural or garden requisites, furniture, furnishings and floor coverings, motor vehicles and accessories, and white goods. Units 2, 4 and 6 are specifically allowed to sell all types of electrical goods. Units 1-6 therefore benefit from a bulky goods retail planning permission. An outline planning permission was granted in July 2006 for a drive-thru A3 restaurant to be located in the southern corner of the site adjacent to the car park. Copies of these planning permissions are available upon request. COMPARABLE RENTAL EVIDENCE The most recent evidence from within the park itself is the letting to Land of Leather in January 2008 at a rent of per ft² with 3 months rent free as a tenant s incentive. The subject park is the largest retail park in the town and is the main destination park for bulky goods retail shopping. Whilst retail warehousing on the west side of Yeovil is dominated by Houndstone Retail Park, on the east side of the town there is a cluster of non food retail warehousing at Babylon Hill. The Peel Centre, which fronts Sherborne Road, is let to Matalan, JJB Sports, Brantano and Argos. The former Focus unit to the rear of the Peel Centre was subdivided into three 11,500 ft² units and let to Boots, Next and Sports Direct in The former 16,500 ft² Fabric Warehouse unit, which is adjacent to the Peel Centre, is to be split into circa 8,000 ft² units and terms have been agreed at rental levels of 23 per ft². HOUNDSTONE RETAIL PARK, WESTERN AVENUE, YEOVIL

10

11 Elsewhere in this region in Exeter, top rents are 35 per ft² at the bulky goods Rydon Lane Retail Park on the north side of the town with the letting of 10,000 ft² to Land of Leather in Also, on the south side of the town at Exeter Retail Park, Brantano have recently let 7,480 ft² at per ft² net effective. The March 2007 rent review of a 7,517 ft² unit occupied by Allied Carpets was at per ft². At Taunton the top rent in the town was achieved at Deane Retail Park with a 2004 rent review settlement on the Mothercare World unit comprising 15,000 ft² at per ft². ESTIMATED RENTAL VALUE We are of the opinion that the ERV of Houndstone Retail Park is 2,228,584 per annum. This ERV is a reflection of clear rental evidence on the scheme and the strong demand from retailers to be on the town s dominant and largest retail park. ASSET MANAGEMENT OPPORTUNITIES As a result of the subdivision of the MFI unit to allow the letting to Land of Leather, unit 7 and 7A have open A1 food retail planning consent. Future asset management initiatives that have therefore not been explored by our client include surrendering these leases, possibly splitting the MFI unit and reletting to open A1 retailers. On behalf of our client we have held recent discussions with a number of the existing retailers with the aim of regearing their leases and these have been met with positive responses. KFC Our client has planning permission to build a drive through restaurant in the southern corner of the site adjacent to the car park comprising 2,600 ft² and has agreed terms with KFC at a rent of 70,000 per annum on a 20 year lease with a 15 year mutual break. Our client proposes to retain the right to develop this unit with the purchaser to make an additional payment of 778,750, reflecting a 8.5% net initial yield, following practical and lease completion of the unit. Full details can be provided on request. PROPOSAL Our client is seeking offers in the region of 21,400,000 (Twenty One Million Four Hundred Thousand Pounds), subject to purchaser s costs of 5.75%. A purchase at this level reflects the following attractive yield profile: Initial Yield 8.50% Yield upon settlement of outstanding rent reviews 9.09% Reversionary Yield 9.82% Net Equivalent Yield 9.74% True Equivalent Yield 10.36% Make use of the large site area by constructing a further retail or restaurant unit on the generous car parking area, subject to planning. Construct a new retail unit to complete the terrace between the Maplin and Carpetright units, subject to planning. Make use of the physically divisible terrace to create smaller units through tenant engineering and sub-division. HOUNDSTONE RETAIL PARK, WESTERN AVENUE, YEOVIL

12 FURTHER INFORMATION For further information and in order to arrange an inspection, please contact: Will Andrews London Tel: Fax: Jonathan Perkins London Tel: Fax: Mark L Smith London Tel: Fax: markl.smith@kingsturge.com Edward Blood Manchester Tel: Fax: edward.blood@kingsturge.com James Porteous Manchester Tel: Fax: james.porteous@kingsturge.com Crown Copyright All rights reserved. Promap licence number King Sturge licence number This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. MISREPRESENTATION CLAUSE. The accuracy of any description, dimensions, references to condition, necessary permissions for use and occupation and other details contained herein is not guaranteed and is for general guidance only and prospective purchasers or tenants must not rely on them as statements of fact or representations and must satisfy themselves as to their accuracy. Neither King Sturge nor any of its employees or representatives has any authority to make or give any representation or warranty or enter into any contract whatever in relation to the Property. Rents quoted in these particulars may be subject to VAT in addition. The reference to any mechanical or electrical equipment or other facilities at the Property shall not constitute a representation (unless otherwise stated) as to its state or condition or that it is capable or fulfilling its intended function. Prospective tenants/purchasers should satisfy themselves as to the fitness of such equipment for their requirements. Under the Control of Asbestos at Work Regulations 2002 (CAW Regulations), the owner or tenant of the property, and anyone else who has control over it and/or responsibility for maintaining or repairing it, may be under a statutory obligation to detect and manage any asbestos or asbestos related compounds contained within the property. Failure to comply with the CAW Regulations is an offence and could adversely affect the value of the property. Subject to Contract Exclusive of VAT November 2008