REVERSIONARY RETAIL WAREHOUSE INVESTMENT Hinckley lsh.co.uk
Investment Summary Located in Hinckley town centre Prominent site on the corner of Leicester Road and New Buildings Detached retail warehouse extending to approx. 2,936.35 sq m (31,607 sq ft) Freehold site of approx. 1.95 acres Let in its entirety to B&Q plc FR&I lease until 26 February 2025 (7.75 years unexpired) Rental income of 235,000 per annum ( 7.44 psf) B&Q in occupation since 1989 We are seeking offers in the region of 3,150,000 for the freehold interest, subject to contract, reflecting a NIY of 7.01% and a NRY of 8.11% assuming the maximum rental increase allowed. We have assumed purchaser s costs of 6.64%. 02
Location Hinckley is a major Leicestershire market M6 Toll Tamworth town, situated some 12 miles to the south east of Leicester city centre. The town Sutton Coldfield enjoys excellent road access, with the A5 running to the south west and the M69 motorway running to the south-east, providing access to junction 21 of the M1 at Leicester and junction 2 of the M6 at M6 Toll A5 M69 A45 of this within the urban area and the Solihull A426 Rugby M42 M40 Redditch M6 Coventry A435 A4177 A46 A14 A5 M45 A423 Royal Leamington Spa A6 M69 Nuneaton M6 A47 A47 M1 Birmingham of 105,000 (2011 census) with about half Leicester Hinckley A5 M42 M6 Coventry. The town has a district population remainder in the surrounding villages A444 A426 A45 M1 Daventry M40 03
Situation The property is located to the north-east of Hinckley town centre on the corner of Leicester Road and New Buildings. The premises are 100m south of Castle Street which is the main pedestrianised shopping centre of Hinckley. The retail warehouse supply in Hinckley remains tight with Hinckley Retail Park to the north of the town consisting of just two retail warehouses let to Halfords and Wickes. More recently, approximately 25,000 sq ft of retail warehouse space has been developed on Hawley Road adjacent to Tesco and Lidl, which is let to Poundstretcher and Pets at Home. 04 Neighbouring B&Q locations Location Distance from B&Q Hinckley (miles) Size Bull Head St, Leicester 15 c 30,000 sq ft Devonshire Road, Leicester 14 c 100,000 sqft Ventura Park, Tamworth 17 c 40,000 sq ft Brandon Road, Coventry 13 c 100,000 sqft Alvis Retail Park, Coventry 18 c 50,000 sq ft
Description The property comprises a purpose built detached retail warehouse dating from 1989. It is of steel portal frame construction with brick blocked external elevations and metal profile sheeting to the pitched roof. There is an internal eaves height of approximately 6.3m. Site Internally the property is fitted out to the corporate trading style of the tenant with large sales area and a two storey integral section incorporating offices, staff room and stores. A loading bay formed internally to the front of the property is accessed via a steel roller shutter door. The site extends to 1.95 acres with the garden centre and main store positioned to the north of the site and customer parking to the south. The property has frontages to both Leicester Road and New Buildings and as such has excellent prominence and visibility. The vehicular entrance is from New Buildings, providing access to the customer car park (c 100 spaces) and service yard. 05
Accommodation The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and provides the following approximate Gross Internal floor areas: Demise Sq M Sq Ft Ground Floor Retail sales/loading bay 2,677.79 28,824 Ground Floor Ancillary 77.11 830 First Floor Ancillary 181.45 1,953 Total 2,936.35 31,607 Tenancy The property is let in its entirety to B&Q PLC for a term of 10 years from 27th February 2015 until 26th February 2025; thus providing 7.75 years unexpired. The lease is drafted on a Full Repairing and Insuring basis at a current passing rent of 235,000 per annum ( 7.44 per sq ft). The lease is subject to 5 yearly upwards only rent reviews subject to a cap of 15.93% increase on the passing rent. The property is to be used for non-food retail purposes within Class A1 (a) together with ancillary storage and staff facilities. B&Q has been in occupation of the building since it was developed in 1989. Covenant B&Q plc is a DIY and home improvement retailing company operating stores in the UK and Ireland as well as in mainland China and Taiwan. B&Q plc is a wholly owned subsidiary of Kingfisher plc and is arguably the the best known retail brand in the sector. B&Q plc has reported the following financial results. 31/01/2016 31/01/2015 01/02/2014 Turnover 3,704,000,000 3,664,000,000 3,589,500,000 Pre-Tax Profit ( 68,900,000)* 19,600,000 138,600,000 Net Worth 4,493,200,000 4,538,900,000 4,385,900,000 *Loss reported after exceptional restructuring costs of 252.1m. 06
Rental Evidence Date Address Size (sq ft) Rent(pa) Headline rent (per sq ft) January 2017 B&M, Snipe Way, Ashton under Lyne 30,000 420,000 14.00 August 2016 Smyths Toys, Portland Retail Park, Mansfield 20,174 252,175 12.50 May 2016 Go Outdoors, Mansfield Road, Nottingham 24,565 315,000 12.82 October 2015 B&M, Willowbrook Retail Park, Loughborough 20,000 200,000 10.00 October 2015 Pets at Home, 2 Hawley Way, Hinckley 7,517 120,256 16.00 January 2015 B&Q, Nuffield Road, Abingdon 24,300 200,000 14.50 October 2011 Wickes, Hinckley Retail Park, Hinckley 38,976 467,712 12.00 Investment Evidence Date Address Tenant UXT (years) Price NIY January 2017 Stafford Road, Wolverhampton Wickes Building Supplies Ltd 14 6,710,000 6.75% December 2016 Netherfield Retail Park, Nottingham DW Fitness and Sports 16 9,600,000 6.20% December 2016 Newport West Retail Park, Newport Lidl, B&M, Home Bargains 6.3 6,660,000 6.69% November 2016 Statham Street, Macclesfield B&Q PLC 8 6,900,000 6.73% August 2016 County Road Retail Park, Swindon Go Outdoors, B&M 7.1 7,180,000 6.85% Planning The lease allows for open A1 (non food) retail use. Further enquiries can be made to Hinckley & Bosworth Borough Council. VAT The property is elected for VAT. It is anticipated that the transaction will be treated as a TOGC. EPC The property has an EPC rating of B and a score of 36. A copy of the EPC and Recommended Report is available upon request. 07
Proposal We are seeking offers in the region of 3,150,000 (Three Million One Hundred and Fifty Thousand Pounds) for the freehold interest, subject to contract, reflecting a Net Initial Yield of 7.01% and a Reversionary yield of 8.11% assuming the maximum rental increase allowed at the next review. We have assumed purchaser s costs of 6.64%. Contacts Adam Ramshaw Lambert Smith Hampton 0121 237 2395 aramshaw@lsh.co.uk Ankur Chadha Lambert Smith Hampton 0121 237 2367 achadha@lsh.co.uk Richard Durkin Lambert Smith Hampton 0121 237 2330 rdurkin@lsh.co.uk Lambert Smith Hampton Interchange Place Edmund Street Birmingham B3 2TA 08 Lambert Smith Hampton June 2017. Details of Lambert Smith Hampton can be viewed on our website www.lsh.co.uk This document is for general informative purposes only. The information in it is believed to be correct, but no express or implied representation or warranty is made by Lambert Smith Hampton as to its accuracy or completeness, and the opinions in it constitute our judgement as of this date but are subject to change. Reliance should not be placed upon the information, forecasts and opinions set out herein for the purpose of any particular transaction, and no responsibility or liability, whether in negligence or otherwise, is accepted by Lambert Smith Hampton or by any of its directors, officers, employees, agents or representatives for any direct, indirect or consequential loss or damage which may result from any such reliance or other use thereof. All rights reserved. No part of this publication may be transmitted or reproduced in any material form by any means, electronic, recording, mechanical, photocopying or otherwise, or stored in any information storage or retrieval system of any nature, without the prior written permission of the copyright holder, except in accordance with the provisions of the Copyright Designs and Patents Act 1988. Warning: the doing of an unauthorised act in relation to a copyright work may result in both a civil claim for damages and criminal prosecution.