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Prime Open A1 Retail Park and Foodstore Investment
Hermiston Gait Retail Park Edinburgh
Investment summaRy
■■ Edinburgh has the 10th largest shopping population in the UK.
■■ Hermiston Gait Retail Park has exceptional transport links.
■■ A 300,000 sq ft (27,870 sq m) retail park anchored by a new 75,000 sq ft (6,970 sq m) Tesco foodstore and 102,415 sq ft (9,515 sq m) B&Q Warehouse which account for over 62% of the income.
■■ The scheme benefits from a flexible Open A1 (including food) consented retail warehouse terrace along with Tesco and B&Q.
■■ The average rent on the 120,000 sq ft (11,150 sq m) retail terrace is a low £14.71 per sq ft.
■■ Current net income of £4,687,619 p.a. with a highly reversionary ERV of £4,990,169 p.a.
■■ The weighted average unexpired lease term is 15.70 years.
■■ Planning applications have been submitted to increase the total floorspace, develop a new retail and A3 terrace and refurbish the retail frontages.
Initial Yield 7.00%
Reversionary Yield – Sep-12 7.32% (B&Q guaranteed uplift)
Reversionary Yield – May-13 7.48% (tesco projected uplift*)
Reversionary Yield – Oct-13 8.03% (On completion of the 2013 reviews)* 5 year RPI forecast of 1.6% p.a. (Source: CBRE)
■■ We are instructed to seek offers in the region of
£63,340,000 subject to contract and exclusive of
VAT for our client’s interest. A purchase at this level
will reflect the following yield profile, based on
purchaser’s costs of 5.725%.
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asset manaGement
With two new key anchor retailers and low average rents, Hermiston Gait is now uniquely placed to finally unlock its latent rental growth potential.
Planning aPPlications Currently there are a number of planning applications
submitted that will fundamentally alter the park’s already
significant reversion. A final decision is expected by the end of
the year on these applications that includes the following:
Permitting up to 50% mezzanine floors across units 1-8, 1.
suiting modern retailer’s requirements.
Refurbishment of existing retail fronts including 2.
removal of dated canopy, new tenant signage
and over cladding of the brick frontages.
Construct a terrace of units to accommodate restaurants and 3.
retail uses that are aimed at increasing the customer dwell time.
Alter existing car park layout to provide increased 4.
disabled parking in front of the units while creating
new staff parking to the rear of the units.
ongoing initiativesConsent was recently granted to erect a signage board at 5.
the entrance of the scheme to increase shopper awareness.
Surrender and split Unit 7 into two 7,500 sq ft units.6.
develop the ‘teardrop’ site into a pod / retail unit which 7.
offers retailers a busy and prominent site (A profit share
agreement with new Edinburgh would be required).
Work with Tesco to locate and fund a PFS near to 8.
the scheme allowing them to offer their complete
service while further driving the parks footfall.
More detailed information on asset management is
available on request.
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6
2
7
3
5
1
8
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GARdEn CEnTRE
BUlK STOREPlanning applications1 Mezzanine Floors2 Upgrade Retail
Frontages3 new retail and
A3 terrace4 new carpark layout
ongoing initiatives5 new Park Signage6 Split and relet
of Unit 77 Teardrop Site8 Potential PFS Site
edinburgh is the Capital of scotland and a major european city with a diverse economic base. the City benefits from excellent transport links and communications.
To the west the M8 and M9 motorways link with Glasgow 42 km
(67 miles) west and Falkirk to the north west while the A1, to the
east, connects to newcastle with the A720 forming the Edinburgh
City Bypass.
Edinburgh’s railway stations provide regular services to Glasgow
and london with approximate journey times of 50 minutes and 4½
hours respectively.
Edinburgh Airport is approximately 11 km (7 miles) west of the city
centre and offers a wide range of both domestic and international
flights. It is also earmarked for substantial expansion over the
next decade.
DeMogRaPHicsEdinburgh has a large shopping population of 502,000 ranking it
10th in the UK (Source: PROMIS nSlSP). The shopping population
has above average socio economic characteristics as illustrated by
comparison of the 15 minute drivetime against the UK average in
the following tables:
social grade 15 minutes UK index
AB 29.77% 24.89% 120
C1 31.52% 29.56% 107
C2 13.70% 18.29% 75
d/E 25.00% 27.26% 92
(Source – Pitney Bowes MapInfo)
Furthermore the property ownership statistics are above the UK
average.
Property ownership 15 minutes UK Index
% Owned 73.80% 62.59% 118
% Owns outright 38.06% 37.43% 102
(Source – Pitney Bowes MapInfo)
The overall Edinburgh shopping population spends above average
on shopping as shown below.
expenditure estimates edinburgh index
Total goods 2,338.97m 103
Convenience goods 848.18m 102
Comparison goods 1,490.80m 104
Food 566.82m 102
Clothing & footware 369.35m 104
Furniture, floor coverings & h’hold textiles 181.24m 103
Audio-visual equipment & other durables 247.24m 103
Hardware and dIY supplies 126.69m 103
Other goods 475.23m 103
(Source – CBRE nSlSP)
LOCatIOn
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7
Edinburgh
Hermiston
Edinburgh
Hermiston
Queensferry
East Calder
Leeburn
Penicuik
Bonnyrigg
Dalkeith
Whitecraig
MusselburghGladsmuir
Tranent
Haddington
Dirleton
DremAberlady
Fala Dam
Oxton
Fountainhall
Falahill
Gorbridge
OxenfordCastle
Livingston
Broxburn
Blackness
Champany
Grangemouth
Polmont
Falkirk
Kincardine
Blairhall OakleyDunmore
Shieldhill
Binnehill
Armadale
Bathgate
Whitburn
Longridge
FauldhouseShotts
Stane
Forth
NorthQueensferry
A68
A1
A8
M8
M8
M8
M9
M9M9
M9
A1
A1
A1
A68
A90
A90
A92
A92
A71
A71
A71
A71
A720
A199
A720
A876
A985
A985A823
A902
A8000
A702
A702
A702
A702
A68
A68
drive time contours
10 minutes
15 minutes
20 minutes
DemOGRaPHICs
sItuatIOn
the park is strategically located at the junction of the edinburgh City Bypass (a720) and the m8, 8 km (5 miles) west of the city centre. It is fully accessible from either road with recently installed signage over the City Bypass in 2008. access is also now available via Cultins Road direct from the a71 that leads directly into the heart of the city.
located on the northern edge of the park is Edinburgh Park
railway station, opened in 2003, which provides regular
services to the city centre. The Edinburgh Tram project
which was started in 2008, with the first phase due to
complete in 2011 is being routed through this station.
The 362,000 sq ft (33,600 sq m) Gyle Shopping Centre is situated
1.5 km (1 mile) north and is anchored by Mark & Spencer and a
Morrison’s foodstore along with River Island, next and Boots.
directly north of the park is Edinburgh Park which is Scotland’s
largest business park that has been developed since 1990. To date
around 2.5 million sq ft (232,250 sq m) of the development has
been built out with a further 2.2 million sq ft (204,390 sq m) still
to be developed. It is owned by new Edinburgh limited which is
a joint venture between The Miller Group and CEC Holdings ltd
that is a wholly owned subsidiary of the City of Edinburgh Council.
Towards
Edinburgh airport
M8
A720
A71
A8
A720
1
2
3
4
5
Towards
Edinburgh
City CentreTowards
Edinburgh
City Centre
1 new Park Signage2 Edinburgh Park
Railway Station 3 The Proposed
Edinburgh West Tram line
4 The Gyle Shopping Centre
5 Edinburgh Park
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RetaIL WaReHOuse PROvIsIOn In eDInBuRGH
A8A8
A8
A7
A7
A1
A720
A720
A702
A701
A772
A702
A71
A71
A70
A70
M8
M9
A902
A902
A90
A90
A90
A90
A8000
A199A900
A1
A1
A68
Fort Kinnaird shopping Park 580,000 sq ft (53,400 sq m)
Fort Kinnaird is the largest shopping park in
Edinburgh. It comprises three distinct phases
and has attracted the likes of M&S, Arcadia,
River Island, new look and Monsoon with
headline rents reaching £55.00 per sq ft.
The retail cluster also contains the only other
B&Q Warehouse in the city along with a
Tesco Home Store and additional solus units.
straiton Retail Park cluster298,000 sq ft (21,925 sq m)
Straiton Retail Park is a large cluster of retail
warehousing in Edinburgh located to the
south of the A720 and is in split ownership.
These open A1 (non food) retail parks are
arranged in three phases with the most recent
phase let to M&S Simply Food, Boots, Argos,
Brantano and next. The top rent reflects
£28.00 per sq ft while the remaining line up
on the earlier phases includes Comet, Sports
direct, Halfords and Homebase.
the craigleith (Quarry) shopping Park 182,500 sq ft (17,000 sq m)
This park is located 3 km (2 miles) west of
the city centre adjacent to a Sainsbury’s
foodstore on the A90 Queensferry Road.
The park has an Open A1 (non food)
planning consent with a highest rent of
£37.00 per sq ft. Tenants on the park
include M&S, next, new look, Argos,
Arcadia, TK Maxx, Boots and Homebase.
Meadowbank Retail Park
149,200 sq ft (13,800 sq m)
The park is situated 1.5 km (1 mile) east of
the city centre on the A1 london Road. This
Open A1 park was recently purchased and
is anchored by a Sainsbury’s foodstore with
other tenants including TK Maxx Home,
M&S Outlet, Peacocks and Gala. The
highest rent achieved is £23.00 per sq ft.
the total retail warehouse supply in edinburgh is estimated to be in excess of 2.1 million sq ft (195,000 sq m) of which 75% is located on retail parks. the subject property is the second largest classified retail park within the city.
FORT KInnAIRd SHOPPInG PARK
STRAITOn RETAIl PARK ClUSTER
MEAdOWBAnK RETAIl PARKTHE CRAIGlEITH (QUARRY) SHOPPInG PARK
DesCRIPtIOn
the retail park comprises two anchor units let to tesco and B&Q along with eight Open a1 (inc food) retail units. the park is well configured with the retail terrace and tesco located opposite the B&Q Warehouse across a central car park.
The main retail warehouse units were constructed in 1995 and are
of steel portal frame construction with brick and block cavity walls
incorporating brick and glazed retail fronts.
In 2007, the 102,415 sq ft (9,515 sq m) B&Q Warehouse was
completed providing a steel portal frame unit with brick cladding
and profile metal cladding under a pitched roof.
In 2008, units 9, 10 & 11 were combined to create a new
75,000 sq ft (6,970 sq m) Tesco foodstore to anchor the
southern end of the scheme.
The service access for the Tesco and retail terrace is off Cultins
Road while the B&Q is serviced via a road from the main customer
access. The remainder of the site comprises soft landscaping,
substantial tarmac surface car parking areas and concrete surfaced
service yards and compound areas.
siteThe site is regular in shape and extends to approximately 24 acres
(9.7 ha) providing a site cover of approximately 28%.
caR PaRKingThe scheme benefits from an extensive onsite car park providing a
total of 1,117 spaces, giving a ratio of 1:266 sq ft (1:24.7 sq m).
tenUReOutright Ownership (Scottish equivalent to English Freehold).
PlanningThe park was granted consent in March 1994 which allows for Open
A1 (including food) retail uses without minimum or maximum unit
sizes except for a condition within the reserved matters restricting
the total gross internal floor area of the park to 200,000 sq ft
(18,580 sq m). The unrestricted consent was upheld by the City of
Edinburgh Council in 2008 prior to Tesco’s occupation.
Consent was granted in January 2006 for the B&Q that states that
the unit must not be subdivided and limits 90% of the floorspace to
be used for the sale of bulky goods categories including dIY, home
maintenance, building / construction materials, garden supplies,
furnishing and fittings, floor coverings and bulky electrical goods.
tenant DeManDThe latest lettings on the scheme have been Tesco and B&Q which
opened in September 2008 and October 2007 respectively. We
understand that both are trading above expectations, delivering
significant improvements in customer footfall numbers.
The car count numbers have risen from an average of 15,000 per
week in early 2007, improving on the B&Q opening to 27,500 per
week, before settling to around 37,000 per week since the Tesco
store opened.
We believe that the 120,000 sq ft (11,150 sq m) retail terrace has
the potential to deliver superlative rental growth, particularly given
the low current average passing rent of £14.72 per sq ft.
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COvenant / InCOme
incoMe analYsis The park is well let with a weighted average unexpired lease term
of over 15.70 years (17.00 years without Tesco break clause). The
chart sets out the lease expiry profile for the park:
Tenant date of Turnover net Worth Total Assets Account (£,000) (£,000) (£,000)
Tesco Stores limited 23 Feb 2008 £34,786,000 £4,506,000 £18,130,000 24 Feb 2007 £32,687,000 £4,752,000 £16,871,000 25 Feb 2006 £30,087,000 £3,399,000 £13,257,000
B&Q Plc 02 Feb 2008 £3,854,900 £1,761,800 £2,805,800 03 Feb 2007 £3,817,900 £1,602,900 £2,632,200 28 Jan 2006 £3,753,600 £1,343,200 £2,341,800
Halfords limited 28 Mar 2008 £797,400 £194,700 £413,300 30 Mar 2007 £744,000 £185,500 £393,200 31 Mar 2006 £670,700 £154,100 £291,000
Staples UK Retail limited 02 Feb 2008 £359,707 £2,149 £165,601 03 Feb 2007 £361,129 £(16,550) £145,176 28 Jan 2006 £354,579 £(4,181) £200,714
Specialist Computer Holdings (UK) Plc 31 Mar 2008 – £15,290 £131,201 31 Mar 2007 – £14,240 £134,098 31 Mar 2006 – £12,911 £156,529
dSG Retail limited 03 May 2008 £4,657,189 £785,314 £2,125,259 28 Apr 2007 £4,500,903 £861,108 £2,119,762 29 Apr 2006 £4,203,295 £732,420 £2,019,243
Carpetright Plc 03 May 2008 £521,500 £12,100 £336,100 28 Apr 2007 £475,900 £29,100 £268,200 29 Apr 2006 £451,400 £21,700 £248,000
Blane leisure limited 27 Jan 2008 £164,268 £171,967 £201,678 28 Jan 2007 £177,407 £164,172 £189,754 29 Jan 2006 £173,308 £153,704 £177,752
Childrens World limited 29 Mar 2008 – £63,700 £63,700 31 Mar 2007 – £63,700 £63,700 01 Apr 2006 – £63,700 £63,700
Harveys Furnishing Group limited 28 Jun 2008 – £(46,746) – 30 Jun 2007 – £(46,746) – 01 Jul 2006 – £(46,746) –
tenant inFoRMationtesco Plc
Tesco remains the undisputed leader in UK grocery and the
largest retailer in the UK. It has a market share of over 30% of
the UK grocery market significantly ahead of its nearest rivals. In
recent years the company has also expanded abroad, making the
company a truly global player. The company now has significant
operations in 14 countries with 60% of Tesco floorspace now being
outside of the UK market (Source: Verdict).
B&Q Plc
B&Q is number one in the UK home improvement market, with a
market share of 14.8%, while being the third largest in the world.
B&Q is a wholly owned subsidiary of Kingfisher plc and currently
operates from a total of 330 trading stores in the UK.
We have set out to the right the recent account information
for the primary tenants:
0 10 20 30 40
% of Park Income
Leas
e Ex
piri
es
0–10 years0%
20+ years: Tesco 27.2%
10–15 years: Retail Terrace 37.7%
15–20 years: B&Q 35.0%
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13tenanCy
* Stated lease floorarea.
Unit tenant trading as size lease tenant expiry Passing Rent next eRv comments sq ft start Break Date p.a. per sq ft Rent Review p.a. per sq ft
Unit 1 dSG Retail limited Currys 22,267 16/10/95 – 15/10/20 £337,500 £15.16 16/10/08 £356,272 £16.00 Rent review outstanding.
Unit 2 Halfords limited Halfords 10,080 16/10/95 – 15/10/20 £130,117 £12.91 16/10/08 £176,400 £17.50 Rent review outstanding.
Unit 3 Harveys Furnishing Group limited Harveys 7,529 16/10/95 – 15/10/20 £97,396 £12.94 16/10/08 £135,522 £18.00 Rent review outstanding.
Unit 4 Carpetright Plc Carpetright 9,897 16/10/95 – 15/10/20 £130,078 £13.14 16/10/08 £178,146 £18.00 Rent review outstanding.
Unit 5 Staples UK Retail limited Staples 15,096 10/01/96 – 15/10/20 £330,396 £21.89 16/10/13 £271,728 £18.00
Unit 6 Childrens World limited Mothercare 14,948 16/10/95 – 15/10/20 £189,277 £12.66 16/10/08 £269,064 £18.00 Rent review outstanding.
Unit 7 Specialist Computer Holdings (UK) Plc – 15,015 16/10/95 – 15/10/20 £255,255 £17.00 16/10/08 £270,270 £18.00 Rent review outstanding.
Unit 8 Blane leisure limited JJB Sports 25,101 16/10/95 – 15/10/20 £299,000 £11.91 16/10/10 £414,167 £16.50
Units 9,10,11 Tesco Stores limited* Tesco 75,000 19/05/08 19/05/28 18/05/33 £1,275,000 £17.00 19/05/13 £1,275,000 £17.00 Reviewed 5 yearly to RPI capped at 3.5% p.a. Tenant’s option to extend the term for a further 10 years.
– B&Q Plc* B&Q 102,415 03/09/07 – 02/09/27 £1,638,400 £16.00 03/09/12 £1,638,400 £16.00 Rent to be reviewed to higher of OMRV or £1,853,713 pa (£18.10 per sq ft).
Burger Van Ewan Wisniewska – – 20/12/07 – – £5,200 – – £5,200 – licence
total 297,348 £4,687,619 £4,990,169
the property is let in accordance with the schedule below. the current contracted rent is £4,687,619 p.a. with a number of units still having outstanding reviews from October 2008. the leases are all drawn on FRI terms, subject to five yearly upwards only reviews (unless stated below):
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15PROPOsaL
vatThe subject property is elected for VAT. The vendor would expect
to treat the sale as a transfer of a going concern (TOGC), with the
intention that no VAT would be payable on the purchase price.
PRoPosalWe are instructed to seek offers in the region of £63,340,000
subject to contract and exclusive of VAT for our client’s interest.
A purchase at this level will reflect the following yield profile,
based on purchaser’s costs of 5.725%.
Initial Yield 7.00%
Reversionary Yield – Sep-12 7.32% (B&Q guaranteed uplift)
Reversionary Yield – May-13 7.48% (tesco projected uplift*)
Reversionary Yield – Oct-13 8.03% (On completion of the 2013 reviews)* 5 year RPI forecast of 1.6% (Source: CBRE)
James gullifordt: 020 7182 2216F: 020 7491 4921e: [email protected]
Will atkinsont: 020 7182 2401F: 020 7491 4921e: [email protected]
cB Richard ellis limitedKingsley HouseWimpole streetLondonW1G 0Ret: 020 7182 2000F: 020 7182 2001
Miller Mathieson t: 0131 243 4168 F: 0131 469 0131e: [email protected]
cB Richard ellis limited7 Castle streetedinburgheH2 3aHt: 0131 469 7666F: 0131 469 0131
contactsFor further information please contact:
disclaimer: CB Richard Ellis 2009
CB Richard ellis on its behalf and for the vendors or Lessors of this property whose agents they are, give notice that:
1. these particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract.
2. Details are given without any responsibility and any intending Purchasers, Lessees or third Parties should not rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each of them.
3. no person in the employment of CB Richard ellis has any authority to make any representation or warranty whatsoever in relation to this property.
4. unless otherwise stated, all priced and rents are quoted exclusive of vat.
Edinburgh | Hermiston Gait Retail Park | July 09 | Ref: 105906
www.cbre.com